I talked about the potential dividend cut of 48% for S-REITs in the previous article.

And I said that there’s a risk that S-REITs may fail some of the criteria.

First, due to lower income and relief to the tenants, REITs may have to cut their dividends to survive the cash flow crunch. But that may lead to their inability to fulfil the 90% distributable income requirement to qualify for tax transparency.

Second, property valuation may come down and this would increase the gearing ratio even if the REITs do not increase their debt, thereby increasing the risk of breaching the 45% gearing ratio limit.

And I said that rules can be changed:

Rules are set by humans and can be altered if they do not make sense anymore, especially in extreme situations like Covid-19. So I believe the rules for REITs will be relaxed if needed,