Keppel DC Reit tops Singapore's first governance index for trusts

The Singapore Exchange (SGX) Centre at Shenton Way.
The Singapore Exchange (SGX) Centre at Shenton Way. ST PHOTO: KUA CHEE SIONG

SINGAPORE - Keppel DC Reit came out tops in an inaugural corporate governance ranking for Singapore-listed real estate investment trusts and business trusts.

The new Governance Index for trusts (GIFT) is the brainchild of NUS Business School Professor Mak Yuen Teen and active investor Chew Yi Hong.

Said Assoc Prof Mak: "While Reits and business trusts on the whole have done quite well on GIFT, there is room for improvement especially in the areas of board independence and competencies, remuneration, and alignment of incentives and interests with unitholders. There are still many trusts that link performance fees to net property income, rather than unitholder return or distribution per unit".

The index assessed 43 trusts including six stapled securities. These are among 45 listed trusts that have a total market capitalization of S$85 billion.

Parkway Life Reit and Soilbuild Business Space Reit tied for second place, while AIMS AMP Capital Industrial Reit and Starhill Global Reit took fourth and fifth place respectively.

The trusts were assessed using publicly-available information from annual reports, websites, presentations and other announcements made by the trusts to the Singapore Exchange, and news media reports.

Anonymous emails to investor relations contacts provided by the trusts were also used to assess actual responsiveness to investors.

Mr Tan Boon Gin, the CEO of SGX Regulation (Regco) said: "Singapore is recognized as a leading market for Reits and business trusts. First, there is welcome clarity for unit holders that trust managers must act in the interests of participants as a whole ,not of the manager, even in the èvent of conflicts.

"Therefore, while the corporate and management structure of trusts differs from that of a typical company, the same fiduciary duties remain in place for the board and senior management. In order for Reits and business trusts to flourish, investors must have full confidence in the valuations of the underlying assets."

SGX Regco is an independent regulatory subsidiary of SGX.