The manager of Stoneweg European REIT has proposed to convert the REIT into a stapled trust comprising a REIT and a business trust.
Each unit in the REIT would be stapled to a unit in Stoneweg European business trust (BT), also known as a stapled security, announced the manager on April 3.
The stapled group would be known as Stoneweg European Stapled Trust (SERT) thereafter.
According to the manager, the proposed stapling will done through distributing the units in Stoneweg European BT to holders of units in Stoneweg European REIT via a distribution in specie. After which, Stoneweg European REIT would be stapled to Stoneweg European BT to form SERT.
The manager and Stoneweg European BT’s trustee-manager, Stoneweg EBT Management, will be managers of the new stapled entity.
According to the REIT manager, the proposed stapling will provide the REIT with a future-proof corporate structure with optimal tax efficiency. The stapled structure will also lower reliance on passive rental income and make it more resilient to market cycles.
“While the REIT component benefits from preferential tax treatment in Singapore, having a stapled REIT-BT structure may allow for greater tax structuring flexibility, especially in Europe,” reads the April 3 statement.
Under the new structure, SERT will retain the REIT’s existing investment mandate of investing in European offices, logistics, light industrial and retail buildings. It will also include an additional flexibility of implementing the investment mandate under the business trust.
For instance, the business trust may conduct “incremental or moderate development activities” that may or may not have exceeded the development limit established in Appendix 6 of the Code on Collective Investment Schemes issued by the Monetary Authority of Singapore (MAS) under the REIT. Instead, under the business trust, such development assets would be defined as real estate located in Europe, which is within the existing investment strategy of Stoneweg European REIT, says the manager.
The business trust may also invest in assets, which support or are ancillary to its real estate, such as solar power installations. “Accordingly, while Stoneweg European BT may embark on such activities, the type of investment remains the same as it would invest in real estate assets, real estate-related assets or assets ancillary to, or in support of, such real estate assets and real estate-related assets located in Europe,” it adds.
The Singapore Exchange Securities Trading Limited (SGX-ST) has already given its approval-in-principle for the listing of, dealing in, and quotation of the stapled securities on the Mainboard.
An extraordinary general meeting (EGM) will be held at 4pm on April 29 for the proposed stapling, after the REIT's annual general meeting (AGM) at 3pm.
Units in Stoneweg European REIT closed flat at EUR1.54 ($2.26) or $2.23 on April 2.
