As far as efficiency is concerned, size matters. In general, the largest REITs are likely to have the lowest fees as a percentage of assets within their groups. Hence, the manager of CapitaLand Integrated Commercial Trust (CICT) charged just 0.36% of deposited property in FY2020. This is partly because assets in the former CapitaLand Mall Trust which was renamed CICT almost doubled and the sponsor and manager waived the acquisition fee of more than $111 million.
Fees paid to REIT managers can be a touchy subject but we will attempt to poke the subject with a stick in this issue. Firstly, we have updated our fees table of Singapore-listed REITs based on their latest annual reports for FY2020 and FY2021. In order to standardise the fees, we have highlighted them as a percentage of assets excluding acquisition and divestment fees (see big table).
Here are a few general observations. As a group, REITs with overseas assets such as the US-based office REITs and a couple of other REITs with foreign assets have the highest fees as a percentage of deposited property. So, in addition to currency risk, different risk-free rates, tax issues and unfamiliarity with the properties being based in another country, investors are paying the managers the highest fees.
