93
92
STARHILL
GLOBAL
REIT
Annual
Report
FY 2014/15
Notes to the
Financial Statements
(iii) where the Group invests in 30.0% or more of a real estate related asset of any entity, including any class of equity,
equity-linked securities and/or securities issued in real estate securitisation, the Group’s proportionate interest in the
value of the underlying real estate of the entity issuing the equity which comprises the real estate related asset.
The Manager may opt to receive the Base Fee in respect of its properties in cash or units or a combination of cash and
units (as it may determine).
The portion of the Base Fee payable in cash shall be payable monthly in arrears and the portion of the Base Fee payable
in the form of units shall be payable quarterly in arrears. If a trigger event occurs, resulting in the Manager being removed,
the Manager is entitled to be paid the Base Fee up to the day on which the trigger event occurs.
Performance fee
The Manager is entitled to a performance fee (“Performance Fee”) where the accumulated return (comprising capital gains
and accumulated distributions and assuming all distributions are re-invested in the Trust) of the units (expressed as the “Trust
Index”) in any six-month period ending 30 June or 31 December (“Half-Year”) exceeds the accumulated return (comprising
capital gains and accumulated distributions and assuming re-investment of all distributions) of a benchmark index
(“Benchmark Index”).
The Performance Fee is calculated in two tiers as follows:
•
a Tier 1 Performance Fee equal to 5.0% of the amount by which the accumulated return of the Trust Index exceeds
the accumulated return of the Benchmark Index, multiplied by the equity market capitalisation of the Trust; and
•
a Tier 2 Performance Fee which is applicable only where the accumulated return of the Trust Index is in excess of
2.0% per annum (1.0% for each Half-Year) above the accumulated return of the Benchmark Index. This tier of
the fee is calculated at 15.0% of the amount by which the accumulated return of the Trust Index is in excess of
2.0% per annum above the accumulated return of the Benchmark Index, multiplied by the equity market
capitalisation of the Trust.
For the purposes of the Tier 1 Performance Fee and the Tier 2 Performance Fee, the amount by which the accumulated
return of the Trust Index exceeds the accumulated return of the Benchmark Index shall be referred to as outperformance.
The outperformance of the Trust Index is assessed on a cumulative basis and any prior underperformance will need to be
recovered before the Manager is entitled to any Performance Fee.
The Performance Fee, whether payable in any combination of cash and units or solely in cash or units will be payable
half-yearly in arrears. If a trigger event occurs in any Half-Year, resulting in the Manager being removed, the Manager
is entitled to payment of any Performance Fee (whether structured in cash or in the form of units) to which it might
otherwise have been entitled for that Half-Year in cash, which shall be calculated, as if the end of the Half-Year was the
date of occurrence of the trigger event, in accordance with Clause 15.1.4 of the Trust Deed. If a trigger event occurs at
a time when any accrued Performance Fee has not been paid, resulting in the Manager being removed, the Manager is
entitled to payment of such accrued Performance Fee in cash.
The management fees (Base Fee and Performance Fee, including any accrued Performance Fee which has been carried
forward from previous financial years but excluding any acquisition fee or divestment fee) to be paid to the Manager
in respect of a financial year, whether in cash or in units or a combination of cash and units, is capped at an amount
equivalent to 0.8% per annum of the Value of the Trust Property as at the end of the financial year (referred to as the
“annual fee cap”).
If the amount of such fees for a financial year exceeds the annual fee cap, the Base Fee of the financial year shall be paid to
the Manager and only that portion of the Performance Fee equal to the balance of an amount up to the annual fee cap will
be paid to the Manager. The remaining portion of the Performance Fee, which will not be paid, shall be accrued and carried
forward for payment to the Manager in future Half-Years. If, at the end of a Half-Year, there is any accrued Performance Fee
which has been accrued for a period of at least three years prior to the end of that Half-Year, such accrued Performance
Fee shall be paid to the Manager if the accumulated return of the Trust Index in that three-year period exceeds the
accumulated return of the Benchmark Index over the same period. The payment of such accrued Performance Fee shall
not be subject to the annual fee cap.
(c) Acquisition and divestment fees
The Manager is entitled to receive an acquisition fee of 1.0% of the value of the real estate acquired. For any acquisition
made by the Group in Singapore, any payment to third party agents or brokers in connection with the acquisition shall be
borne by the Manager, and not additionally out of the Group. For any acquisition made by the Group outside Singapore,
any payment to third party agents or brokers shall be borne by the Group, provided that the Manager shall charge an
acquisition fee of 0.6% instead of 1.0%.
The Manager is entitled to receive a divestment fee of 0.5% of the value of the real estate divested. For any divestment
made by the Group in Singapore, any payment to third party agents or brokers in connection with the divestment shall be
borne by the Manager, and not additionally out of the Group. For any divestment made outside Singapore, any payment to
third party agents or brokers shall be borne by the Group, provided that the Manager shall charge a divestment fee of 0.5%
of the sale price. The Manager also receives acquisition fees and divestment fees in instances other than an acquisition and
divestment of real estate.
(d) Trustee’s fee
Under the Trust Deed, the Trustee’s fee shall not exceed 0.1% per annum of the value of the deposited property (subject to
a minimum of $8,000 per month excluding out of pocket expenses and GST) or such higher percentage as may be fixed
by an Extraordinary Resolution of a meeting of unitholders. The Trustee’s fee is payable out of the deposited property
of the Group on a monthly basis, in arrears. The Trustee is also entitled to reimbursement of expenses incurred in the
performance of its duties under the Trust Deed.
Based on the current agreement between the Manager and the Trustee, the Trustee’s fee is less than 0.1% per annum of the
value of the deposited property (subject to a minimum of $8,000 per month excluding out of pocket expenses and GST).
2. BASIS OF PREPARATION
2.1 Statement of compliance
The financial statements have been prepared in accordance with the
Statement of Recommended Accounting Practice
(“RAP”) 7 “Reporting Framework for Unit Trusts”
issued by the Institute of Singapore Chartered Accountants (“ISCA”), the
applicable requirements of the Code on Collective Investment Schemes (“CIS Code”) issued by the Monetary Authority of
Singapore (“MAS”) and the provisions of the Trust Deed. RAP 7 requires that accounting policies adopted should generally
comply with the principles relating to recognition and measurement of the Singapore Financial Reporting Standards (“FRS”).
2.2 Basis of measurement
The financial statements have been prepared on the historical cost basis, except as set out in the accounting policies below.
2.3 Functional and presentation currency
These financial statements are presented in Singapore dollars, which is the functional currency of the Trust. All financial
information presented in Singapore dollars has been rounded to the nearest thousand, unless otherwise stated.
2.4 Use of estimates and judgements
The preparation of financial statements in conformity with RAP 7 requires the Manager to make judgements, estimates and
assumptions that affect the application of policies and reported amounts of assets, liabilities, income and expenses. The
estimates and associated assumptions are based on historical experience and various other factors that are believed to be
reasonable under the circumstances, the results of which form the basis of making the judgements about carrying amounts of
assets and liabilities that are not readily apparent from other sources.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in
the period in which the estimates are revised and any future periods affected.
