Proper incentives, business acumen needed for internalised Reit manager model to work

THE failed merger between Sabana Shari'ah Compliant Real Estate Investment Trust (Sabana Reit) and ESR-Reit has resurfaced the question of whether an internalised Reit management model is viable for Singapore Reits (S-Reits) in the sponsor-controlled universe here.

Sabana Reit unitholders had tried and failed to internalise the Reit's manager at a 2017 extraordinary general meeting (EGM).

The only successful case of internalisation here is that of Japanese mall landlord Croesus Retail Trust (CRT) in 2016. CRT was bought and privatised by Blackstone in 2017, at a 23 per cent premium to its net asset value and 24 per cent premium to its last traded price pre-announcement.