New governance index for Reits and trusts gives the big picture

Singapore

REAL estate investment trusts (Reits) and business trusts (BTs) have become an important feature of our capital market as Singapore aspires to be a hub for such listings.

As at June 1, 2017, there are 45 such issuers with a primary listing trading on the Singapore Exchange (SGX), accounting for a total market capitalisation of S$85 billion. Of the 45 issuers, six are constituted as stapled securities, nine as pure business trusts and 30 as Reits.

Existing governance indices in the Singapore landscape exclude this important group of issuers because their governance structures and practices, and applicable rules and regulations, are different from companies.

One important difference, for example, is that with one current exception, these trusts are externally managed by a manager or trustee-manager, with the board of directors residing with the latter and appointed by its shareholders, rather than…