If the proposed changes of raising the leverage limit of Singapore real estate investment trusts above the current leverage limit of 45 per cent goes through, debt markets can no longer take a "broad-brush" approach and assume S-Reits are “low-risk”.IF the leverage limit for Singapore real estate investment trusts is raised above the current 45 per cent, debt markets can no longer take a"broad-brush" approach and assume S-Reits are"low-risk".
In addition, a higher leverage limit may also weaken the credit metrics of Reits which have historically and generally kept their aggregate leverage within 40 per cent despite the allowed limit of 45 per cent. Ms Seow added that the proposed changes will likely benefit perpetual holders of healthy Reits, as well as the sponsors of the Reits.
Meanwhile, sponsors would benefit as they would be able to inject properties with greater ease into the Reits from a financial standpoint, including sizeable ones. This is because the cost of debt is lower than the cost of equity.
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Source: BusinessTimes - 🏆 15. / 51 Read more »
Source: BusinessTimes - 🏆 15. / 51 Read more »