Perpetual Securities REIT Singapore: Complete Investor Guide 2026
For informational purposes only. Not financial advice.
Perpetual securities in Singapore REITs are hybrid instruments with no fixed maturity date that S-REITs issue to raise capital without increasing reported gearing under MAS rules. They sit between equity and debt and carry a distribution deferral risk. This guide explains what Singapore REIT investors need to know about perpetual securities.
What Are Perpetual Securities in S-REITs?
Perpetual securities (also called “perps”) are debt-like instruments with no fixed maturity date. S-REITs issue perps to raise capital that is classified as equity under accounting standards, which means it does not appear as debt when calculating the aggregate leverage ratio under MAS rules. This allows REITs to effectively raise more capital without breaching the 50% gearing limit.
However, perps carry a distribution that must be paid before distributions to ordinary unitholders in some structures. If a REIT defers perp distributions (which most perp terms allow after a certain period), this is considered a deferral event — not a default — but signals financial stress.
How Perpetual Securities Affect Gearing and DPU
Because perps are classified as equity, they do not increase the reported aggregate leverage ratio. This makes them attractive to REIT managers who want to raise capital for acquisitions without increasing stated gearing. However, the perp distributions reduce the income available for ordinary unitholders, effectively reducing DPU.
Analysts typically add back perp securities to debt when calculating “adjusted gearing” to get a true picture of REIT leverage. Investors should look at both reported gearing and adjusted gearing when evaluating S-REIT financial health.
Risks of Perpetual Securities for REIT Investors
Key risks include: (1) Distribution deferral — issuers can defer perp distributions under certain conditions, creating uncertainty; (2) Step-up clauses — perp coupon rates typically step up significantly if the REIT does not call the instrument at the first call date, creating refinancing pressure; (3) Subordination — perp holders rank below senior debt holders in a liquidation; (4) DPU dilution — perp distributions come from distributable income, reducing what is available for unitholders.
Which Singapore REITs Have Issued Perpetual Securities?
Several major S-REITs have issued perps as at 2026, including Mapletree Logistics Trust, Suntec REIT, and Frasers Logistics & Commercial Trust. Investors should check the REIT’s balance sheet notes and latest financial statements on SGX for current perp balances and upcoming call dates.
Related: DPU, Gearing Ratio, NAV. Tools: REIT calculators. Glossary: full list.
Frequently Asked Questions
What are perpetual securities in Singapore REITs?
Perpetual securities are hybrid instruments with no maturity date issued by S-REITs to raise capital without increasing reported gearing. They are classified as equity under accounting rules, so they do not count toward the MAS 50% aggregate leverage limit. However, they carry distribution payments that reduce income available to ordinary unitholders.
Do perpetual securities affect REIT gearing in Singapore?
Perpetual securities are classified as equity, so they do not appear in the reported aggregate leverage ratio. However, REIT analysts often calculate “adjusted gearing” by including perps as debt to get a more accurate picture of true leverage. Always check both reported and adjusted gearing when evaluating S-REITs with perp issuances.
Can Singapore REITs defer perpetual security distributions?
Yes, most perpetual security terms allow the issuer to defer distributions under certain conditions. This is not a default but is a warning signal of financial stress. Investors should monitor the REIT’s perp call dates and financial health to assess deferral risk.
How do perpetual securities affect REIT DPU?
Perp distributions are paid from distributable income before ordinary unitholders receive their distribution. This reduces DPU. REITs with large perp balances relative to their distributable income may have structurally lower DPU than peers with similar net property income but no perps outstanding.
What is a step-up clause in perpetual securities?
A step-up clause means the coupon rate on a perpetual security increases significantly (often by 2–5%) if the issuer does not call (redeem) the instrument at its first call date. This creates strong economic incentive for the REIT to refinance at the call date, effectively making most perps behave like medium-term instruments in practice.
Related Concepts
Explore DPU, Gearing Ratio, NAV in REITs. Full glossary here.