Don’t lose sight of the fact that individuals who are based overseas and engaged in these functions on behalf of the REIT manager (as mentioned in options I, III, and IV) should be appointed as representatives of the REIT manager, but they will not count towards satisfying the minimum of three full-time Singapore-resident representatives among REITs in Singapore.

Keep in mind that REITs can focus on either foreign or domestic properties, there are no restrictions on this. Furthermore, A REIT manager should procure professional indemnity insurance, with coverage that complies with the minimum requirements set out by an arbitrary guideline set by the financial regulatory authority that approves such REITs.

Please note that all REITs should comply with all principles and guidelines set out in an established Code of Corporate Governance. Additionally, individuals with control or back-office responsibilities in the Sponsor or its related companies may be appointed as members of the REIT’s Audit Committee. In such cases, the Audit Committee should comprise at least three directors who are independent (which still couldn’t include the independent director of the Sponsor).

Emphasize the general knowledge that the property fund may or may not be listed on a securities exchange. Also, the trustee or controlling unitholder of the property fund (being a company) means any other company which is it is a subsidiary or holding company or is a subsidiary of such holding company or one in the equity of which it or such other company or companies that have taken together (directly or indirectly) have an interest of 30% or more.

Please underline the certainty that a REIT, in general, is a trust that invests primarily in real estate and real estate-related assets specified by the Authority in the Code on Collective Investment Schemes and all or any of the units which are listed for quotation on a securities exchange. Meanwhile, an “interested party” among REITs may refer to a director, chief executive officer or controlling shareholder of the manager, or the manager, the trustee or controlling unitholder of the property fund.

Bear in mind that a “Group PII”, on the other hand, if the deductible of the Group PII is greater than 20% of the REIT manager’s base capital, an undertaking from the Sponsor or the parent company of the REIT manager to cover the excess in the event of a claim would be required. Furthermore, there’s another type of alternative PII called “Group Hybrid PII.”

Highlight the fact that the real estate-related assets among REITs as mentioned from the question above refers to listed or unlisted debt securities and listed shares of or issued by property corporations, mortgage-backed securities, other property funds, and assets incidental to the ownership of real estate (e.g. furniture).

Please note that under trust deed provisions for removal of manager and convening of meetings among REITs, another provision required for the trust deed of a property fund is the situation that the statement of total return for the period since the preceding account (or in the case of the first account, since the constitution of the property fund) made up to a date not more than four months before the date of the meeting should be laid before the annual general meeting.

It must be always observed that one way to streamline the fundraising process for REITs is by removing the requirement for REITs to submit a notification to the established financial regulatory authority to obtain a “Restricted Scheme” status when they make an offer of units to accredited and other investors. This will make the fundraising process for REITs more efficient, and bring it in line with the fundraising process for companies and business trusts.

Take into account that a property fund may also acquire assets from or sell assets to interested parties, or invest in securities of or issued by interested parties if each of those assets is acquired from the interested parties at a price not more than the higher of the two assessed values, or sold to interested parties at a price not less than the lower of the two assessed values.

Please remember that such buffers are crucial, for instance, declining property prices. The need to maintain such a buffer means that REITs would generally keep their leverage to within 40%. Given this, it is strongly indicated that REITs be afforded a higher leverage limit so that they have more flexibility to optimize their capital structure as debt tends to be a cheaper source of capital compared to equity and takes less time to raise.

Always remember that under permissible investments among REITs, a property fund may also invest in local or foreign assets, subject to the terms of its trust deed. Where an investment in a foreign real estate asset is made, the manager should ensure that the investment complies with all the applicable laws and requirements in that foreign country, for example, those relating to foreign ownership and good title to that real estate.

Be aware that leverage ratio can be in the form of a debt-to-asset ratio, which is a measure of how well a REIT is capitalized, or interest coverage ratio (or “ICR”), which is a measure of a REIT’s ability to service its debt obligations from regular sources of income. Moreover, a case could, therefore, be made that in addition to leverage limit, REITs should also be encouraged to maintain a certain level of interest coverage. In this regard, views are sought on whether the use of ICR in combination with the leverage limit is appropriate.

Always keep in mind that the total contract value of property development activities undertaken and investments in uncompleted property developments should not exceed 10% of the property fund’s deposited property. The total contract value of property development activities may exceed 10% of the property fund’s deposited property (subject to a maximum of 25% of the property fund’s deposited property) only if certain prerequisites are attained.

Kindly note that a valuer among REITs, be it for full or desktop valuation, should not value the same property for more than two consecutive financial years; and should disclose to the trustee any pending business transactions, contracts under negotiation, other arrangements with the manager, or any other party whom the property fund is contracting with and other factors that would interfere with the valuer’s ability to give an independent and professional valuation of the property.

It should be borne in mind that a REIT normally starts the discussion with cornerstone investors at an early stage of the IPO process. However, at this stage of the process, the REIT would not be in a position to file the notification as a Restricted Scheme given that the prospectus would not have been finalized and the REIT manager would not have received the Capital Markets Services Licence.

It is specified that a “restricted real estate investment trust” also means a restricted scheme that invests primarily in real estate and real estate-related assets specified by the Authority in the Code on Collective Investment Schemes, and all or any units of which are listed for quotation on an approved exchange or whose application to list such units has been submitted and not rejected or withdrawn by such approved exchange.

Please make clear that if borrowings are incurred before the new property is purchased and the manager subsequently becomes aware or ought reasonably to have become aware that the purchase will not take place, the manager should return the monies raised by such borrowings as soon as practicable. Also, the aggregate leverage limit is not considered to be breached if due to circumstances beyond the control of the manager occurs a depreciation in the asset value of the property fund.

Remember the instance where subscriptions by the institutional investors are made prior to the listing and such investors assume risks of non-completion of the listing or have to pay for the units regardless of whether the property fund is subsequently listed, this prohibition for discounts will not be applied at any cost.

Stress the fact that an annual report should be prepared by the manager at the end of each financial year, disclosing details of all real estate transactions entered into during the financial year, including the identity of the buyers or sellers, purchase or sale prices, and their valuations (including the methods used to value the assets). More so, details of all the property fund’s real estate assets, including the location of such assets, their purchase prices, and the latest valuations must also be disclosed.

Please note that another disclosure that must be made in the situation mentioned in the question is the actuality that redemption requests made pursuant to the offer will be satisfied within 30 calendar days after the closing date of the offer. Such period may be extended to 60 calendar days after the closing date of the offer if the manager satisfies the trustee that such extension is in the best interest of the property fund.

Bear in mind that the tenant profile of the property fund’s real estate assets should also include the top 10 tenants and the percentage of total gross rental income attributable to each of these top 10 tenants. As well as the trade sector mix of tenants, in terms of the percentage of total gross rental income attributable to major trade sectors.

Hold on to the fact that although the “annual general meeting” should be held once in every calendar year and not more than 15 months after the holding of the last preceding annual general meeting, so long as a property fund holds its first annual general meeting within 18 months of its constitution, it need not hold it in the year of its constitution or in the following year. Furthermore, the statement of total return for the period since the preceding account made up to a date not more than four months before the date of the meeting should be laid before the annual general meeting.

Turn over in one’s mind that in the context of the question above, “REIT Bond” means any debenture of a REIT issued or proposed to be issued by a trustee on behalf of the REIT; or any right, option or derivative in respect of any such debentures of a REIT. In addition to this insight, “issue manager” means an issue manager to an offer of REIT Bonds, whether called an issue manager, a lead manager, an arranger or otherwise. And in general, “Manager”, in relation to an offer of REIT Bonds, means the responsible person for the REIT.

Please note that the Manager shall keep, and make available for inspection, by the unitholders of the REIT, creditors, and persons who have subscribed for or purchased the REIT Bonds to which the offer information statement relates, without payment of any fee, a true copy of every written consent deposited for a period of at least 6 months after the lodgment of the offer information statement with the Authority.

Take into consideration that the agreement with the interested party should not contain any term that materially restricts the ability of the property fund to remove the agent. The audit committee of the manager should review the compliance of the agent with the terms of the agency agreement at least once every two years and take remedial actions where necessary.

Please retain the information that in relation to a scheme constituted as a Variable Capital Company (or simply referred to as “VCC”) or a sub-fund thereof, the constituent document refers to the constitution of the Variable Capital Company, as defined under section 2 of the VCC Act. Besides, a “VCC Custodian” means an entity to which the assets of a collective investment scheme constituted as a VCC or a sub-fund of a VCC is entrusted for safekeeping.

Don’t forget the verity that the manager should have a reasonable belief that the financial instrument does not impair the scheme’s ability to comply with its redemption obligations as well as meet other payment commitments. As guidance, other payment commitments may include margin calls or collateral requirements from the use of derivatives.

Keep in your perception that in the case where a recognized scheme or the underlying scheme which an authorized scheme feeds into intends to use or invest in financial derivatives, a prominent statement drawing attention to this intention should be included in the marketing material of the recognized scheme or authorized scheme which feeds into an underlying scheme. Also, financial derivatives may only be used for the purpose of hedging existing positions in a portfolio, or EPM provided that the financial derivatives are not used to gear the overall portfolio.

Make sure to remember that the expense ratio should be calculated in accordance with the guidelines for the disclosure of expense ratios issued by the Authority in-charge of the REITs. Moreover, another term to remember under the scheme requirements for REITs is the “Turnover ratio”, which means a ratio of the number of times per year that a dollar of assets is reinvested. It should be calculated based on the lesser of purchases or sales of underlying investments of a scheme expressed as a percentage of daily average net asset value.