Keppel Infrastructure Trust's proposal to align fee structure

WE REFER to the Mark to Market column "Keppel Infrastructure Trust should get its DPU on strong upward trajectory before revising fees" (The Business Times, Apr 4 2022). The article argues that the proposal might have the investors of Keppel Infrastructure Trust (KIT) "feeling that the new fee structure is less about the trustee-manager aligning its interests with those of unitholders than it is about the trustee-manager simply lining its own pockets".

We would like to emphasise that the proposed fee structure aligns with unitholders' interests. In fact, the performance fees are only payable with distribution per unit (DPU) growth. It is a structure that is well-adopted by newly listed Singapore real estate investment trusts (S-Reits).

As pointed out in the article, the independent financial adviser (IFA) found that the revised fees "are not all that different from other locally-listed business trusts and real estate investment trusts (Reits)". By tagging fees to distributable income and DPU increases, the trustee-manager would be better aligned to its objective of long-term value creation and serving the interests of unitholders.