CORPORATE GOVERNANCE REPORT
(CONT’D)
In addition, as part of its undertaking to the MAS, the Manager has undertaken that it will not deal in the Units during the
period commencing one month before the public announcement of LMIR Trust’s full year results and where applicable,
property valuation, and two weeks before the public announcement of LMIR Trust’s quarterly results and ending on the
date of announcement of the relevant results or, as the case may be, property valuation.
FEES PAYABLE TO THE MANAGER
Under the revised Code of Collective Investment Scheme (the “CIS Code”) issued by MAS which took effect on 1 January
2016, where fees are payable out of the deposited property of a property fund, the methodology and justifications for each
type of fees payable should be disclosed. The methodology for computing the fees payable to the Manager is contained in
Clause 15 of the Trust Deed (as amended), details of which are disclosed under Notes to Financial Statements.
The management fees, which are contained in Clause 15.1 of the Trust Deed, are fees earned by the Manager for the
management of LMIR Trust’s portfolio. The management fees should be viewed holistically as a whole which comprise
three components, namely the Base Fee, the Performance Fee and the Authorised Investment Management Fee, which
are elaborated further below:
BASE FEE
In relation to the authorised investments in the nature of real estate whether held by LMIR Trust, or indirectly through
one or more special purpose vehicles of LMIR Trust, the Manager shall be entitled to receive for its own account out of all
the assets of LMIR Trust for the time being held or deemed to be held upon the trusts of the Trust Deed (the “Deposited
Property”) the Base Fee, being a fee not exceeding the rate of 0.25% per annum of the value of the Deposited Property
(excluding those authorised investments not in the nature of real estate, whether directly held by LMIR Trust or indirectly
through one or more special purpose vehicles) (Clause 15.1.3 of the Trust Deed).
The Base Fee represents the remuneration to the Manager for executing its core responsibility and it compensates the
Manager for the costs incurred in managing LMIR Trust, which includes day-to-day operational costs, compliance costs and
costs incurred in managing and monitoring the portfolio. The base fee is calculated at a fixed percentage of asset value as
the scope of the Manager’s duties is commensurate with the size of LMIR Trust’s asset portfolio.
PERFORMANCE FEE
In relation to the authorised investments in the nature of real estate whether held by LMIR Trust, or indirectly through
one or more special purpose vehicles of LMIR Trust, the Manager shall be entitled to receive for its own account out of the
Deposited Property the Performance Fee, being a fee equal to a rate of 4.0% per annum (or such lower percentage as may
be determined by the Manager in its absolute discretion) of the Net Property Income (as defined in the Trust Deed) for each
financial year (calculated before accounting for the Performance Fee in that financial year) (Clause 15.1.4 of the Trust Deed).
The Performance Fee, which is based on the objective benchmark of Net Property Income, aligns the interests of the
Manager with Unitholders as the Manager is motivated and incentivised to enhance Net Property Income and achieve
income stability by ensuring the long-term sustainability of the assets through proactive asset management strategies
and asset enhancement initiatives. Therefore, to achieve sustainability in LMIR Trust’s Net Property Income, the Manager
is dis-incentivised from taking on excessive short-term risks, and will strive to manage LMIR Trust in a balanced manner.
The pegging of the Performance Fee to Net Property Income also aligns the interests of the Manager with the interests of
Unitholders as the compensation to theManager commensurates with the value that theManager delivers to the Unitholders
in the form of distributable income, which is derived from the Net Property Income.
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