MAS to go ahead with most proposed changes for Reits market

The new measures are aimed at giving Reit unitholders "better protection and greater accountability", while providing managers with more flexibility operationally, MAS said in a statement.
The new measures are aimed at giving Reit unitholders "better protection and greater accountability", while providing managers with more flexibility operationally, MAS said in a statement.PHOTO: ST FILE

SINGAPORE - The Monetary Authority of Singapore (MAS) on Thursday announced it will go ahead with most of the new rules it had proposed for the booming property trust sector.

The new measures are aimed at giving Reit unitholders "better protection and greater accountability", while providing managers with more flexibility operationally, MAS said in a statement.

It had sought industry feedback last October via a consultation paper that pencilled proposals to "strengthen" the real estate investment trust (Reit) market.

To bolster corporate governance within the industry, Reit managers and their directors will be bound by a statutory duty to prioritise investors' interests over those of the manager and the sponsor, in the event of a conflict of interest.

They will also have to disclose their remuneration policy and procedures in their annual reports.

The MAS said it will not intervene on the structure or type of fees that managers charge, but will require them to justify the implementation of such fees.

"This will provide greater clarity to investors on the various types of fees charged by managers, without being over-prescriptive on how fees should be charged," it noted.

In addition, a trust will be able to develop a project that costs up to 25 per cent of its total asset size, up from the current limit of 10 per cent.

It will be able to borrow 45 per cent of its total assets, an increase over the 35 per cent cap now, although it will no longer be allowed to borrow up to 60 per cent with a credit rating.

MAS also extended the effective date of the requirements: the changes to the regulations are to take effect from Jan 1, 2017, while the amendments to the Act and the Code on Collective Investment Schemes will take place no later than the first annual general meeting relating to the financial years ending on or after Dec 31, 2016.

"The finalised positions reflect a balanced approach to enhancing safeguards for investors and unitholders while facilitating the growth of a vibrant Reit market," said Mr Lee Boon Ngiap, assistant managing director of capital markets at MAS.

tsjwoo@sph.com.sg