Ascott Residence Trust retains corporate governance crown for Reits, business trusts

ASCOTT Residence Trust (ART), the largest hospitality real estate investment trust (Reit) in Asia-Pacific, has topped the ranking among Singapore-listed Reits and business trusts for best corporate governance practices for the second straight year.

A stapled group comprising Ascott Real Estate Investment Trust and Ascott Business Trust, ART scored a total of 110.6 points for the 2022 edition of the Singapore Governance and Transparency Index.

On top of corporate governance practices, the annual study – jointly conducted by CPA Australia, the National University of Singapore (NUS) Business School’s Centre for Governance and Sustainability (CGS) and the Singapore Institute of Directors (SID) – also evaluates Singapore-listed companies on the timeliness, accessibility and transparency of their financial disclosures.

Companies were evaluated based on their board responsibilities, rights of shareholders, engagement of stakeholders, accountability and audit, and disclosure and transparency.

In addition, the 44 Reits and business trusts were scored on their structure, leverage, interested person transactions, competency of Reit manager or trustee-manager, and emoluments.

SID chair Wong Su-Yen noted that there was “growing awareness of the importance of good corporate governance” among Singapore-listed companies.

“It is heartening to see the improvements our companies have made despite the disruption to business-as-usual over the past 2 years,” she said. “This is… a testament to the efforts of all the companies in the industry, not just those at the top, to improve their corporate governance practices in Singapore.”

While ART retained its crown, it was a case of musical chairs among the other Reits and business trusts in the top 5.

Ascendas Real Estate Investment Trust (A-Reit) overtook 2021 runner-up Far East Hospitality Trust (FEHT) to claim second place in the ranking this year, while CapitaLand Intergated Commercial Trust (CICT) nudged past Netlink NBN Trust to rank fourth.

All the top 5 trusts received lower overall scores this year compared with 2021.

ART’s winning score this year was 4.7 points lower than the 115.3 points it chalked up in 2021.

The 2022 scores for A-Reit (108.7), FEHT (107.4), CICT (107.2) and Netlink NBN Trust (105.2) were also between 1.2 and 6.4 points lower than their year-ago scores.

However, the average overall score for all the Singapore-listed Reits and business trusts inched up marginally to 85.3 points in 2022, from 85 points last year.

Since the launch of the Reits and business trusts category in 2017, there has been an improvement in the mean scores for each year.

The Reits and business trusts scored an average of 60.4 points in the inaugural edition in 2017.

“The improvement in corporate governance, as evidenced by the improving mean scores of the index, can be attributed to 2 main factors,” said Professor Lawrence Loh, director of NUS Business School’s CGS.

“First, the accountability required by companies on sustainability matters has spurred better corporate governance in recent years. Second, guidelines for corporate governance in Singapore is placing more emphasis on directors’ responsibilities and independence in matters relating to governance and transparency,” he said.