MAK YUEN TEEN CHEW YI HONGgovernanceforstakeholders.com/wp-content/uploads/2018/07/GIFT... · 1 The Governance Index for Trusts – GIFT - is produced by Associate Professor Mak Yuen

MAK YUEN TEEN CHEW YI HONG

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FirstpublishedinJuly2018

Copyright@2018MakYuenTeen&ChewYiHong

All rights reserved. No part of this publica?on may bereproduced,stored inaretrievalsystem,ortransmiCed, inany form or by any means, electronic, mechanical,photocopying, recording or otherwise, without the priorwriCenpermissionofthepublisher,except for ‘fairuse’asbriefquota?onsinareviewaspermiCedbycopyrightlaws.

This book is published on the understanding that neitherthe authors nor the publisher are rendering professionaladvice. If professional advice or other expert assistance isrequired, the services of a competent professional personshouldbesought.

GOVERNANCEINDEXFORTRUSTSVolume2

AUTHORSMAKYUENTEEN&CHEWYIHONG

Theauthorswouldliketothankthetrustsfortheirpar?cipa?onintheself-assessment,making this rankingacommunityeffort; thepartnersfortheirsupportinthedevelopmentofGIFTin2017;andLimYueFengfor his assistance in collec?ng informa?on from no?ces,announcements and annual reports and in carrying out the analysis.However,theauthorsareresponsibleforthecontentinthisreportandanyerrors.

Acknowledgements

Thefindingsofthe2018edi?onoftheGovernanceIndexforTrusts(GIFT)tellofbiggainsmadeamongthe top-ranking trustssuchthatwhatwasconsideredasa topscore in2017 isnowamiddle-of-the-pack showing. As was the case in 2017, the best-ranked trusts were amix ofsmallertomid-sizeonesaswellasthebiggerones.

These results and the accompanying report are ?mely reminders to the REITs and BusinessTrustssectorofthreekeymaCers.First,istheimportanceoftransparencyandcommunica?on.Investors are becoming increasingly savvy and ac?ve. They are asking ques?ons on crucialmaCers and as part-owners of the trusts, they deserve answers that are clear, accurate and?mely.Thisistheminimumthatinvestors,themarketplaceandregulatorsexpect.

Second,asakeysectorwithintheSingaporemarket,theREITsandBusinessTrustssectormustkeepimproving.Lastyear,SGXsaiditwouldworkwiththeSingaporeIns?tuteofSurveyorsandValuerstoenhancevalua?onconductandrepor?ng.Ourtwoorganisa?onsjointlyestablishedaworkingcommiCeecomprisingindustrypar?cipantstoreviewthesemaCers.TheIns?tutehassincelauncheditsPrac?ceGuideonValua?onsforREITsandIPOs.Aimedatmee?nginvestors’need for clarity and completeness of informa?on, theGuide setsminimum requirements forvalua?onrepor?ngandfor inclusionofkey informa?oninvalua?onsummaries.SGXwillnowlook into how the Guide and other related maCers should be incorporated into the Lis?ngRules.WealsostronglyencouragetheREITsandBusinessTrustssectortostudytheGuideandweighcarefullyitsrecommenda?ons.

InApril,we introduced theSGXFastTrackprogramme for issuerswithgoodgovernanceandcompliancetrackrecord.Atotalof60issuersareontheprogramme.Ofthese,11arefromtheREITsandBusinessTrustssector.Thistranslatestoroughly25%ofthesectorandtes?fiestothequalityofthesectorasawhole.Nevertheless,ifthissectoristocon?nuetogrow,improvingongovernance standing will be crucial. Many other markets are already launching the REITsstructure;ifSingapore’sposi?onasaninterna?onalhubforREITsandBusinessTrustsistobesustained,issuers’governanceperformancemustcon?nuetoadvance.

Finally, the realestatesector, includingREITsandBusinessTrusts, isapillarof theSingaporeandregionaleconomies.Thesectoralsohasalargefootprintintermsoftheenvironmentandits impact on society. Given rising concerns on maCers such as climate change, wastemanagement, and health and safety standards – all of which are relevant to the REITs andBusiness Trusts sector – sustainability repor?ng presents yet another opportunity forSingapore-listedtruststoposi?onthemselvesapartfrompeerselsewhere.

IwillbelookingtothenextGIFTresultsfromProfessorMakandhispartnersforcluesontheprogressmadebythesector.Iamhopefulthatonceagain,thesectorwillexcelandstandoutfromnotjustamongotherlistedissuersinSingaporebutalsoamongtheirpeersglobally.

ByTanBoonGinCEOofSingaporeExchangeRegulaRon

Foreword

1TheGovernanceIndexforTrusts–GIFT-isproducedbyAssociateProfessorMakYuenTeenandChewYiHong, in collabora?on with governanceforstakeholders.com. The following individuals contributed to thedevelopmentofGIFT:AletheaTengShuyi,AuMeiLinEunice,WuWenjingandYapHuiLin.NopartoftheGIFTmethodologymaybereproducedwithoutthepriorwriCenpermissionofAssociateProfessorMakYuenTeen.

GOVERNANCEINDEXFORTRUSTS(GIFT)1

July2018

1.INTRODUCTION

PAGE2|GIFT2018

InJune2017,welaunchedtheGovernanceIndexforTrusts(GIFT),thefirst-everpublishedgovernanceindexinSingaporethatspecificallycaterstolistedrealestateinvestmenttrusts(REITs)andbusinesstrusts(BTs)inSingapore.ThisrecognisestheincreasingimportanceofREITsandBTsintheSingaporecapitalmarketandthedifferencesintheirgovernancestructuresandprac?ces,andapplicablerulesandregula?ons,comparedtolistedcompanies.GIFTassessesbothgovernanceandbusinessriskfactors,with80percentofthebasescoreallocatedtogovernancefactorsand20percentallocatedtobusinessriskfactors.Inaddi?on,meritanddemeritpointsareawardedforbothareas.

Fortheinauguralrankinglastyear,wecovered43REITsandBTswithaprimarylis?ngtradingonSingaporeExchange(SGX).Lastyear,thetrusts2thatwererankedinthetop5wereKeppelDCREIT,ParkwayLifeREIT,SoilbuildBusinessSpaceREIT,AIMSAMPCapitalIndustrialREITandStarhillGlobalREIT.

AnumberofthoserankedlowonGIFTlastyearhavebeenfacing

challenges.However,wedonotassertthatGIFTwillnecessarilypredictthefinancialperformanceofatrustespeciallyovertheshortterm,orthatahighly-rankedtrustwillcon?nuetobewellgoverned.

Asat30June2018,thereare48REITsandBTswithaprimarylis?ngtradingontheSingaporeExchange(SGX),accoun?ngforatotalmarketcapitalisa?onof$95billion.Ofthese,6arecons?tutedasstapledsecuri?es(SS),9aspurebusinesstrustsand33asREITs.

Forthissecondissue,weassessed44REITsandBTsusingpubliclyavailableinforma?onfromannualreports,websites,presenta?onsandotherSGXNETannouncementsofthetrusts,andnewsmediareports.Weexcluded4newly-listedtrusts(3REITsandaBT)thathavenotyetpublishedanannualreportatthecut-offdate.

Forthisyear’sassessment,wemadesomeminorchangestotheindexandourapproach.Otherthanwordingchangestomakethecriteriaclearer,someadjustmentsweremadetofine-tunethescoringcriteriaandasmallnumberofnew

GOVERNANCEINDEXFORTRUSTS2018|PAGE3

demeritcriteriawereaddedtorecogniseriskssuchasdilu?onfromnon-renounceableissues.Vola?lityofreturnsofthetrustasabusinessriskfactorwasdroppedaswerecognisethatthisisnotwhollyunderthecontrolofthetrust.Initsplace,wehaveaddedacriterionrela?ngtoforeignassetsandforeigncurrencyrisks.

Tofurtherimprovetheunderstandingoftherisksofthetrusts,wehaveprovidedabreakdownofthegovernanceandbusinessriskscores.Thisrecognisesthatwhileriskisimportanttoinvestors,thelevelofrisktotakeisul?matelyabusinessdecisionbythetrust.Investorsmaywishtoconsiderwhethertruststhathavehigherriskshavethecommensuratelevelofgovernancetosafeguardtheirinterestsandalsotheappropriatereward/riskra?o.Itmaythereforebewisetopaypar?cularaCen?ontotruststhathavehigherriskandpoorergovernance.

Forthisyear’sassessment,wealsocontactedallthetruststhathavepublishedemailaddressesfortheirinvestorrela?onsfunc?on,invi?ngthemtocompleteaself-assessmentusingtherevisedscorecard.This

wasdoneprimarilytoincreasetheengagementwiththetrustsandprovideanopportunityforthemtousethescorecardtoreflectontheirgovernance.Wereviewedtheself-assessmentaspartofourindependentassessment.AstheassessmentforGIFTisbasedonpubliclyavailableinforma?onthatisavailabletoinvestorsandotherstakeholders,wewouldliketoemphasisethatourindependentassessmentmaynotnecessarilybethesameastheself-assessmentprovidedbythetrust.

Wearedelightedwiththeresponsivenessofmanyofthetruststotheinvita?ontoundertaketheself-assessment.Ofthe43trustswewereabletocontactbyemail,29submiCedaself-assessment.Wewouldliketothankthemforengagingwithusonthisini?a?ve.

Finally,thisyear,wereleasedGIFTslightlylaterinordertoincludethelatestannualreportsfortrustswithaMarchyearend.Forthesetrusts,weusedtheannualreportsreleasedaslateasJuly2018.Thisallowsustousethemostupdatedinforma?onpossibleforthefinancialyearunderreviewtoassessthetrusts.

2Forbrevity,whenweusetheterm“trusts”,wearereferringtobothREITsandBTscollec?vely.Whenweusetheterm“managers”,itincludestrustee-managersinthecaseofBTs.Wealsousetheterm“trust”and“manager”interchangeablyeventhoughgovernanceofREITsandBTsisreallyaboutthegovernanceofthemanager,notthetrust,sinceREITsandBTsarealmostalwaysexternallymanagedinSingapore.

PAGE4|GIFT2018

First Ship Lease Trust (FSL) had a drama-filled year as its syndicated loan facility went into default, causing the trust to seek court protection via a scheme of

arrangement under section 210 of the Companies Act. Its trustee-manager was then sold, a new sponsor was appointed and the chairmanship of the trust was handed over to the new controlling unitholder while the trust sells some of its

assets to pare down debt. Meanwhile, the trust delayed its AGM and when it did publish its audited results, the auditors highlighted the existence of material

uncertainty related to going concern of the trust. Eventually, the trust secured commitments to refinance its overdue syndicated loans as a fund emerged as a

new substantial shareholder, building up a stake of over 6% in FSL.

Hutchison Port Holdings Trust and Accordia Golf Trust both suffered from falling DPU, with their respective unit price falling by two-fifths and by approximately

15%. RHT Health Trust received an emphasis of matter from its auditors relating to its ability to refinance its bonds, which led to a material uncertainty related to

going concern. Lippo Malls Indonesia Retail Trust (LMIRT) has fallen by a third in price too as the quality of its malls was called into question, coupled with

concerns about the deteriorating credit quality of its sponsor.

GOVERNANCEINDEXFORTRUSTS|PAGE5

2.METHODLOGY

Theindexincludesamainsec?oncarryinganoverallscoreof100points.Eighty(80)pointsareallocatedtothefollowingareasofgovernance:boardmaCers(20points),remunera?onofdirectorsandkeymanagement(10points),alignmentofincen?vesandinterests(10points),internalandexternalaudit(10points),communica?onwithunitholders(15points)andothergovernancemaCers(15points).

Twenty(20)pointsareallocatedtobusinessrisk,assessedusingleverage-relatedfactorsofoverallleverage,debtmaturity,percentageoffixedinterestrateborrowing;andotherfactorsrela?ngtodevelopmentlimit,leaseexpiry;incomesupportarrangements;andforeignassetsandforeigncurrencyrisks.

Therearesomedifferencesintermsofcriteriaandweigh?ngforREITsandBTstotakeintoaccountdifferencesinregulatoryrequirementsandbusinessmodels.

Inaddi?ontothemainsec?on,thereisasec?oncomprisingmeritanddemeritpoints.Meritpointsaregivenforcertainprac?cesthatwebelievetrustsshouldaspiretoadoptinordertofurtherimprovetheirgovernanceortoreducetheirrisks.Examplesincludeputngtrustdeedsandloanagreementsontheirwebsitesandavoidinghybridsecuri?esthatareclassifiedasequitybuthavedebt-likefeatures.Meritpointsrangedfromonetothreepointsperitemandthemaximumnumberofmeritpointsis25.

Demeritpointsaregivenforcasessuchasindependentdirectorsservingonboardsofarelatedmanagerorhavinganexcessivenumberofdirectorshipsinlistedcompaniesandmanagers.Demeritpointsgenerallyrangefromminusonetominusthree,althoughcertainseriousgovernanceissuescanincurasmanyas10demeritpointsperitem.

Thefullindexisavailableatwww.governanceforstakeholders.com.

3.COVERAGE

PAGE6|GIFT2018

Inthissecondissueoftheindex,weassessed44trusts,includingsixthatarestapled.Ofthesixstapledsecuri?es,threeofthemhavedormantbusinesstrusts.Thestapledsecuri?eswerescoredmostlyasREITsbutwhererelevant,thestricterstandardsforBTgovernancewasappliedtothestapledsecuri?es.

Forinforma?onfromannualreports,weuseannualreportspublishedbetweenSeptember2017andJuly2018.

AscendasREIT,CapitaLandCommercialTrustandCapitaLandMallTrustarethethreelargestREITswithmarketcapitalisa?onofmorethan$5billion.Another25trustsareinthebillion-dollarclub.Ofthe16remainingtrusts,15havemarketcapitalisa?onofmorethan$300millionto$1billion,withjustoneexcep?onbelowthe$100millionmarketcapitalisa?onlevel.

Ofthe36REITs(whichincludesthe6stapledsecuri?es)intheindex,25havethemajorityoftheirassetsin

Singapore.FourothershavethebulkoftheirassetsinChinaand/orHongKongandafurthertwoareAustralia-centric.TheremainingfivearefocusedonIndonesia,Europe,USAandawell-diversifiedporuolio.

JustoneoutofeightBTsisSingapore-centric.TheremainingsevenisadiversegroupwithgeographicfocusinChina,India,JapanandTaiwanforassetssuchasshippingvessels,hospitals,ports,retailandindustrialrealestate,golfcoursesandPayTV.


4.KEYFINDINGS

Forthemainindex,theoverallrangeofscoresforthe44trustsisfrom51to81outofamaximumof100points,withameanof68andmedianof68.Thereisanincreaseinthemeanby3pointsandmedianby2pointscomparedtolastyear.Overall,thereissomeimprovementinaveragescoresacrossallareas,exceptforinternalandexternalauditandbusinessrisk.However,wenotethatthescoresarenotstrictlycomparabletolastyear’ssincetheindexhasbeenrefinedslightly.

Theimprovementin“BoardmaCers”ispartlyduetotheenhancedindependentrequirementsintroducedbyMASthatputahardlimitofnineyearsforindependentdirectors.Intheareaof

“Communica?onwithunitholders”,wehavealsoseentrustsstar?ngtoputupminutesofmee?ngsontheirwebsites.Thishasledtoanimprovementinthescoresaswell.

Whenmeritanddemeritpointsareincluded,theoverallrangeofscoresisfrom40to79,withameanof65.5andmedianof68.Thetotalscore,includingmeritanddemeritpoints,isamorecompletemeasureofthegovernanceofatrust.Comparedtolastyear,themeantotalscoreimprovedby3.5pointsandmediantotalscoreimprovedby6points.

Table1showsthedistribu?onofscoresforeachofthesevenareasofthemainindex.

GovernanceRisks BusinessRisks

Boardmatters

Remunerationofdirectorsandkeymanagement

Alignmentofincentivesandinterests

Internalandexternalaudit

Communicationwithunitholders

Othergovernancematters

Allocationofpoints

20points

10points 10points 10points

15points 15points 20points

Averagescore

10.8 4.2 7.2 9.3 11.1 12.6 12.8

Highestscore

16 8 10 10 14 15 19

Lowestscore

4 0 4 6 6.5 7.5 3

Table1:DistribuRonofscoresforeachofthesevenareasofthemainindex

PAGE8|GIFT2018

FortheoverallGIFTscore,thetop5trustsfor2018areCapitaLandCommercialTrustandKeppelDCREIT(jointfirst),followedbyMapletreeCommercialTrustandMapletreeGreaterChinaCommercialTrust3(jointthird),andFrasersLogis?cs&IndustrialTrust,whiletheboCom5areSabanaREIT,HutchisonPortHoldingsTrust,LippoMallsIndonesiaRetailTrust,RHTHealthTrustandFirstShipLeaseTrust.

Whenwedisaggregatethegovernanceandbusinessrisksec?onsofGIFT,thefollowingtrusts,listedinalphabe?calorder,wereassessedashavingbothgoodgovernanceandlowbusinessrisk,beingrankedinthetop10onbothfactors.Attheotherend,thefollowingtrustswereassessedashavingrela?velypoorergovernanceandhigherbusinessrisk,beinginrankedintheboCom10onbothfactors.

4.KEYFINDINGS

GoodgovernanceandlowbusinessriskCapitaLandCommercialTrustFrasersLogis?cs&IndustrialTrustKeppelDCREITMapletreeCommercialTrustMapletreeGreaterChinaCommercialTrust

PoorergovernanceandhigherbusinessriskAccordiaGolfTrustFirstShipLeaseTrustHutchisonPortHoldingsTrustOUECommercialREITSabanaREIT

3MapletreeGreaterChinaCommercialTrust(MGCCT)wasrenamedMapletreeNorthAsiaCommercialTrust(MNACT)inMay2018followingtheacquisi?onofaporuolioofsixproper?eslocatedinJapan.Forthefinancialyearunderreview,thetrustexistedasMGCCTandreferenceswillbemadetoMGCCT(insteadofMNACT)inthisreport.


Therearesomemajorchangesinscoresandrankingsforcertaintrustscomparedtolastyear,duetobeCerdisclosureandgovernanceprac?cesbythesetrusts.Sometrustshavebeenovertakenintherankingseventhoughtheyhavelargelymaintainedtheirscorescomparedtolastyear.Thiswastheresultofgreatereffortonthepartofsomeothertruststoimprovetheirdisclosureandgovernanceprac?ces.OthertrustshavesimplybecomebeCer.

CertainrelatedREITsmovedupintandem,sugges?ngthatacollec?veeffortwasputintoimprovedisclosure.ChangesinscorescanalsobepartlyaCributedtochangesinpersonnelandchangesintheeconomicsoftheassets(e.g.leverage,debtmaturityandleaseexpiryetc),andpartlyduetotheadjustmentofthescoringguideline.

4.1.Boardma\ers

4.1.1.Appointmentofdirectors

CroesusRetailTrustwastheonlyinternallymanagedtrustinlastyear’sranking,andwithitsdelis?ng,therearenootherinternallymanagedtrustsinthisyear’sranking.Four

externallymanagedtrusts–KeppelREIT,KeppelDCREIT,SuntecREITandParkwayLifeREIT–havegiventherightforunitholderstoendorsedirectorsofthemanager.Thisgivesunitholderssomesayintheappointmentofthesedirectors.Wherethemanagercommitstoprocuretheresigna?onofdirectorswhoarenotendorsedbyunitholders,theunitholders’votebecomeseffec?velybinding.Allthetruststhatgivetherighttoendorsetheappointmentofdirectorsalsostatedthattheywillprocuretheresigna?onofunendorseddirectors.

However,wenotethatoneofthetruststhatallowedunitholderstoendorsetheirdirectorslastyeardidnotputupanydirectorsforre-elec?on.Wehavetakentheposi?onthatunlessitiscleartousthatdirectorsgoforre-endorsementatleastonceevery3years,thetrustwouldonlyearnpar?alpoints.

Currently,notrustgivesunitholderstherighttonominatedirectors,ratherthanjustendorsedirectorsselectedbythemanager.Therefore,notrustreceivedmeritpointsforthiscriterion.

PAGE10|GIFT2018

4.1.2.Boardsize

Theaverage(mean)boardsizeis7directors,witharangefrom4to12directors.Three-quartersofthetrustsinthestudyhaveaboardsizeofsixtoninedirectors,therangeusedinGIFTtodetermineappropriateboardsize.Managersandtrustee-managersgenerallyhavefewercommiCeesthanlistedcompaniesandusuallyhaveonlyasingleexecu?vedirector(ED),theCEO,ontheboard.Theycanoperateefficientlywithrela?velysmallerboardsthantheirlistedcompanycounterpartswithoutcompromisingboardeffec?veness,iftheyhavegoodprocessesforselec?ngtherightnon-execu?vedirectors(NEDs).

4.1.3.Boardchairman

Allofthemanagershaveanon-execu?vechairman.Manyalsostatethattheirchairmanisanindependentdirector(ID).Wehavere-designatedachairmanfromindependenttonon-independentwherehe/shehassignificant

rela?onshipswiththemanager/trustee-managerorthesponsor(evenwherethenomina?onscommiCeehasdeemedthedirectortobeindependent).

Rela?onshipsthatweconsidertobeseriousenoughtocauseare-designa?onincludesignificantconsul?ngservices(suchaslegalservices)providedbythedirectororhis/herfirm,orconcurrentserviceontheboardsofasponsor,controllingunitholderorrelateden??es.WedothesameforallIDsontheboardotherthanthechairman.

Therewasanimprovementinthescoresasallthedirectorswhosetenurehaveexceeded9yearssteppeddownfromtheboards.Lastyear,theywerere-designatedasnon-independentIDs.

Awerthere-designa?on,21trustshaveanindependentboardchairman.

4.KEYFINDINGS


4.1.4.Independentdirectorsandcompetencies

ForthepercentageofIDsontheboard,wetookintoaccountthedifferentregulatoryrequirementsapplicabletoREITsandBTsinsetngtherangesfordifferentnumberofpointsawarded.ForREITs,therangesare:(a)below50%,(b)atleast50%tobelow75%,and(c)atleast75%.ForBTs,theyare:(a)atleast50%tobelow75%and(b)atleast75%.Asmen?onedearlier,somedirectorswerere-designatedfromindependenttonon-independentdirectors.Figure1showsthepercentageofREITsandBTs(includingstapledsecuri?es)respec?velywithineachoftheseranges.

Intermsofcompetencies,IDscommonlyhavegeneralbusiness,banking,accoun?ngandlegal

experience.Fortrusts,havingIDswhohaveinvestment/fundmanagementexperienceandpriorworkingexperienceintheindustryisuseful.Basedonourassessment,20trustshaveIDshavingeitherofthesetypeofexperience,while20haveIDswithbothtypesofexperience.Thereisanimprovementfromlastyear’sassessmentduetobeCerdisclosureandmoredirectorswithsuchcompetencies.

Figure 1: Percentage of Independent directors on the boards of REITs and BTs.

75%andabove

Lessthanone-third

Atleast50%tobelow75%

Atleastone-thirdtobelow50%

7% 7%

83%

3%

ForREITs

75%andabove

Atleast50%tobelow75%

7%

ForSSandBTs

93%

PAGE12|GIFT2018

When comparing the self-assessment of the trusts, we find that the trusts (usually the REIT manager or the trustee-manager) frequently score the “ Board Matters” section higher than our independent assessment. We would like to emphasise

that GIFT sets a high bar, especially in assessing the independence and experience of an independent director, particularly for audit committee members.

It could be that the manager/trustee-manager knows the directors better and hence score them better especially in the area of experience. We encourage trusts to improve the quality of the disclosure on the directors. To qualify as

having certain experience, we have looked for specific “hands-on” experience and have not included experience gained as lawyers, consultants, bankers or independent directors in the industry. We encourage trusts to re-evaluate the

competencies of their directors to ensure that they have the relevant competencies.


4.1.5.Boardcommi\ees

Thirty-threetrustshaveestablishedanomina?ngcommiCee(NC)andthirty-fouraremunera?oncommiCee(RC).Thisisanimprovementfromlastyear.Ofthese,27haveacombinednomina?ngandremunera?oncommiCee.TrustsaregiventhesamepointswhethertheyhaveseparateNCandRC,orhavecombinedthem.FiveNCsand6RCshaveallIDsontheboardcommiCee.

AllthetrustshaveestablishedanauditcommiCee(AC)oranauditandriskcommiCee(ARC).

Figure2showsthepercentageofeachcommiCeethathaveanindependentchairmanandthepercentagesthathaveall,majorityandlessthanmajorityofIDsforeachcommiCee(awerthere-designa?onofIDstonon-independentdirectorswhereapplicable).

82%ofthetrustshaveanindependentACchairassessedtohaverecentandrelevantaccoun?ngorrelatedfinancialmanagementexper?seorexperience,andathirdofthemhaveamajorityofIDshavingsuchexper?seorexperience.WearestringentinassessingthelaCer,focusingonbothrecencyandrelevanceoftheexperience.Forexample,workingexperienceinthefinancialindustrymaynotnecessarilybeconsideredasrelevantaccoun?ngorfinancial-relatedexperiencefortheAC.

Trustsshouldconsideradop?ngamorerigorousapproachwhenassessingtherecencyandrelevanceoftheaccoun?ngandfinancialmanagement-relatedexper?seandexperienceofdirectorsappointedtoACs.

Figure 2: Percentages with independent chairman and composition of independent directors in the NC, RC and AC.

4.KEYFINDINGS

Allindependentdirectors

Majorityindependent

directors

Notformedornotwellcons?tuted

11%forNC14%forRC

84%

ForRemuneraRon/NominaRngcommi\eesForAuditcommi\ee

16%64%

25%forNC23%forRC

PAGE14|GIFT2018

4.2.Remunera;onofdirectorsandkeymanagement

DisclosuresarebeCerwhenitcomestoremunera?onofNEDscomparedtotheremunera?onofEDsandkeymanagement.ForNEDremunera?on,84%disclosedtheactualremunera?onofeachindividualNEDonanamedbasis,animprovementfromlastyear.However,just20%disclosedthefeestructure,althoughthisisaslightimprovementfromlastyear.

Moretrustsarebeginningtodisclosetheremunera?oncomponentsandra?onaleforhavingthesecomponentsfortheirCEOandEDs.Whenitcomestotheremunera?onamountsandbreakdownfortheCEO,otherEDsandkeymanagement,manytrustss?lldonotevenprovidedisclosuresinbands.Theyowencitecompe??vereasonsandsensi?vityfornon-disclosure.Inaddi?on,manyarguethattheirremunera?onispaidbythemanager

andnotbythetrust.Inourview,suchremunera?onisul?matelybornebythetrustandunitholders,andexcessiveorinappropriatelydesignedremunera?onpackageswouldaffecttheefficiencyandeffec?venessofthemanagerortrustee-managerinmanagingthetrust.

Twelvetrustslinktheremunera?onoftheEDsatleastpartlytoreturnonequityortotalunitholderreturnandsixteentodistribu?onorNAVperunit.

Figure3showsthekeyremunera?ondisclosuresandprac?cesofthetrustsforitemsinthemainindex.

Overall,thereiss?llconsiderableroomforimprovementinthedisclosureofremunera?on,especiallyforEDsandkeymanagement.

Figure 3: Key remuneration disclosures and practices for REITs and BTs.

4.KEYFINDINGS

48%

7%

84%

20%

0% 20% 40% 60% 80% 100%

Remunera?onbandsforkeymanagement

Exactremunera?onforCEO/ED

ActualfeesforNEDs

FeestructureforNEDs

To help trusts better understand what we were looking for in terms of disclosure of the fee structure for non-executive directors, we have

attached an example below.

For a trust to earn 2 points for the disclosure on remuneration matters of executive directors and the CEO, the scoring guideline has used

the term “fully disclose”. By “fully disclose”, we mean that the disclosure of remuneration should at most be rounded off to the

nearest $1,000, with a breakdown into salary, annual bonus, long term incentives and other benefits.


PAGE16|GIFT2018

4.3.AlignmentofincenRvesandinterests

Trustsaregenerallytransparentabouttheamountsofdifferentfeespaidtothemanagerandotheren??esprovidingservicestothetrust,includingassetmanagementfees(baseandperformancefees),propertymanagementfees,acquisi?onfees,divestmentfeesandtrusteefees.Suchdisclosuresarehighlyregulatedbyrulesandregula?onssetbyMAS.

Fiweentrustsuseareturn-typemetric,distribu?onperunit(DPU)ornetassetvalue(NAV)perunittodeterminetheperformancefeeofthemanager.TheyaregivenhigherpointsinGIFT.However,25trustslinktheperformancefeetonetpropertyincome,whichmaynotnecessarilymeasuretheoverallperformanceofthetrustfromtheunitholder’sstandpoint.

Foratleasttwotrusts,theexistenceoftheperformancefeeforthetrustee-managerwasnotmen?onedatallintheannualreport.Eventhoughthemanagersinthesecases

havenotmetthecriteriatoearntheperformancefee,thisdisclosureontheperformancefeeandhowitisdeterminedshouldbeintheannualreportforunitholders’benefit.

Threetrustsdidnotdisclosethatthequantumofitsacquisi?onfeeandthedivestmentfee.Theymerelystatedthatthemanageris“en?tledundertheTrustDeed”toreceivesuchfeesbutthetrustdeedisnotavailableonline.Allthetrustschargeacquisi?onanddivestmentfeesandnonebasethesefeesonacost-recoverybasis.Onetrusthasafeestructurethaten?tlesitsmanagertoanacquisi?onfeeof1.5%fortransac?onsoflessthan$200million.

Overall,intheareaofalignmentofincen?vesandinterests,therecanbeimprovementinlinkingperformancefeesmorecloselytounitholders’interestssuchastotalunitholderreturnorDPUandreducingtheuseofnetpropertyincomeasaperformancemeasure,andadop?ngapolicyrequiringNEDstoholdsomeunitsun?ltheyleavetheboard.

4.KEYFINDINGS


4.4.Internalandexternalaudit

Trustsgenerallyfarewellinhavingreputableexternalauditorsandunmodifiedauditopinions.Allbuttworeceivedthefull6pointsallocatedtoexternalaudit.Notrusthadunexplainedchangesintheexternalauditorormodifiedauditopinion(adverse,disclaimer,qualified).However,thisyear,RHTHealthTrustandFirstShipLeasehaveanemphasisofmaCerrela?ngtomaterialuncertaintyrelatedtothetrust’sabilitytocon?nueasagoingconcern.BothwererankedintheboComfiveinGIFTlastyear.

Similarly,thetrustsdidwellintheareaofinternalaudit.Alldisclosedthattheyhadaninternalaudit(eitherin-houseoroutsourced).Approximatelyhalfofthetrustsoutsourcedtoareputableexternalfirm(Big4,mid-?erorreputableriskconsultancyfirm),andtheotherhalfoutsourcedtotheinternalauditdepartmentofthesponsor.

Webelievethatthecommonprac?ceofoutsourcinginternalaudittotheinternalauditdepartmentofthesponsormayunderminetheperceivedindependenceoftheinternalauditfunc?on.Thisisespeciallysoinprovidingassuranceinareasrela?ngtootherfunc?onsthatmaybeoutsourcedtothesponsorandrelated

partytransac?ons,whicharecommonfortrusts.Weurgetruststobearinmindthispossibleconflictofinterestinsuchsitua?ons.

4.5.Communica;onwithunitholders

4.5.1.Timelinessofresults

Communica?onwithunitholdersisanotherareathattrustsexcelin.Morethan80%ofthetrustsreleasedtheirlatestannualresultswithin45daysandabout60%releasedalltheirquarterlyresultswithin30days,eventhoughtherequirementsaretoreleasewithin60daysand45daysrespec?vely(exceptforthefourthquarterwhichis60days).

4.5.2.Accessibilityofinforma;onandinvestorrela;ons

AllthetrustshaveawebsitewithalinktoitprovidedonSGXortheannualreport,withadedicatedlinkforinvestorrela?ons(IR)onthewebsite.Mosthavewell-designedwebsiteswhereinforma?onisrela?velyeasytofind.AllbutonehavetheirIPOprospectusonthewebsiteandallhaveatleastthepastfiveyears’annualreportsorallannualreportssinceIPOiflistedforlessthanfiveyears,usuallyinasubsec?on?tled“Publica?ons”.

Intermsofresultsannouncements,allthetrustshaveadedicatedsec?onforfinancialresultsforatleastthepast12quartersorsincetheirlis?ngdates.

PAGE18|GIFT2018

Webelievethatthetrustdeedisanimportantdocumentandshouldbemadeavailabletounitholdersonthewebsiteofthetrust.LippoMallsIndonesiaRetailTrusthasadedicatedsec?ononthewebsiteforitstrustdeed.

Allthetrustsalsoengagedwithinvestorsandanalyststhroughmee?ngsand/orconferencecallsandallbutoneputtheirpresenta?onmaterialsonthewebsite.

Allthetrustsprovideinforma?onforcontac?ngInvestorRela?ons(IR),withjustmorethanhalfprovidingaspecificIRcontactpersonwithcontactdetailsonthewebsiteandtherestprovidingeithergeneralcontactdetailsforanIRdepartmentoronlyanenquiriesformtobefilledupandsubmiCedonline.

Toassesstheresponsivenessofthetrust’sIR,wecontactedthetrustsviaemailorbyusingthecontactform.Truststhathadalreadyrespondedtoourinvita?ontosubmitaself-assessmentweredeemedtohavemetthiscriterionandwerenotcontactedagain.

Thirty-ninetrustsrespondedingood?mewhiletheremainingfivedidnotrespondbythecut-off?metwoweekslater.

4.5.3.UnitholdermeeRngs

Twenty-onetrustsgiveatleast21days’no?ceformee?ngswithunitholders,andatleast28days’no?cewherethemee?ngincludesaspecialresolu?on,comparedtotherequirementsof14daysand21daysrespec?vely.Itiscommendablethat32trustsdidnotholdtheirAGMswithinthelast5businessdaysofthepeakmonthsofApril,JulyorOctober,therebyavoidingthepeakAGMperiods.Thiswasanimprovementfrom27AGMsthatavoidedthepeakinthelastreviewperiod.AlltrustsshouldtargettoavoidthepeakAGMperiodstoimproveengagementwithitsunitholders.

ThreetrustsdidnotposttheirAGMpresenta?onmaterialonline.Whileitmightbethattherewasnopresenta?onmadeattheAGM,thisisanareaforimprovementforthesetrusts.

Inaddi?on,theCapitaLand-relatedREITsandtheMapletree-relatedREITsposteddetailedmee?ngminutesoftheAGMsontheirREITs’website.WewouldencouragethemandallothertruststoalsoposttheminutesonSGXNet.Inaddi?on,theyshouldposttheminutesassoonasprac?cable.Infuture,wemayconsiderwhetherminutesarepostedonSGXNetandthe?melinessofthepos?ng.

4.KEYFINDINGS


4.6.Othergovernancema\ers

4.6.1.Keymanagementexperience

Goodgovernanceneedstobesupportedbyastrongmanagementteam.OneofthekeyareasweassessedhereisthelengthofworkingexperienceoftheChiefExecu?veOfficer(CEO),ChiefFinancialOfficer(CFO)andHeadofInvestmentorAssetManagement,ortheirequivalents,intheindustryinwhichthetrustoperates.

Table2showsthedistribu?onofthesethreekeymanagementposi?onswith(i)experienceoftenyearsormore,(ii)fivetotenyearsand(iii)belowfiveyears.Thisyear,thescoresinthissec?on,especiallyfortheCFO,showmarkedimprovementsduetobeCerdisclosure.

4.6.2.Ruleoflaw

Whereatrustoperatesmainlyinacountrywithstrongruleoflaw,thereislikelytobebeCerprotec?onofinvestorandpropertyrights.Weconsidercountriesinthetop25thpercen?leoftheWorldBankGovernanceIndicatorsashavingstrongruleoflaw.Forthetrustsassessed,8ofthemarenotawardedpointsastheysolelyorpre-dominantlyoperateincountrieswithweakerruleoflaw.

4.6.3.ACreviewofinterestedpersontransac;ons

AllbutonedisclosethattheACreviewsallinterestedpersontransac?ons(IPTs).TheothertrustonlystatesthattheACreviewscontrols,policiesandproceduresrela?ngtoIPTsorinternalauditreportsonIPTs,orthatitonlyreviewsIPTsaboveacertainthreshold.

Chief Executive Officer

Chief Financial Officer

Head of Investment or Asset Management, or their equivalents

Experience of ten years or more

73% 91% 84%

Experience of between five to ten years

20% 9% 5%

Experience of below five years

7% 0% 11%

Table 2: Experience of key management

PAGE20|GIFT2018

4.6.4.Entrenchmentofmanager

Managersoftrustsaregenerallyentrenchedtosomeextentasitisnoteasytoreplaceamanagerevenifpublicunitholdersaredissa?sfiedwithitsperformance.However,thehigherthepercentageofunitsheldbysponsororcontrollingunitholder,theharderitisforpublicunitholderstoreplacethemanager.ForREITs,therulesprovidethatthemanagercanberemovedbyamajorityofunitholders,whilethetrustee-managerofaBTcanonlyberemovedby75%ofunitholders.Therefore,itwouldbeimpossibleforpublicunitholderstoremoveamanagerifthesponsor/controllingunitholderretains50%oftheunitsinthecaseofaREITand25%(plusoneunit)inthecaseofaBT.Thirty-twoofthetrustswereassessedtohavelessentrenchment.

Notrustcurrentlysubjectsitsmanagertoperiodicre-appointmentbyunitholders.Webelievethatunitholdersrecognisethevalueofretaininganexperiencedmanagerortrustee-managerandwillnottrivialiseadecisiontochangeeveniftheyareableto.Perhapsgivingunitholdersarighttoendorsethere-appointmentperiodically-effec?velyanadvisoryratherthanabindingvote-wouldbeagoodwaytogaugethesa?sfac?onofunitholderswiththeperformanceofthemanagerortrustee-manager.

4.6.5.StaplingofREIT/BT

Staplingatrustwithanothertrustfurthercomplicatesthetruststructure,changesitsrisk-returnprofileandreducesinvestorchoice(whowouldprefertopurchaseindividualtrustsontheirowniftheysowish).Thisisespeciallysoifthetrustsareinunrelatedbusinesses.Onlysixofthetrustsincludedinourassessmentarestapledandjustthreehaveanac?vetrustee-managerstapledtotheREITinarelatedbusiness.

4.6.6.OthernegaRvegovernanceevents

Variousothernega?vegovernanceeventsaretakenintoaccountinassessingthegovernanceofthetrusts,suchasturnoverofdirectorsandkeymanagement;regulatoryissuesrelatedtothetrust,directorsandkeymanagement;andnon-compliancewithlaws,regula?ons,rulesandcodes.

Thesenega?vegovernanceeventsarerare,buttheyareimportanttoincludeintheindextohelpensurethattheindexscorebeCermeasuresthesubstanceofthegovernanceofthetrust.

Table3showsthenega?vegovernanceeventsapplicabletosometrustsandthenumberofdemeritpointsdeductedforeachevent.

4.KEYFINDINGS


Table 3: Negative governance events with demerit points

Commonnegativegovernanceevents Demeritpoints

Any of the directors or KMPs resigns and raisescorporategovernance-relatedconcerns

5to10demeritpoints

CEO, CFO, CIO or COO of the REIT Manager/BTTrustee-Manager resigns without adequatedisclosureofthecircumstances

3 demeritpoints

Non-compliance with any Rules, Regulations, CodesorActs

3to10demeritpoints

Delay in holding its AGMwithin 4months from theendofthefinancialyear

3 demeritpoints

Disclosure-related lapses resulting in queries fromtheExchange

2 demeritpoints

PAGE22|GIFT2018

4.7.Businessrisk

InGIFT,20pointsareallocatedtofactorsrelatedtobusinessrisk.Thesefactorsinclude:(a)leverage-relatedfactorsofoverallleverage,averagedebtmaturity,percentageofdebtmaturingwithin12monthsandpercentageofborrowingscarryingfixedinterestrates;(b)changeinweightedaverageleaseexpiry(WALE)fromprioryear;and(c)extentofincomesupportarrangements.Vola?lityofreturnsofthetrust,whichwasincludedintheindexlastyear,wasdroppedaswerecognisethatthisisnotwhollyunderthecontrolofthetrust.Initsplace,wehaveaddedacriterionrela?ngtoforeignassetsandforeigncurrencyrisks.

ForREIT,afiwhfactor,percentageofdevelopmentlimit,wasincluded,with

theweightageforoverallleveragereduced.

Figure4showshowthetrustsfaredintermsofthedistribu?onofthelevelofleverage,theweightedaveragedebtexpiryandtheweightedaverageleaseexpiry.

InthecaseofWALE,wedifferen?atebetweenthosewithaWALEofatleastfiveyearsorwithanincreaseinWALEcomparedtothepreviousyear,fromothertrustswithaWALEoflessthanfiveyearsandaconstantordecreaseinWALE.TwentytrustshaveaWALEofatleastfiveyearsoranincreaseinWALE.EighthaveaWALEoflessthanfiveyearsandaconstantWALE,andninehaveaWALEoflessthanfiveyearsandadecreaseinWALE.

4.KEYFINDINGS

18%

36%

34%

5%5%2%

20%to30% 30%to35% 35%to40%

40%to45% Morethan45% Notdisclosed

Figure 4: Distribution of the level of leverage, the weighted average debt maturity and weighted average lease expiry

Leverage

39%

61%

3yearsormore Lessthan3years

Debtmaturity


Aboutfour-fiwhofthetrustsdidnotdiscloseanyincomesupportarrangementsordisclosethattheydidnothavesucharrangements.Theothertrustshavesomeformofincomesupportarrangements,withthreetrustshavingincomesupportexceeding10%oftheirtotaldistribu?ons.

ForREIT,weincludedevelopmentlimitasafiwhfactorrelatedtobusinessrisk.RecentMASregulatorychangesallowREITstoexceeda10%developmentunitwiththeapprovalofunitholders.AhigherdevelopmentunitexposestheREITtohigherrisk.WedidnotfindanyREITseekingunitholders’approvaltoincreasethedevelopmentlimitinthisroundofassessment.

Figure 4: Distribution of the level of leverage, the weighted average debt maturity and weighted average lease expiry (continued)

45%

18%

25%

11%

Increasedormorethan5years Constant,ifnotmorethan5years

Decreasedandlessthan5years Notapplicable

WALE

PAGE24|GIFT2018

Forbusinesstrusts,werecognisethattheymaynothaveadirectmeasurementofWALEdependingonthebusinessmodel.Forinstance,AccordiaGolfTrustdependsonplayerfeesandthusthebusinessmodelofthetrustdoesnotprovideitsunitholderswitha

highlevelofcertaintyofitsincome.

Duringthescoringofthetrusts,wecameacrosstruststhatonlydiscloseWALEbyNetLeCableArea(NLA)andnotWALEbyGrossRentalIncome(GRI).WethinkthatthisisanareaforimprovementandweplantospecificallyscoreWALEbyGRIinfutureedi?onsof

GIFT.


WewouldliketohighlightcertainmaCersthat,iflewunchecked,maycausegovernance,businessriskorperformanceissuesfortrustsgoingforward.

5.1Changeofcontrolinthemanager/sponsor

Therewereseveralcasesofmanagersoftrustsbeingsold,thusleadingtoachangeofcontrolinthemanager/sponsor.Financialdetailswerenotdisclosedasthemanagersareprivateen??esalthoughawell-runmanagerwithareasonableAUMwasvaluedatmorethan$50millionintheSingaporeREIT/BTcontext.SomeexamplesoftrustswithachangeincontrolincludeESRREIT(whichusedtobeCambridgeREIT),FirstShipLeaseTrustandIREITGlobal.

Asitisdifficulttoremovethemanagergiventhesubstan?alstakeheldbythecontrollingunitholdercoupledwithdispersedpublicunitholdingsinatypicaltrust,thereisanissueofentrenchmentbythemanager/trustee-manager.Inaddi?on,itisdifficulttochangethetrustdeedwithouttheblessingofthemanagerwhoisowencontrolledbythecontrollingunitholder/sponsorandthusitisunlikelythatfeesareadjusteddownwards.

Therecentsaleofamanagersuggeststhatthereisdemandformanagersduetotherela?velystablenatureoftheirfee-basedincome.Theriskisthatwhenamanager/trustee-managerisboughtatahighprice,unitholdersmayul?matelysufferasthemanager/trustee-managerisfacedwithsignificantpressuretodeliverreturnstothenewowners.Ul?mately,itmayleadtounitholderspayinghigherfeestothemanager/trustee-manager.

Thisalsocreatesapoten?alissuetounitholderswhennewownerschangethemandate(seenextsec?on).

5.2Changeofmandate

Most,ifnotall,trustdeedsallowthemanagertoexpanditsinvestmentmandatewith30days’no?cegivento“inform”unitholdersthatthemandatehasbeenexpanded.Noapprovalbyunitholdersisrequiredass?pulatedinthetrustdeed.

Therehavebeenseveralexamplesoftheexpansionofatrust’smandate.ASingapore-focusedindustrialREIThasexpandedtoAustraliawhileanAustralian-focusedindustrialREITexpandedtoEurope.Theusualreasongivenisthelackofinvestmentopportuni?esinitsoriginalmandate.

5.UNWRAPPINGTHETRUSTS

PAGE26|GIFT2018

Onetrusthas?lyannouncedaproposedacquisi?onunderthenewmandateonthe28thdayofthe30days’“no?ceperiod”.Oneothertrustwentevenfurthertoannounceaproposedacquisi?ontogetherwiththeannouncementofanenlargedmandate.

Theques?onunitholdersshouldbeaskingiswhetherthenewmandatesignificantlyalterstheriskprofileofthetrusts.Unitholdershavetoevaluateifthemanager/trustee-managerhastheexper?seandthenetworktomakegoodonthediversifica?onandconsiderifthegovernanceisinplacetopreventover-aggressiveacquisi?onsespeciallyasmostmanagers/trust-managersarecompensatedbasedonassets-under-management.

5.3Foreigncurrencyexposure

Ifatrust’sminorityinvestorsdependonthetrustforincome,thentheaddedexposureofforeignassetsearningincomedenominatedinforeigncurrencywillintroduceuncertaintyandriskstotheunitholders’expectedincomeintheformofdistribu?ons.However,mostREITshaveacertainlevelofnaturalhedging(i.e.foreigncurrencydenominatedloansforitsforeignassets).

Hedgingtheincomewillreducetheforeigncurrencyrisksandprovideacertainlevelofcertaintytotheshort-termcashflow.SomeREITshave,asapolicy,chosentobeexposedtocurrencymis-match,i.e.,borrowingsinSingaporedollarstoinvestinforeignassetsearningincomedenominatedinforeigncurrency.

5.4ManagingDPU(I)

NewREITsandbusinesstrustshaveemergedinthemarketthathavethesponsor/controllingunitholder/vendorwaivetheirrightstoreceivedistribu?onsforacertainperiodof?me.Thisthenallowstheunitstobesold/IPO-edwithacertainlevelofyieldtoaCractinvestors.Inonepar?culartrust,itwasdisclosedintheannualreportthatasmuchas55%oftheunitsinissuehavewaivedtheirrighttoreceivedistribu?ons.Ineffect,theactualDPUhasbeenar?ficiallyboostedtotwiceits“sustainable”levelifallunitsarerankedthesameandreceivedistribu?ons.Forinvestorswhodonotreadthefineprint,theseREITsaretradingatar?ficiallyhighyieldsandlessinformedinvestorsmaynotbeawareofit.

5.UNWRAPPINGTHETRUSTS


5.5ManagingDPU(II)

Ass?pulatedinthetrustdeed,thefeesofmanagersandtrustee-managerscouldbepaidincashorinunitsattheirdiscre?on.AchairmanofaREITproudlyclaimedattheAGMthattheREIT’sCEOcould“performmagic”astheCEOincreasedtheREIT’sDPUdespitecarryingoutamajorassetenhancementini?a?veatoneofitskeyassets.Thiswasachievedpartlybyelec?ngtoreceiveitsfeesinunitsinsteadofcashsothattheREITcouldkeepupitstrendofincreasingDPUovertheyears/quarters.InitsannualreportandintheREIT’spresenta?onmaterial,theincreasesintheDPUover?mewereprominentlyhighlightedbutnotthe“magictrick”.

Ul?mately,thereisnofreelunch.Thehiddencosttounitholdersisthedilu?onoftheirunitholdings.Imagineifthemanager’sperformancefeesdependedonincreasesinDPU,thentherewillbehugeincen?vestomanagetheDPUtoearntheirperformancefees.Intheexamplestatedabove,themanager’sperformancefeesarepeggedtonetpropertyincomesothereisnothingtoosinisteraboutthemanagermanagingitsDPU.

Governance Index For Trusts – July 2018

PAGE28|GIFT2018

Ranking REIT/BT

GovernanceScore

BusinessRiskScore GIFT2018

1 CapitaLandCommercialTrust 61 18 79 KeppelDCREIT 60.5 18.5 793 MapletreeCommercialTrust 58 20.5 78.5 MapletreeGreaterChinaCommercialTrust 61.5 17 78.55 FrasersLogistics&IndustrialTrust 57.5 20 77.56 ESRREIT 62 15 777 AIMSAMPCapitalIndustrialREIT 61.5 14.5 768 AscendasREIT 60 15.5 75.5 ManulifeUSREIT 57 18.5 75.510 CapitaLandMallTrust 57.5 17.5 7511 FrasersCentrepointTrust 60 14 7412 MapletreeIndustrialTrust 51 22.5 73.5 SoilbuildBusinessSpaceREIT 64 9.5 73.514 IREITGlobal 54 18.5 72.515 AscottResidenceTrust 56 16 7216 FrasersHospitalityTrust 55.5 15.5 7117 FrasersCommercialTrust 53 17 7018 AscendasIndiaTrust 54 15.5 69.5 MapletreeLogisticsTrust 54.5 15 69.520 KeppelREIT 55 14 69 ParkwayLifeREIT 53 16 6922 FirstREIT 54 14.5 68.523 CapitaLandRetailChinaTrust 52 16 6824 SPHREIT 55 12 6725 AscendasHospitalityTrust 50.5 15.5 66 KeppelInfrastructureTrust 49 17 66 SuntecREIT 53 13 6628 BHGRetailREIT 55.5 8.5 6429 FarEastHospitalityTrust 52.5 11 63.530 StarhillGlobalREIT 46 17 6331 OUEHospitalityTrust 43 19 6232 CDLHospitalityTrusts 50.5 10.5 6133 AsianPayTelevisionTrust 47 12 5934 CacheLogisticsTrust 49 9 58 DasinRetailTrust 44.5 13.5 58 ECWorldREIT 48 10 5837 VivaIndustrialTrust 55.5 2 57.538 AccordiaGolfTrust 44 8 5239 OUECommercialREIT 41.5 9 50.540 SabanaREIT 48 0 4841 HutchisonPortHoldingsTrust 38.5 7 45.542 LippoMallsIndonesiaRetailTrust 48.5 -3.5 4543 RHTHealthTrust 33.5 11 44.544 FirstShipLeaseTrust 35 5 40

Note:ThemainGovernancescoreandBusinessriskscoreaddupto80and20pointsrespec8vely.Inthetwocolumnsabove,thescoresincludemeritanddemeritpoints.Thatiswhytwotrustsscoredmorethan20pointsandatrustreceivednega8vepointsinthebusinessrisksec8on.

ABOUTTHEAUTHORS

MakYuenTeen

MakYuenTeenisanAssociateProfessorofAccoun?ngattheNUSBusinessSchool,Na?onalUniversityofSingapore,whereheteachescorporategovernance.ProfMakholdsfirstclasshonoursandmasterdegreesinaccoun?ngandfinanceandadoctoratedegreeinaccoun?ng,andisafellowofCPAAustralia.

HeservedoncommiCeesthatdevelopedandrevisedtheCodeofCorporateGovernanceforlistedcompaniesinSingaporein2001and2005.HeisamemberoftheCorporateGovernanceCouncilformedbyMASin2017toreviewtheCode.

ProfMakdevelopedtheGovernanceandTransparencyIndex(GTI)andtheGovernanceEvalua?onforMid-andSmall-Caps(GEMS)andwastheSingaporeexpertinvolvedindevelopingtheASEANCorporateGovernanceScorecard.

Formoreinforma?onaboutProfMak’swork,pleasevisithiswebsiteatwww.governanceforstakeholders.com.

.

ChewYiHong

ChewYiHongisanac?veinvestorandakeenobserverofthecorporategovernancescene.HereceivedanMBAwithDis?nc?onfromtheLondonBusinessSchoolandgraduatedfromCornellUniversitywithdualdegreesinEconomicsandElectricalEngineering.

Priortohis?mespentataBig4publicaccoun?ngfirm,heconsultedforaglobalfundtoaddresscorporategovernanceissuesofalistedissuer.Mr.Chewhasalsoresearchedonotherareasofcorporategovernanceincludingboardandseniormanagementdiversityinthepublicandprivatesectors,andacrossmajorAsianeconomies.


Associate Professor Mak Yuen Teen NUS Business School [email protected] www.governanceforstakeholders.com

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MAK YUEN TEEN CHEW YI HONGgovernanceforstakeholders.com/wp-content/uploads/2018/07/GIFT... · 1 The Governance Index for Trusts – GIFT - is produced by Associate Professor Mak Yuen