So what are some of the common roles and attributes of the sponsors?
The sponsor is usually the major shareholder of the REIT
In most cases when the REIT is created, it is the sponsor who injects its own properties into the initial portfolio of the REIT. The sponsor will then retain majority of the ownship when the REIT is listed.
Right of first refusal of the sponsor's assets
There is usually a right of first refusal agreement between the REIT and its sponsor. When the sponsor wants to sell its property asset, the REIT will be offered the right to purchase the asset first before it is being offered to the market. Point to note is that usually the sponsor has the obligation to ensure that the rental income of the properties are stable before injecting them into the REIT.
Source of credit
When the REIT is sourcing for credit for acquisition purpose or refinancing of debt, the presence of a strong sponsor will offer several advantages. The financial institutions may be more willing to lend because of the sponsor. The REIT may also tap on the existing relationship of the sponsor with certain financial institutions. As a last resort, the sponsor may also provide credit to the REIT with its own funds. For example, in Nov 2008, Fraserscomm refinanced its short-term debt of S$70.0 million by way of a loan from F&N Treasury Pte. Ltd, a wholly-owned subsidiary of its sponsor F&N.
Source of equity
When the REIT is raising funds via rights issue, the sponsors may support the exercise by undertaking to subscribe for their pro-rata entitlement of rights units, and also to subscribe to part or all of the excess rights units. In a way, we can view this as the sponsor injecting funds directly into the REIT. Sometimes the sponsor's percentage holding of the REIT may be increased as a result of subscribing to the excess rights. For example, in the rights issue exercise of Mapletree Logistics Trust in August 2008, its sponsor Mapletree Investment has increased its stake in the REIT from 30.2% to 46.9% after acquiring 325m excess rights units.
Advantages of having a sponsor
The advantages of having a strong sponsor are clearly revealed during the financial crisis. The REITs were able to tide through difficult times with the support of the sponsor, whether in their support in the rights issue exercises, or in helping to source for credit.
Disadvantages of having a sponsor
There are some who argues that the rights of first refusal agreement with the sponsor is at a disadvantage to the REIT. The argument is that as the sponsor may also be the major shareholder, the REIT may be 'pressured' to purchase the assets, even if it is not being offered the best price in the market. Of course this point can only be proved if the asset is really refused and offered to the market such that the prices can be compared. Some also questioned the quality of the properties injected by the sponsors into the REITs.
List of some of the REITs and their sponsors
[Updated as at 10 Nov 2010]
| REIT | Sponsor |
| AscendasReit | Ascendas Pte Ltd |
| AscottReit | Capitaland |
| Cache Logistics | CWT |
| CapitaRChina | Capitaland |
| CapitaComm | Capitaland |
| CDL H-Trust | CityDev |
| CapitaMall | Capitaland |
| FirstReit | Lippo Group |
| Fortune | Cheung Kong (Holdings) Limited |
| FrasersComm | F&N |
| FrasersCT | F&N |
| K-Reit | Keppel Land |
| LippoMapleTrust | Mapletree Investments, Lippo Group |
| MapleTreeInd | Mapletree Investments |
| MapleTreeLog | Mapletree Investments |
| AIMSAMPI Reit | AIMS Financial Group |
| PLife | Parkway Holdings |
| Starhill Gbl | YTL Corporation |
| Suntec | Suntec City Development Pte Ltd |
Some background information about the sponsors
[Updated as at 10 Nov 2010]
| Sponsor | Background | Listed |
| Ascendas Pte Ltd | In 2001, the subsidiary of JTC, Arcasia Land, merges with the international operations arm of JTC International to form Ascendas Pte Ltd. Currently Ascendas is Asia's leading provider of business space solutions. Renowned for quality infrastructure and lifestyle environments catering to business, Ascendas has an excellent track record as Asia’s premier developer and manager of business space. | |
| Capitaland | CapitaLand is one of Asia's largest real estate companies. Headquartered and listed in Singapore, the multi-local company's core businesses in real estate, hospitality and real estate financial services are focused in growth cities in Asia Pacific, Europe and the Gulf Cooperation Council (GCC) countries. | SGX |
| CityDev | Singapore's property pioneer since 1963, City Developments Limited (CDL) is a listed international property and hotel conglomerate involved in real estate development and investment, hotel ownership and management, facilities management, as well as the provision of hospitality solutions. The Group's global presence is led by its diversification into hospitality management and the acquisition of hotel assets through CDL's London-listed subsidiary, Millennium & Copthorne Hotels plc (M&C). | SGX, London (M&C) |
| CWT | CWT was founded in 1970 and listed on the Singapore Exchange in 1993. CWT has since grown and the principal businesses of CWT currently comprise integrated logistics solutions and engineering maintenance and facilities management services. Being the largest listed logistics company in Southeast Asia, CWT offers integrated logistics solutions to some of the world´s leading brands in the chemical, commodities, automotive, marine, oil & gas, defence and industrial sectors. Through its global network, the CWT Group is able to connect customers to 120 ports and over 1,200 destinations seamlessly around the world. |
SGX |
| Lippo Group | The Lippo Group is a major Indonesian conglomerate founded by its Chairman, Dr. Mochtar Riady in the 1950s. It consists of private and public companies in China mainland, Hong Kong and Macau; Indonesia, Philippines, Singapore and South Korea with US$11 billion in assets. Lippo Group has over 15 public-listed companies in different parts of Asia including Hong Kong, Indonesia and Singapore. | |
| Cheung Kong (Holdings) Limited | Cheung Kong (Holdings) Limited ("Cheung Kong Holdings") is the flagship of the Cheung Kong Group, the leading Hong Kong based multi-national conglomerate. Cheung Kong Holdings is a property development and strategic investment company. It is one of the largest developers in Hong Kong of residential, commercial and industrial properties. About one in seven private residences in Hong Kong were developed by the company. The company also has substantial interests and operations in life sciences and other businesses. It is listed on the Main Board of the Hong Kong Stock Exchange. | Hong Kong Stock Exchange |
| F&N | F&NL is a leading Pan Asian Consumer Group with core expertise and dominant standing in the Food and Beverage, Property and Publishing & Printing industries. Leveraging on its strengths in marketing and distribution; research and development; brands and financial management; as well as years of acquisition experience, it provides key resources and sets strategic directions for its subsidiary companies across all three industries. F&NL owns an impressive array of renowned brands that enjoy market leadership across a mix of beer, dairies, soft drinks and beverages; residential properties, retail malls and serviced residences; as well as publishing and printing services. | SGX |
| Keppel Land | Keppel Land is today one of Asia's premier property companies, recognised for its sterling portfolio of quality award-winning residential developments and investment-grade commercial properties, and high standards of corporate governance and transparency. Keppel Land is geographically diversified in Asia, with current focus on Singapore, China, Vietnam, India and Indonesia. | SGX |
| Mapletree Investments | Mapletree Investments (Mapletree) is a 100% owned subsidiary of Temasek Holdings. It is a leading real estate company in Singapore with an Asian focus. It is focused on investing in and managing real estate assets and funds in the office, logistics, industrial, business park and retail/lifestyle sectors. | |
| AIMS Financial Group | AIMS Financial Group Established in 1991. AIMS Financial Group is an Australian diversified non-bank financial services and investment group which has a solid track record in the Australian mortgage and securitization markets. Since establishment, AIMS Financial Group has also expanded to become an international financial group focusing on lending, securitization, real estate investment, private equity, investment banking, funds management, securities exchange ownership and e-commerce across the Asia Pacific region. | |
| Parkway Holdings | Parkway Holdings Limited provides healthcare services throughout Asia, while also managing Parkway Life REIT and providing healthcare education through Parkway Education Pte Ltd. | SGX |
| YTL Corporation | YTL Corporation Berhad is one of the largest companies listed on the Bursa Malaysia. The company was listed in 1985, has also had a secondary listing on the Tokyo Stock Exchange since 1996. YTL was the first Asian non-Japanese company to be listed on the Tokyo Stock Exchange. The YTL Group's core businesses are ownership and management of regulated utilities and other infrastructural assets, serving 10 million customers in three continents. | Bursa Malaysia, Tokyo Stock Exchange. |
| Suntec City Development Pte Ltd | Suntec City Development Pte Ltd was incorporated in Singapore in August 1988. In December 1988, its highest bid and distinguishable design won the Urban Redevelopment Authority (URA) tender to build the S$2.3 billion complex comprising the convention and exhibition centres, office towers and a shopping and entertainment centre. Situated on a site of 11.7 hectares, Suntec City is the single largest privately owned commercial development in Singapore. Funded entirely by a consortium comprising some of Asia’s most successful entrepreneurs, it began with a vision to create a futuristic city to meet the challenges of a global metropolis and be a premier landmark of Singapore in the 21st century. |
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