What to peg Reit managers' fees to?

DIFFERENT real estate investment trusts (Reits) employ different performance fee structures with which to reward their managers. As private investor Bobby Jayaraman, who authored the book Building wealth through Reits, noted, there is no completely fair fee structure, but some do have more drawbacks than others.

One of these drawbacks was brought to the fore and ''rectified'' earlier this month when the management of Cambridge Industrial Trust (CIT) announced that it will revise the way it calculates its performance fees. The revised methodology will effectively slash fees by up to 50 per cent. This move was, unsurprisingly, lauded by analysts and unitholders.

The industrial Reit is one of just two Singapore-listed Reits to benchmark its total returns (comprising change in unit price and distribution per unit or DPU) against …