S-Reits may lose the capital support of strategic investors due to the limit on foreign individual ownership
THE news that Frasers Hospitality Trust’s (FHT) wholly owned Australian subsidiary, FHT Australia Trust, will be subject to a higher effective tax rate probably came as a rude shock to its unitholders.
The managers of the Singapore-listed real estate investment trust (S-Reit) in October disclosed that FHT Australia Trust no longer qualifies as a “managed investment trust” Down Under. As a result, it will face an effective tax rate of 37.5 per cent instead of the concessionary withholding tax rate of 15 per cent it previously enjoyed.
While the exact impact is expected to be announced only when FHT releases its financial results on Nov 7, the higher tax cost is estimated to reduce its distributable income by S$1.3 million for FY2024. For reference, that amounts to some 2.5 per cent of FHT’s distributable income in FY2023.
