The trustee-manager of Keppel Infrastructure Trust (KIT) has proposed changes to its existing management and performance fee structures to enhance the alignment of the manager’s interests to its unitholders on March 28.
The proposed changes will also enhance its ability to drive growth through new acquisitions and investments, according to the trustee-manager.
Under the new fee structure, the trustee-manager of KIT will be paid a base fee of 10% per annum (p.a.) of KIT’s distributable income, as well as a performance fee of 25% p.a. with any increase in KIT’s distribution per unit (DPU) y-o-y, multiplied by the weighted average number of units in issue.
The trustee-manager of KIT is currently receiving a management fee of $2 million and a 4.5% performance fee pegged to KIT’s income, which has been in place since 2010 when KIT was first listed under the SGX-ST as a business trust.
No changes are proposed to the acquisition and divestment fees payable to the trustee-manager under KIT's trust deed.
“[The proposed new fee structure] reflects the increased level of resources to manage and operate KIT’s diverse portfolio, which has grown since its inception, from $760 million comprising three assets in Singapore as at Dec 31, 2010, to a well-diversified global portfolio of approximately $4.6 billion comprising nine assets across five countries as at end-February 2022,” reads the statement released by the manager.
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The number of employees within the trustee-manager have also grown more than three-fold to 22 employees as at Dec 31, 2021, from its seven employees at the time of listing.
Jopy Chiang, CEO of the trustee-manager, says, “To support KIT’s growth, we will broaden our global reach and expand our talent pool in investment origination, deal execution and portfolio management. To this end, we are looking to establish offices in key overseas markets to create new synergies and increase deal flow, which will allow us to scale up faster and accelerate KIT’s growth plans.”
The proposed new fee structure is currently being widely adopted by Singapore REITs (S-REITs) listed in the last five years.
The proposed base and performance fee are subject to KIT’s unitholders’ approval at an extraordinary general meeting (EGM) to be held on April 19.
If approved, the proposed base fee will be implemented progressively over the financial year ending Dec 31, to reflect the progressive building-up of KIT’s portfolio of assets by the trustee-manager and to also allow more time to build up its resources.
Units in KIT closed at 56.5 cents on March 25.
