MAS sets new ICR, leverage caps, and tighter disclosure rules for S-REITs

The changes will take effect immediately.

The Monetary Authority of Singapore (MAS) will impose a minimum interest coverage ratio (ICR) of 1.5 times, along with a 50% aggregate leverage limit for all S-REITs, effective immediately.

Previously, a minimum ICR of 2.5 times was required only for REITs intending to increase their aggregate leverage from 45% to 50%.

MAS said the revisions to the Code on Collective Investment Schemes (Code) rationalise leverage requirements for the REIT sector following a public consultation held from July to August.

“Maintaining a minimum ICR of 1.5 times at all times underscores the responsibility of REIT managers in ensuring that REITs can adequately meet all interest payments, complemented by a leverage limit of 50% that is among the strictest globally,” MAS said.

S-REITs will also be required to provide additional disclosures on the outlook and management of their leverage and ICR levels in their financial result announcements and annual reports. This will apply from financial periods ending on or after 31 March 2025 onwards.

REIT managers must disclose how they intend to manage REITs’ leverage and ICR levels as well as analyses on the impact of changes in EBITDA and interest rates on REITs’ ICRs based on a 10% decrease in EBITDA and a 100-basis point increase in interest rates.

In addition, where the ICR of a REIT has fallen below 1.8 times, the REIT manager should have plans in place to improve the REIT’s ICR and disclose this additional information.