You will produce a one-page structure map for one S-REIT, including fees and related parties.
Darren's notes on his REIT were spread across a prospectus, three annual reports and two circulars. The facts he needed were all in them, but whenever a new announcement came out he had to hunt through every document again to remember who the trustee was or how the performance fee worked. He wanted one page that answered the basic questions without opening a PDF.
That page is what this exercise produces. It takes about twenty-five minutes for one S-REIT, and you will reuse it every time the REIT announces a deal.
First, gather two sources. The first is the REIT's latest annual report, from its investor relations website or SGXNet. The second is a summary of the trust deed. Most annual reports include one, often in a section on corporate governance or in the notes to the financial statements. The prospectus, if the REIT listed in recent years, has a fuller summary.
If you already drew the structure in lesson 4.1, Sponsor, manager and trustee: who does what, start from that drawing.
At the top of your page, write the name of the REIT and the date of the annual report you are using. Then name four parties: the sponsor, the manager, the trustee and the property manager. Use the full legal names from the corporate information page, because companies in the same group often have very similar names.
Next to the sponsor, write its unitholding as a percentage of units in issue, from the section listing substantial unitholders. If the sponsor holds through several companies, add them up. Note also whether the manager is owned by the sponsor and, if so, what share.
From the annual report's fee section, list every fee paid to the manager and the property manager. For each one, write its basis as stated in the report, last year's amount, and how it was paid, cash or units. Use the reading from lesson 4.3, How the manager is paid, and why it matters to you, and mark each fee that grows with the REIT's size whether or not DPU rises.
Then note any right of first refusal the sponsor has granted, with the types of property it covers and when it expires, if stated.
Look for the section on interested person transactions, usually near the end of the annual report, or a note on related-party transactions in the financial statements. For the last two years, list the largest deals with the sponsor, the manager or their related companies: acquisitions, divestments, leases to sponsor companies, and large service contracts. For each, note the value and whether it went to a unitholder vote. If you need the second year, use the previous annual report.
Lesson 4.4, How MAS regulates S-REITs, explained which deals need disclosure and which need a vote.
Here is how a finished map might read for a made-up REIT that owns four suburban malls. Every figure is an example.
The sponsor is a property group that holds 28% of units in issue through two subsidiaries and owns 100% of the manager. The trustee is the trust arm of a bank, unconnected to the sponsor. The property manager is a subsidiary of the sponsor.
Fees: a base fee on deposited property, last year S$11.5 million, half paid in units; a performance fee on net property income, S$6.2 million, paid in cash; an acquisition fee on the price of each purchase, S$4.0 million last year on one acquisition; and property management fees of S$5.1 million. The base fee, the performance fee and the acquisition fee all grow with size. None is tied to DPU.
Right of first refusal: granted by the sponsor over completed retail properties in Singapore, for as long as the sponsor owns the manager.
Related-party deals: one mall bought from the sponsor eighteen months ago for S$400 million, approved by unitholders other than the sponsor; leases to two sponsor-owned tenants totalling a small share of rent.
A reader who sees that page knows straight away that the sponsor is on both sides of growth, that fees reward size, and that the last large purchase came from the sponsor. Those are the facts to keep in mind when the next acquisition is announced.
Your page has the four parties named, the sponsor's stake, every fee with its basis, amount and settlement, any right of first refusal, and the largest related-party deals of the last two years. Each figure has its page number in the annual report. It fits on one page, and someone else could check every line.
Pick your REIT and work through the parties, fees and deals in that order, and keep the map where you will find it again, because module 7 asks you to read an equity raising against exactly these facts.
Submit a one-page structure map for one S-REIT with parties, fees, sponsor stake and related-party deals.
Junxiong-WFG Organisation is an authorised representative of AIA Financial Advisers Private Limited (Reg. No. 201715016G).