Michael Noonan (Limerick City, Fine Gael) | Oireachtas source

I move amendment No. 51:

In page 86, between lines 24 and 25, to insert the following:
" 'specified debt' means any debt incurred by a REIT or group REIT in respect of monies borrowed by, or advanced to, the REIT or group REIT, as the case may be;".

These three amendments are interlinked. They have been proposed in order to provide additional protection for investors in Irish REITs. It has also been confirmed with interested parties that these provisions will not impair the function of the REITs or give rise to additional costs. The REIT model already includes a profit financing test to limit the amount of interest on borrowings a REIT can have by reference to its rental profits.

Concerns were raised by REITs professionals that this limit may still allow scope for significant borrowings within a REIT and it was proposed that a debt equity provision be introduced to protect investors. Accordingly, I am putting forward for consideration the following amendments: Amendment No. 51 provides for the insertion of a definition of specified debt in order to allow for the introduction of a debt equity limitation which will apply to Irish REITs. Amendment No. 53 then introduces a provision limiting the amount of specified debt within a REIT to 50% of the market value of the assets of the REIT. Amendment No. 53 also introduces a second new investor protection feature to REIT legislation, a good asset test. This feature is being added following a review of other REIT regimes worldwide and also following suggestions made by Deputies on Second Stage. The good asset test will require that a minimum of 75% of the assets of a REIT must be assets of the property rental business of the REIT. Amendment No. 54 is a technical amendment relating to a consequential re-numbering of a sub-paragraph due to the addition of the text proposed in amendment No. 53.