AI-Reit trustee disputes resolution to access records related to internalisation

[SINGAPORE] The trustee of Alpha Integrated Real Estate Investment Trust (AI-Reit) has disputed a proposed resolution seeking access to records related to the trust’s internalisation process, warning it may seek court directions if the motion is passed.

HSBC Institutional Trust Services on Thursday (Apr 17) said that it considers a resolution to be tabled at AI-Reit’s annual general meeting on Apr 21 to be “invalid and incapable of binding the trustee to act in accordance with its terms”.

The resolution called for the trustee to provide and procure access for the Reit manager to documents and records relating to legal, financial and other professional services paid for by the Reit in connection with the internalisation of its manager.

During the internalisation, certain fees and expenses were incurred in relation to legal, financial and other professional services rendered to the trustee and the former manager, which were paid or reimbursed out of the assets of AI-Reit.

The payment or reimbursement was consistent with the terms of the trust deed and were disclosed to unitholders previously.

AI-Reit’s manager said it requires the records as part of a comprehensive review of the trust’s accounts and records as part of its onboarding process.

While not stated in the explanatory note, the manager said in correspondence with the trustee that it needs the records to “properly assess the legitimacy of these payments and ensure the integrity of the Trust’s financial records” and to “properly close out the accounting/verification exercise and maintain accurate records of the Reit”.

But the trustee said the manager “is not entitled to carry out these intended actions” under the trust deed.

It added that it is not aware of any provision in the trust deed that gives the manager the responsibility to review the records to assess the legitimacy of expenditures during the internalisation.

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The trustee also raised concerns that the resolution covers documents that may be legally privileged and exceed what unitholders or the manager are entitled to access.

It further noted that the manager has not disclosed the potential costs of reviewing the records, which could be substantial given the broad scope.

If the resolution is passed, the trustee said it will consider all available options, including applying to the Singapore Court for directions, with related costs to be borne by the assets of AI-Reit.

The trustee also said that about S$13.1 million in fees and expenses were incurred for professional services linked to the internalisation process from June 2023 to December 2025, which had been previously disclosed to unitholders.

Units of AI-Reit ended Friday 1 per cent or S$0.005 higher at S$0.485, before the announcement.