Tweaking regulatory limits for S-Reit gearing seen as double-edged sword

However, industry watchers are divided on whether tweaks should be made to the gearing ratio limits to offer some relief to the Singapore-listed real estate investment trusts (S-Reits).

Experts polled by  The Business Times  (BT) said the need for flexibility needs to be weighed against investor protection considerations.

Tan Boon Gin, chief executive of Singapore Exchange Regulation, noted that office Reits with overseas assets, for example, have suffered a &ldquo triple whammy&rdquo .

&ldquo Tenants now want smaller spaces and are moving away from workstations to common areas. They may also need to green their building. These are all very capex intensive,&rdquo he said in a fireside chat at the Reit Association of Singapore conference in August.

To raise money, Reits could increase equity or sell properties. But these options may not be feasible when unit prices have fallen significantly, and market conditions for asset sales are not conducive.

Read the full report on BT