A move by Singapore’s central bank to review gearing gearing limits for REITs has been cheered by Morgan Stanley as one that could ultimately result in higher distribution per unit (DPUs) across the sector.

The Monetary Authority of Singapore (MAS) announced on 2 July that it is seeking views on raising the gearing limit for Singapore-listed REITs to 50%, or higher.

“The industry has provided feedback that at the current leverage limit of 45%, REITs face challenges when competing against other bidders such as private equity funds, property companies and foreign REITs” said Abigail Ng, Executive Director of MAS, at the REITAS conference 2019.