By MoneyBees
A REIT's gearing and interest cover against the MAS limits of 50% and 1.5 times, the debt headroom left and the fall in property values that hits the limit.
Its total borrowings and deferred payments divided by its deposited property, which is the value of its total assets at the latest valuation, as MAS's Code on Collective Investment Schemes defines them.
50% of deposited property. Since 28 Nov 2024 it is a single limit, and a REIT must keep interest cover of at least 1.5 times.
Earnings before interest, tax, depreciation and amortisation over the last 12 months, divided by the interest expense and borrowing-related fees over the same 12 months, up to the latest reported results.
It is not a breach. MAS guidance is that the manager should have plans to improve it and disclose them.
Debt stays the same while the assets it is measured against shrink. At 40% gearing, a 20% fall in values takes gearing to 50%.
In the REIT's latest results or annual report, which state total assets, borrowings, gearing and interest cover, so the calculator can work from your own figures and names no REIT.
Not on its own. It means less room to borrow and more sensitivity to valuations and interest costs. Compare gearing with interest cover, debt maturity and the yield you are paid.
Junxiong-WFG Organisation is an authorised representative of AIA Financial Advisers Private Limited (Reg. No. 201715016G).