Investors appear increasingly comfortable with higher levels of gearing. In April 2020, the Monetary Authority of Singapore (MAS) lifted aggregate leverage levels for locally listed REITs from 45% to 50%. Since then, several REITs have lifted their gearing levels.

The troubled Riady REITs, Lippo Mall Indonesia Retail Trust (LMIRT) and First REIT both raised equity through dilutive rights issues. LMIRT completed its rights issue in January and First REIT in February. Excluding its perpetual securities, LMIRT’s gearing is 41.7%, and its interest coverage ratio is just 1.3% as at March 31, following its rights issue to part-finance the acquisition of Puri Mall in Indonesia.

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