Contributed by Stamford Law Corporation

As of the end of February 2007 there were 15 real estate investment trusts (REITs) listed on the Singapore Stock Exchange with an aggregate market capitalization of more than S$25 billion. The number of listed REITs looks set to grow in light of the recent listing of Parkway Life REIT and numerous pending proposals to securitize real estate in the Asia-Pacific region.

In response to the growth of this market segment, the Monetary Authority of Singapore recently concluded a consultation on proposed amendments to the property fund guidelines applicable to REITs. The proposed amendments are intended to:

* establish measures to safeguard the interests of unitholders, including enhancing disclosures on short-term yield increasing arrangements and disallowing arrangements to entrench REIT managers at the initial public offering stage;

* provide greater clarity and flexibility on investment guidelines, including the removal of the 5% limit on investments in real estate-related securities issued by a single party;

* rationalize guidelines where compliance costs outweigh benefits, including guidelines on the duties of trustees to review proposed contracts and the need to appoint an independent financial adviser in relation to interested person transactions; and

* introduce a licensing framework for REIT managers under the Securities and Futures Act.

In line with the property trusts regimes in the United Kingdom and Australia, the Securities Industry Council has decided to extend the ambit of the Code on Takeovers and Mergers to include property trusts structured as collective investment schemes. The Monetary Authority of Singapore is expected to amend the act and the code on the advice of the council. The council has suggested that parties engaged in takeover or merger transactions involving REITs should comply with the code before the amendments are officially introduced. Parties should make a general offer for the REIT if they intend to (i) acquire 30% or more of the total units of a REIT, or (ii) if already holding between 30% and 50% of the total units of a REIT, acquire more than a further 1% of the total units in a six-month period. If in doubt, parties should consult the council.

A copy of the consultation paper is available at www.mas.gov.sg.

For further information on this topic please contact Tian-Haw Lin at Stamford Law Corporation by telephone (+65 6389 3000) or by fax (+65 6389 3099) or by email (tianhaw.lin@stamfordlaw.com.sg).