The financial statements of K-REIT Asia (the "Trust") for the financial year ended 31 December 2008 were authorised for issue
by the Manager on 11 February 2009.
- General
K-REIT Asia is a Singapore-domiciled real estate investment trust constituted by the Trust Deed dated 28 November
2005 (as amended) (the "Trust Deed") between K-REIT Asia Management Limited (the "Manager") and RBC Dexia Trust
Services Singapore Limited (the "Trustee"). The Trust Deed is governed by the laws of the Republic of Singapore. The
Trustee is under a duty to take into custody and hold the assets of the Trust in trust for the holders ("Unitholders") of
units in the Trust (the "Units"). The address of the Trustee’s registered office and principal place of business is 20 Cecil
Street, #28-01 Equity Plaza, Singapore 049705.
The Trust was formally admitted to the Official List of the Singapore Exchange Securities Trading Limited ("SGX-ST")
on 28 April 2006 and was included in the Central Provident Fund ("CPF") Investment Scheme on 28 April 2006.
The principal activity of the Trust is to invest in a portfolio of quality real estate and real estate-related assets which are
predominantly used for commercial purposes in Singapore and Asia with the primary objective of generating stable
returns to its Unitholders and achieving long-term capital growth.
The immediate and ultimate holding company is Keppel Corporation Limited, incorporated in Singapore.
The Trust has entered into several service agreements in relation to the management of the Trust and its property
operations. The fee structures of these services are as follows:
- Property management fees
Under the property management agreement, for property management services rendered by K-REIT Asia
Property Management Pte Ltd (the "Property Manager"), the Trustee will pay the Property Manager property
management fees of 3.0% per annum of the property income of each of the investment properties.
The Property Manager is also entitled to receive leasing commission at the rates set out as follows:
- one month’s Gross Rent (base rental income and tenant service charge) or licence fee, as applicable, for
securing a tenancy or licence of two years or more;
- one-half month’s Gross Rent (base rental income and tenant service charge) or licence fee, as applicable, for
securing a tenancy or licence of less than two years but at least a year and a proportionate part thereof; and
- one-quarter month’s Gross Rent (base rental income and tenant service charge) or licence fee, as applicable,
for securing a renewal of tenancy or licence of a year or more and a proportionate part thereof for securing a
renewal of a tenancy or licence of less than a year.
The property management fees are payable monthly in arrears.
- Manager’s management fees
Pursuant to the Trust Deed, the Manager is entitled to the following management fees:
- a base fee of 0.5% per annum of the value of all the assets for the time being of the Trust or deemed to be
held upon the trust constituted under the Trust Deed ("Deposited Property"); and
- an annual performance fee of 3.0% per annum of the Net Property Income (as defined in the Trust Deed) of
the Trust and any Special Purpose Vehicles (as defined in the Trust Deed) after deducting all applicable taxes
payable.
The management fees will be paid in the form of cash and/or Units (as the Manager may elect). The management
fees payable in Units will be issued at the volume weighted average price for a Unit for all trades on the SGX-ST
in the ordinary course of trading on the SGX-ST for the period of 10 Business Days (as defined in the Trust Deed)
immediately preceding the relevant Business Day.
The Manager’s management fees are payable quarterly in arrears.
The Manager is also entitled to receive an acquisition fee at the rate of 1% of the acquisition price and a
divestment fee of 0.5% of the sale price on all acquisition or disposal of properties.
- Trustee’s fees
Under the Trust Deed, the maximum fee payable to the Trustee is 0.03% per annum of the value of the Deposited
Property and shall be payable quarterly in arrears.
- Summary of significant accounting policies
- Basis of preparation
The financial statements have been prepared in accordance with Statement of Recommended Accounting
Practice 7 "Reporting Framework for Unit Trusts" ("RAP 7") issued by the Institute of Certified Public Accountants
of Singapore, the applicable requirement of the Code on Collective Investment Schemes ("CIS Code") issued by
the Monetary Authority of Singapore and the provisions of the Trust Deed. RAP 7 requires the accounting policies
to generally comply with the principles relating to recognition and measurement of the Singapore Financial
Reporting Standards ("FRS").
The financial statements, which are expressed in Singapore dollars and rounded to the nearest thousand, unless
otherwise stated, are prepared on the historical cost basis, except for investment properties which are stated at
fair value.
- Changes in accounting policies
The following INT FRSs are effective for annual period beginning 1 January 2008:
INT FRS 111
INT FRS 112
INT FRS 114
|
FRS 102 - Group Treasury Share Transactions
Service Concession Arrangements
FRS 19 - The Limit on a Defined Benefit Asset, Minimum Funding Requirements and
Their Interaction
|
The above changes however do not have any implication to the Company’s financial statements.
- FRS and INT FRS not yet effective
The Trust has not applied the following FRS and INT FRS that have been issued but not yet effective:
|
Effective date (Annual periods beginning on or after) |
| INT FRS 113 |
Customer Loyalty Programmes |
1 July 2008 |
| FRS 1 |
Presentation of Financial Statement |
1 January 2009 |
| FRS 23 |
Borrowing Costs |
1 January 2009 |
| FRS 32 |
Financial Instruments: Presentation - Amendments Relating to
Puttable Financial Instruments and Obligations Arising on Liquidation |
1 January 2009 |
| FRS 102 |
Share-based Payment - Vesting Conditions and Cancellations |
1 January 2009 |
| FRS 108 |
Operating Segments |
1 January 2009 |
The Manager expects that the adoption of the above pronouncements will have no material impact to the
financial statements in the period of initial application, except for FRS 1 as indicated below:
FRS 1 Presentation of Financial Statements - Revised Presentation
The revised FRS 1 requires owner and non-owner changes in equity to be presented separately. The statement of
changes in equity will include only details of transactions with owners, with all non-owner changes in equity
presented as a single line item. In addition, the revised standard introduces the statement of comprehensive
income: it presents all items of income and expense recognised in profit or loss, together with all other items of
recognised income and expense, either in one single statement, or in two linked statements. The Trust is
currently evaluating the format to adopt.
