REITs seek more relief such as electricity discount, fee waivers

  • Economy
  • Wednesday, 22 Apr 2020

MRMA chairman Datuk Jeffrey Ng urged the government to speed up the proposed relief measures for M-REITs to remain relevant to investors at large.

KUALA LUMPUR: The Malaysian REIT Managers Association (MRMA) has urged the government to provide more relief measures to cope with the economic fallout from the Covid-19 pandemic.

The industry group had on Wednesday sought the electricity tariff discount to be increased from 15% to 25% for to hotels, retails malls, conventions and exhibition centres, commercial and industrial properties, for a six-month up to end-September.

It also proposed for a full waiver of the imbalance costs pass through (ICPT) charges six months and waiver of any penalty due to non-compliance of the minimum electricity usage for the same duration.

It also sought the government’s assistance and support for MRMA’s application to the various State Governments for a waiver of 100% of the assessment tax and quit rent chargeable for one year.

MRMA said this appeal was crucial as this was intended to alleviate the burden of a REIT in providing financial support to its tenants throughout the MCO period and thereafter.

It also appealed for the exemption in withholding tax to all resident individual unitholders, who are currently taxed at 10%.

“With the exodus of funds in the capital market, MRMA opines that the proposal is timely to enhance the competitiveness of M-REITs vis-à-vis Singapore-REITs and simultaneously broaden the depth and breadth of M-REITs’ investors base.

“MRMA strongly believes that the capital market is poised to reap significantly greater benefits arising from the liberalisation of withholding tax, ” it said.

In its request for financial relief, it proposed a reduction in interest and financing rate to 3% for at least six months, automatic six-month moratorium on financing facilities repayment or payment and double deduction of borrowing costs for six months from April 1 to end-September.

MRMA has sought the authority’s consent to allow, on a case-to-case basis, a REIT to exceed the gearing limit for 12 months, provided the affected REIT has obtained the sanction from its unitholders. This proposal acts as a pre-emptive measure in order to manage potential asset devaluation risk and gearing surpassing the permissible threshold.

It also urged the government to follow Singapore’s move to allow the extension of permissible period for income distribution

It cited that Singapore’s Finance Minister and Inland Revenue Authority has extended the timeline for REITs listed in Singapore (S-REITs) to distribute at least 90% of their income distribution from three months to 12 months (after the end of financial year (FY) 2020) to qualify for tax transparency.

“MRMA has proposed to the authority for the same extension to be applicable to M-REITs, taking precedence of S-REITs. The extension allows M-REITs the flexibility to manage cash flows in such challenging times, ” it said.

MRMA chairman Datuk Jeffrey Ng urged the government to speed up the proposed relief measures for M-REITs to remain relevant to investors at large and “to defend the survivability of the business value chain of our tenants and welfare of stakeholders without asserting pressure to consumers”.

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