Singapore MAS Proposed REITs to Have Minimum Interest Coverage Ratio of 1.5x & Aggregate Leverage Limit of 50%, New Requirements for REITS to Adequately Meet Interest Payments & Prudent Borrowing, Consultation Paper Feedback Deadline on 23rd August 2024
25th July 2024 | Hong Kong
The Monetary Authority of Singapore (MAS) has issued a consultation paper to propose REITs (Real Estate Investment trusts) to have minimum interest coverage ratio of 1.5x and aggregate leverage limit of 50%, with the new requirements to ensure REITs can adequately meet interest payments & prudent borrowing. The consultation paper feedback deadline is on 23rd August 2024. Singapore MAS (25/7/24): “The Monetary Authority of Singapore (MAS) today published a consultation paper to subject all REITs to a minimum interest coverage ratio (ICR) threshold of 1.5 times and an aggregate leverage limit of 50%, as it simplifies leverage requirements for the sector. MAS proposes that a minimum ICR of 1.5 times apply to all REITs. This underscores the responsibility of REIT managers in ensuring that REITs can adequately meet their interest payments. The proposed threshold is set at 1.5 times as it will now be applied at all times to all REITs. Currently, the ICR requirement of 2.5 times is to be met only by REITs which intend to increase their aggregate leverage from 45% to 50%. The ICR and aggregate leverage work complementarily to indicate a REIT’s financial strength. To simplify the requirements, MAS proposes that a single aggregate leverage limit of 50% apply to all REITs going forward. A leverage limit of 50%, together with the ICR floor, will continue to foster prudent borrowing by REITs. To provide investors with information on how a REIT’s credit profile could be affected by changes in market conditions, MAS proposes that REITs perform and disclose sensitivity analyses on the impact of changes in EBITDA and interest rates on REITs’ ICRs. This disclosure is to be made in their interim financial results and annual reports.” MAS invites views and suggestions from interested parties on the proposals set out in this consultation paper which is available here. Comments may be submitted via the FormSG link by 23 August 2024.
“ Singapore MAS Proposed REITs to Have Minimum Interest Coverage Ratio of 1.5x & Aggregate Leverage Limit of 50%, New Requirements for REITS to Adequately Meet Interest Payments & Prudent Borrowing, Consultation Paper Feedback Deadline on 23rd August 2024 “
Singapore MAS Proposed REITs to Have Minimum Interest Coverage Ratio of 1.5x & Aggregate Leverage Limit of 50%, New Requirements for REITS to Adequately Meet Interest Payments & Prudent Borrowing, Consultation Paper Feedback Deadline on 23rd August 2024
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