Plan to further liberalise REIT market welcomed


Plan to further liberalise REIT market welcomed

PETALING JAYA, 3 August: The Malaysian REIT Managers Association (MRMA) is fully supportive of the SC’s proposals to further liberalise the Malaysian real estate investment trusts (M-REITs) market, pending clarification with SC on certain proposals as well as collating final feedback from its members.

MRMA chairman Datuk Jeffrey Ng, who is also Sunway Reit Management Sdn Bhd CEO, said the 16 proposals by the SC will expand the scope of permissible activities, significantly enhance corporate governance on M-REITs’ disclosure and streamline the efficiency in post-listing requirements.

“The proposals reflect the maturity stage of the M-REITs and places M-REITs competitively by narrowing regulatory gaps between M-REITs and other established regional REIT markets,” he added.

Calling the SC’s proposal to allow M-REITs to acquire vacant land and to undertake property development – subject to a cap of 15% of the enlarged total asset value of the REIT – a key proposal, Ng said the perceived risks associated to undertaking development activities should not be a major concern.

“Under the existing REIT guidelines, REIT managers are exposed to construction risk when they embark on refurbishment exercises or acquire property under construction. This is further mitigated by prescriptive requirements in managing construction risk.”

On July 14, the SC issued a consultation paper seeking public feedback on proposed enhancements to the REIT guidelines.

According to MRMA, the M-REIT market has registered healthy growth over the past 10 years, with the total market capitalisation growing from RM356 million in 2005 to RM40 billion as at June 30, 2016. The M-REIT industry is represented by 17 REITs, including three Islamic REIT and one Islamic stapled REIT.


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