and Accordia Golf Trust which focuses on golf courses. IREIT Global, the first S-REIT with a
European-centric investment portfolio was also listed. However, Singapore faces competition from
other regional markets as they are establishing their own REIT and business trust frameworks and will
compete increasingly for listings.
In the United States, there are uncertainties over when and the pace at which the Federal Reserve
will raise the federal funds rate. An increase in the federal funds target rate may influence the
Singapore Government 10-year bond yield and Singapore Interbank Offered Rate (SIBOR) to
increase, and S-REITs may face a corresponding increase in borrowing costs when financing new
acquisitions and refinancing existing debts. To compensate for the higher borrowing costs and
achieve better yields, S-REITs will now have to look at how best to achieve organic growth. In
addition, S-REITs need to re-examine and be more pro-active in their capital management. This would
include scrutinising the hedging policies and debt strategies.
In the 2015 Budget delivered on 23 February 2015, the Singapore Government announced the
following extension or enhancement to the tax concessions for listed REITs:
• that the reduced withholding tax of 10.0% on distributions of taxable income to qualifying
non-tax resident non-individual unitholders will continue to apply to distributions made from
1 April 2015 to 31 March 2020 (both dates inclusive);
• that the tax exemption on qualifying foreign-sourced income derived from overseas properties
will apply so long as the overseas properties are acquired by a REIT or its wholly-owned
Singapore tax resident subsidiaries on or before 31 March 2020;
• that the Goods and Services Tax (GST) concession that allows S-REITs to claim GST incurred on
the setting up of their various tiers of special purpose vehicles (SPVs) that hold overseas
properties, GST incurred by their SPVs on the acquisition and holding of overseas properties,
and GST incurred on qualifying business expenses will continue to apply in respect of GST on
qualifying expenses incurred up to 31 March 2020. In addition, the GST concession will be
enhanced to allow S-REITs to claim GST on business expenses incurred by S-REITs from 1 April
2015 to 31 March 2020 to set up SPVs that are used solely to raise funds for the S-REITs.
The stamp duty remission on the transfer of a Singapore immovable property to a REIT or the transfer
of 100.0% of the issued share capital of a Singapore-incorporated company that holds immovable
properties situated outside Singapore to a REIT will be allowed to lapse after 31 March 2015. Stamp
duty at approximately 3.0% on the consideration or the market value, whichever is the higher, will
have to be paid by a REIT on any contract, agreement or instrument executed on or after 1 April 2015
for the acquisition of immovable property in Singapore.
LOOKING FORWARD
The framework for S-REITs has been continually refined since the public listing of the first S-REIT in
2002. We believe that we will continue to see efforts in strengthening and refining the existing S-REIT
regime as Singapore seeks to stay ahead of the competition.
Leading with Confidence | 101
