SC raises gearing limit for M-REITs to 60%

The regulator said in a statement on Wednesday the “temporary increase in gearing limit will provide M-REITs greater cash flow flexibility and allow M-REIT managers to manage their REIT’s debt and capital structures more efficiently”.

KUALA LUMPUR: The Securities Commission (SC) will temporarily increase the gearing limit for Malaysian real estate investment trusts (M-REITs) from 50% to 60%, effective immediately, until Dec 31,2022.

The regulator said in a statement on Wednesday the “temporary increase in gearing limit will provide M-REITs greater cash flow flexibility and allow M-REIT managers to manage their REIT’s debt and capital structures more efficiently”.

It said this temporary measure was crucial especially due to the challenging operating environment during the Covid-19 pandemic.

Notwithstanding the temporary increase in gearing limit, the SC said it expected managers of M-REITs to consider sustainability of the REIT and best interests of unit holders, before taking on any additional debt.

The SC said as the financial system adjusts to the impact of Covid-19, it continues to monitor the evolving situation in global and domestic markets, to calibrate its responses and update the public accordingly.

“The regulator has already introduced an array of measures to assist capital market participants and the industry, ” it said.