M&C REIT Management Limited (the "H-REIT Manager") was appointed manager of CDL Hospitality Real Estate Investment Trust ("H-REIT") in accordance with the terms of the Trust Deed dated 8 June 2006 (as amended or restated) between the H-REIT Manager and the H-REIT Trustee, DBS Trustee Limited. M&C Business Trust Management Limited (the "HBT Trustee-Manager") was appointed the trustee-manager of CDL Hospitality Business Trust ("HBT") in accordance with the terms of the Trust Deed constituting HBT dated 12 June 2006. The H-REIT Manager and the HBT Trustee-Manager (collectively "the Managers") executed a Stapling Deed dated 12 June 2006 (the "Stapling Deed") to form CDL Hospitality Trusts ("CDLHT"), a stapled group comprising H-REIT and HBT, and each Stapled Security consists of one H-REIT Unit and one HBT Unit and is treated as a single instrument.
The H-REIT Manager has general powers of management over the assets of H-REIT. The H-REIT Manager’s main responsibility is to manage H-REIT’s assets and liabilities for the benefit of the holders of H-REIT Units. The H-REIT Manager is responsible for formulating the business plans in relation to H-REIT’s properties and in this regard, it works closely with the master lessees to implement H-REIT’s strategies. In addition, the H-REIT Manager sets the strategic direction of H-REIT and gives recommendations to the H-REIT Trustee, DBS Trustee Limited, on the acquisition, divestment or enhancement of H-REIT’s assets in accordance with its stated investment strategies.
Other roles and responsibilities of the H-REIT Manager include:
- Managing, enhancing and maintaining Claymore Connect (previously Orchard Hotel Shopping Arcade) aimed at achieving high occupancy levels at a good yield.
- Using its best endeavours to ensure that the business of H-REIT is carried on and conducted in a proper and efficient manner and to conduct all transactions with or for H-REIT at arm’s length and on normal commercial terms.
- Ensuring that H-REIT complies with the relevant applicable laws and regulations, including the applicable provisions of the Securities and Futures Act, Chapter 289 of Singapore, the Listing Rules issued by Singapore Exchange Securities Trading Limited ("Listing Manual of SGX-ST"), the Code on Collective Investment Schemes (including the Property Funds Appendix), the conditions set out in the Capital Markets Services ("CMS") Licence for REIT Management issued by the Monetary Authority of Singapore ("MAS"), the H-REIT Trust Deed, the tax rulings issued by the Inland Revenue Authority of Singapore on the taxation of H-REIT and the holders of the Stapled Securities and all relevant contracts.
The H-REIT Manager holds a CMS licence issued by MAS to conduct real estate investment trust management activities as required under the licensing regime for real estate investment trust managers. In addition, employees of the H-REIT Manager who are engaged in investment management, asset management, financing, marketing and investor relations functions are holders of CMS representative licences.
HBT was activated on 31 December 2013. It acts as the master lessee of Jumeirah Dhevanafushi as well as the Japan hotels which were acquired by H-REIT. In addition to its function as a master lessee, HBT may also undertake certain hospitality and hospitality-related development projects, acquisitions and investments which may not be suitable for H-REIT. On 1 October 2015, HBT completed the acquisition of Hilton Cambridge City Centre (previously known as Cambridge City Hotel), a purpose-built upper upscale hotel located in Cambridge, United Kingdom.
The HBT Trustee-Manager has the dual responsibility of safeguarding the interests of the HBT Unitholders, and managing the business conducted by HBT. The HBT Trustee-Manager has general powers of management over the assets of HBT and its main responsibility is to manage HBT’s assets and liabilities for the benefit of the HBT Unitholders. The HBT Trustee-Manager also sets the strategic direction of HBT and works closely with the hotel managers where it is the master lessee or owner of the properties.
Both H-REIT and HBT are externally managed by the H-REIT Manager and HBT Trustee-Manager respectively. Accordingly, both H-REIT and HBT do not have personnel of their own. Experienced and well-qualified management staff are employed to run the day-to-day operations. The H-REIT Manager and HBT Trustee-Manager, not H-REIT, HBT or CDLHT, remunerate all the Directors and employees of the H-REIT Manager and HBT Trustee-Manager respectively.
This report sets out the corporate governance practices of both the Managers as they have adopted a similar set of corporate governance practices, with specific reference to the principles and guidelines of the Code of Corporate Governance 2012 ("2012 Code"). Where there are differences in practice from the principles and guidelines under the 2012 Code, the Managers’ position in respect of the same is also explained in this report.
The Managers are committed to maintaining good corporate governance and business integrity in all of CDLHT’s business activities.