Manulife US Reit’s manager should invite MAS to act as “special scrutineer” of its strategic review

DURING an informal meeting more than a decade ago, the chief executive of a large Singapore property group admonished me for complaining about locally-listed real estate investment trusts (Reits) being externally managed.

If Reits were required to have internal managers, the CEO said, Singapore’s major property developers might not have placed their best income-generating assets under these structures. The lucrative stream of fee income that externally-managed Reits offered was necessary in order to draw high-quality sponsors with pipelines of good assets.

This seemed a rather self-serving viewpoint to me. The way I saw it, externally-managed Reits were likely to prioritise their fee income and push for asset growth. On the other hand, internally-managed Reits seemed more likely to focus on distribution per unit (DPU) growth and resilience.