Media Releases
Published Date: 20 October 2005

MAS Issues Revised Property Fund Guidelines


Singapore, 20 October 2005... The Monetary Authority of Singapore (MAS) has issued revised Property Fund Guidelines (Guidelines (321.9 KB) ) relating to the governance of real estate investment trusts (REITs).

2. The revised Guidelines aim to strengthen the oversight of managers of REITs, augment the requirements applicable to interested party transactions, enhance disclosure requirements for REITs and incorporate flexibility in key areas to accommodate domestic and overseas expansion by REITs.

3. In formulating the revised Guidelines, MAS considered feedback from its public consultation in June this year and held extensive discussions with REIT players.  Our responses to the comments received are published on the MAS website. (Click here to view (51.6 KB) ).

4. Mr Shane Tregillis, Deputy Managing Director of MAS, said, "Singapore has witnessed significant growth and development in its REITs market. A robust regulatory regime that safeguards investors' interests while providing adequate flexibility to facilitate commercial transactions will support the sustained long-term development of our REITs market."

5. The key changes are:

  • bolstering the entrance criteria for REIT managers, pending legislative amendments to introduce a licensing framework, and prescribing a voting threshold for their removal; 
  • augmenting the requirements applicable to interested party transactions through requiring REITs to obtain two independent valuations of assets before they transact with interested parties, and requiring REIT managers to receive transaction fees in units of the REIT for interested party transactions;  
  • facilitating overseas acquisitions and partial ownership of properties, subject to safeguards to protect the interests of REITs;  
  • giving REITs more flexibility to manage their capital structure.  An aggregate leverage limit, which encompasses both borrowings and deferred payments, has replaced the borrowing limit. The aggregate leverage of a REIT may exceed 35% of its deposited property so long as it obtains and discloses a credit rating from a major rating agency (subject to a cap of 60% of its deposited property); and  
  • modifying the valuation requirements such that desktop valuations, not full valuations, of a REIT's real estate assets are required where a REIT proposes to issue new units and the last available valuation of the REIT's real estate assets is more than 6 months old. This modification takes into account the fact that REITs are already required to perform a full valuation of all its real estate assets at least once a year.

6. MAS will continue to engage industry players and keep our regulatory regime under active review to keep pace with the market's development and growth. 


Notes to Editor:

1. The first Singapore REIT was launched and listed on the Singapore Exchange ("SGX") in July 2002. There are now seven REITs listed on SGX with an aggregate market capitalisation of almost S$11 billion. This included Singapore's first cross-border REIT which had underlying properties in Hong Kong.

2. To foster the growth of the REITs market, several regulatory and tax measures had been put in place. In Budget 2005, the Minister for Finance granted a 3% stamp duty waiver on the transfer of properties into REITs listed on SGX.  A lower withholding tax on REIT distributions to foreign institutional investors from 20% to 10% was also granted.