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seems like a good investment

I think there is new requirement for REITs to have gearing limited to 40% right?
Noted IREIT gearing exceeded 40%, what will happen?
http://reitdata.com/

Gearing limit is 45%

Oic, Thanks Nick. But what will happen if gearing exceeds 45%?
What are the implications to the REIT?

(04-12-2015, 12:49 PM)butcher Wrote: [ -> ]Oic, Thanks Nick.  But what will happen if gearing exceeds 45%?
What are the implications to the REIT?

It would mean that future acquisitions will be largely equity financed. I don't believe there is any 'penalty' if gearing exceeds 45% due to property devaluation. Buddies can verify this.

maybe after yesterday EUR depreciation is less of a worry

(04-12-2015, 01:02 PM)Nick Wrote: [ -> ]

(04-12-2015, 12:49 PM)butcher Wrote: [ -> ]Oic, Thanks Nick.  But what will happen if gearing exceeds 45%?
What are the implications to the REIT?

It would mean that future acquisitions will be largely equity financed. I don't believe there is any 'penalty' if gearing exceeds 45% due to property devaluation. Buddies can verify this.

I think there is. If gearing exceeded 45% due to whatever reason (including property devaluation), the REIT needs to pare down the debt or issue rights to raise capital....

(04-12-2015, 08:32 PM)desmondxyz Wrote: [ -> ]

(04-12-2015, 01:02 PM)Nick Wrote: [ -> ]

(04-12-2015, 12:49 PM)butcher Wrote: [ -> ]Oic, Thanks Nick.  But what will happen if gearing exceeds 45%?
What are the implications to the REIT?

It would mean that future acquisitions will be largely equity financed. I don't believe there is any 'penalty' if gearing exceeds 45% due to property devaluation. Buddies can verify this.

I think there is. If gearing exceeded 45% due to whatever reason (including property devaluation), the REIT needs to pare down the debt or issue rights to raise capital....

Based on this 2009 Circular, there seems to be no penalty - http://www.mas.gov.sg/~/media/resource/l...1_2009.pdf

I am not too certain if there are any rule changes since then.

Granted, penalty or not, individual loans might have LTV covenants in it.

i think the loans' LTV covenants are easy to comply with the banks if exceeded as negotiations can happen and generally will be waived but the regulations by SGX is what we should be worry about. As SGX will not be so lenient

If the gearing exceeds 45% , the shareholders can ask the REIT directors to reduce the gearing ratio or step down .