CORPORATE GOVERNANCE
Fees Payable to the Manager
Pursuant to the revised CIS Code issued by MAS which come into effect on 1 January 2016, the Manager is to disclose the
methodology and justifications of fees which are payable out of the deposited property of a property fund.
The Manager is entitled to the following fees:
i.
Base Fee
The Base Fee covers the operational and administrative expenses incurred by the Manager in executing its responsibilities
to manage A-REIT’s portfolio. In accordance with clause 15.1.1 of the Trust Deed, the Base Fee is calculated at 0.5% per
annum of the Deposited Property or such higher percentage as may be approved by an Extraordinary Resolution of a
meeting of Unitholders, which is an appropriate metric in determining the resources for managing the assets, and shall
be paid to the Manager in the form of cash and/or units (as the Manager may elect).
With effect from 19 November 2007, the Manager has elected to receive 20.0% of the Base Fee in units and 80.0% in
cash for all properties. In accordance with clause 15.1.1 of the Trust Deed, the cash component of the Base Fee will be
paid monthly in arrears and the units component will be paid on a six-monthly basis in arrears.
ii.
Performance Fee
In accordance with clause 15.1.2 of the Trust Deed, the Manager is entitled to a Performance Fee of:
(i)
0.1% per annum of the Deposited Property, provided that the annual growth in distribution per unit in a given
financial year (calculated before accounting for the performance fee in that financial year) exceeds 2.5%; and
(ii)
an additional 0.1% per annum of the Deposited Property, provided that the growth in distribution per unit (“DPU”)
in a given financial year (calculated before accounting for the performance fee in that financial year) exceeds 5.0%.
The Performance Fee is pegged to the growth in A-REIT’s DPU. DPU growth takes into consideration the Manager’s overall
performance in managing and growing the portfolio and balancing the financing risks to maximise returns for Unitholders.
The interests of the Manager are aligned with the interests of Unitholders as the Performance Fee would commensurate
with the value that the Manager delivers to Unitholders in the form of DPU. It also ensures that the Manager is motivated
and incentivised to grow DPU on a long-term and sustainable basis through its three-pronged strategy of proactive
portfolio management, disciplined value-adding investments and prudent capital and risk management. By pegging the
Performance Fee to DPU growth, the Manager will not take on excessive short-term risks that will affect the stability and
sustainability of returns to Unitholders.
The Manager will also unilaterally waive part of its Performance Fee to ensure equitable distribution of the growth in
distributable income such that any increase in DPU (which is calculated before accounting for the Performance Fee) would
not result in Unitholders receiving less DPU than the threshold percentage as a result of the payment of the Performance
Fee.
With effect from 17 November 2004, the Manager in accordance with clause 15.1.2 of the Trust Deed, may elect to receive
Performance Fee in cash and/or units, in such proportion as may be determined by the Manager. The Performance Fee
is payable on an annual basis, within 60 days from the last day of every financial year in accordance with clause 15.1.2 of
the Trust Deed.
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A-REIT ANNUAL REPORT
2015/2016
