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11 UNITS/STAPLED SECURITIES IN ISSUE (CONT’D)
Each H-REIT unit is stapled together with a HBT unit under the terms of a stapling deed dated 12 June 2006 entered
into between the H-REIT Manager, the H-REIT Trustee and the HBT Trustee-Manager and cannot be traded separately.
Each Stapled Security represents an undivided interest in H-REIT and HBT.
A holder of the Stapled Security has no equitable or proprietary interest in the underlying assets of the Stapled Group
and is not entitled to the transfer to it of any asset (or any part thereof) or of any real estate, any interest in any asset
and real estate-related assets (or any part thereof) of the Stapled Group.
The liability of a holder of the Stapled Securities is limited to the amount paid or payable for the Stapled Securities.
Each HBT unit and H-REIT unit carry the same voting rights.
Capital management
The Boards of the H-REIT Manager and HBT Trustee-Manager have a policy to maintain a strong capital base so as to
maintain investor, creditor and market confidence and to sustain future development of the business. Capital consists
of Unitholders’ funds. The Boards monitor the yield, which is defined as net property income from the property divided
by the latest valuation for the property, on the properties acquired. The Boards also monitor the level of distributions
made to holders of Stapled Securities.
The Boards seek to maintain a balance between the higher returns that might be possible with higher levels of
borrowings and the advantages and security afforded by a sound capital position.
H-REIT is subject to the aggregate leverage limit as defined in the Property Funds Appendix of CIS Code
issued by the MAS. The CIS Code stipulates that the total borrowings and deferred payments (together the
"
Aggregate Leverage
") of a property fund should not exceed 35.0% of its Deposited Property except that
the Aggregate Leverage of a property fund may exceed 35.0% of its Deposited Property (up to a maximum
of 60.0%) if a credit rating of the property fund from Fitch Inc., Moody’s or Standard and Poor’s is obtained
and disclosed to the public. The property fund should continue to maintain and disclose a credit rating so
long as its Aggregate Leverage exceeds 35.0% of its Deposited Property. With effect from 1 January 2016,
the Aggregate Leverage of a property fund shall not exceed 45.0% under a single-tier leverage limit as imposed by
the MAS.
For this financial year, H-REIT has a credit rating of BBB- from Fitch Inc. The Aggregate Leverage of H-REIT as at
31 December 2015 was 36.4% (2014: 31.7%) of H-REIT’s Deposited Property. This complied with the aggregate leverage
limit as described above.
The HBT Group, the H-REIT Group and the Stapled Group are in compliance with the borrowing limit requirements
imposed by the relevant Trust Deeds and all externally imposed capital requirements for the financial year 2015 and 2014.
There were no substantial changes in the HBT Group’s, the H-REIT Group’s and the Stapled Group’s approach to capital
management during the year.
NOTES TO THE FINANCIAL STATEMENTS
