Originally Posted by
minority
YES REITs can go down but at most the person lost his cash not make bankrupt. . common people go take up big debt. later cash call they can be made bankrupt so who they blame u?. Also there are rules that guide the reits. so u dont know dont any how KP.
Specific rules for REITs in Singapore
In Singapore, there are specific rules and regulations that a REIT has to abide by. Firstly, 90% of its net income must be distributed to its shareholders in the form of dividends. Unlike other listed companies, they do not have the liberty to choose to retain a higher percentage of their profits. Other than that, a minimum of 70% of their assets must be invested into properties and at least 75% of their income must be derived from rental income.
In Singapore, there are also specific requirements on how much debt REITs can incur. If the company does not have a credit rating, their debt to asset ratio cannot exceed 35%. And even if the company has a credit rating, their debt to asset ratio cannot exceed 60%. Such regulations have been enforced to ensure that REITs would not face the problem of over-borrowing. What this means is that if they purchase a property priced at S$100 million, the maximum amount they can borrow to finance the purchase is 60% of the property price, or S$60 million in this case.
REITs were first introduced to Singapore only 10 years ago, where the first REIT was Capital Mall Trust listed in 2001. However, the history of REITs dates back to as early as 1960 in the US. Today, there are over 180 REITs in the US, amounting to total assets worth about US$350 billion.