Keppel Infra Trust trustee-manager proposes to peg base, performance fees to distributions

SINGAPORE (THE BUSINESS TIMES) - The trustee-manager of Keppel Infrastructure Trust (KIT) has proposed a new base fee structure pegged to distributable income and a performance fee structure pegged to distribution per unit (DPU) growth.

The move will help the trustee-manager better align its interests with the business trust's unit holders and support KIT's growth plans, it said in a bourse filing on Monday (March 28).

The trustee-manager is proposing its base fee be amended to 10 per cent per annum of KIT's distributable income, versus its existing base management fee of $2 million per annum.

It has also proposed an adjustment of its performance fee to 25 per cent per annum of any increase in DPU, multiplied by the weighted average number of issued units, instead of the present 4.5 per cent performance fee pegged to the trust's income.

The trustee-manager's acquisition and divestment fee will remain unchanged at 0.5 per cent or 1 per cent of the acquired investment's enterprise value, and 0.5 per cent of the divested investment's enterprise value.

The proposed adjustments have been deemed by an independent financial adviser to be on "normal commercial terms and not prejudicial to the interests" of KIT and minority unit holders.

The trustee-manager's audit and risk committee, along with directors who are considered independent from the matter, have therefore recommended that unit holders vote in favour of the proposed base fee and performance fee supplement.

The new proposed fee structures will give the trustee-manager more resources to manage KIT's portfolio, bolstering its ability to "optimise and create greater value", the announcement said.

It will also enhance the trustee-manager's ability to drive growth through new acquisitions and investments.

The trustee-manager noted that the proposed fee structure has been widely adopted by Singapore real estate investment trusts listed in the past five years. The fee quantum - as a percentage of assets under management, market capitalisation and revenue - is within the market range charged by selected business trusts, it said.

Mr Jopy Chiang, chief executive of the trustee-manager, said that the company will broaden its global reach and expand its talent pool in investment origination, deal execution and portfolio management.

"To this end, we are looking to establish offices in key overseas markets to create new synergies and increase deal flow, which will allow us to scale up faster and accelerate KIT's growth plans," he said.

The trustee-manager has seen its workforce grow from seven employees since its listing in 2010 to 22 as at Dec 31 last year. 

Its portfolio as at the end of last month stands at $4.6 billion, up from $760 million at its listing.

The trustee-manager will seek unit holder approval for the proposed base and performance fee amendments at an extraordinary general meeting to be held on April 19.

Units of KIT closed 0.5 cent, or 0.9 per cent higher, at 56.5 cents on Friday.