As the REIT Manager, the Board of Directors realizes the importance of Corporate Governance and believes that good corporate governance is a crucial factor for FTREIT’s operations, in order to efficiently and effectively manage the business to have stability, continuous growth and fairness to all stakeholders. For such reasons, the Board of Directors has stipulated the Corporate Governance Policy in order to be a guideline for REIT management to achieve the objectives that have been set for correctness and transparency.
Structure of the board of directors
The REIT Manager has one committee, the Board of Directors, consisting of 6 directors (Duties and Responsibilities were disclosed in “Management”). Besides, there are no sub-committees.
|No.||Name - Surname||Position||No. of Attendance /
No. of all meetings in 2022
|1.||Mr. Threekwan Bunnag||Chairman and Independent Director||9 / 9|
|2.||Mr. Sopon Punyaratabandhu||Independent Director||9 / 9|
|3.||Mr. Sopon Racharaksa||Director||9 / 9|
|4.||Mr. Sopon Racharaksa||Director||9 / 9|
|5.||Mr. Hiroaki Sagane||Director||9 / 9|
|6.||Mr. Somboon Wasinchutchawal||Director||8 / 9|
- Mr. Somboon Wasinchutchawal was appointed to be the Director on 1 November 2021, and he has started joining the Board of Director meeting since No.2/2022.
- Ms. Pornpimol Supawiratbancha, Chief Financial Officer, is the Company Secretary passed the Company Secretary Program (CSP) 105/2020 conducted by Thai Institute of Directors Association (IOD)
Structure of the Board of Directors
- The Chairman is an independent director, and all Independent Directors account for one-third of the Board of Directors.
- None of the directors is a member of REIT manager's management team.
- No Director has ever been an employee, shareholder or partner of KPMG Phoomchai Audit Ltd. which is the external audit firm of the REIT Manager and FTREIT.
The Board of Directors’ Meeting
The REIT Manager holds the Board of Director Meeting at least once a quarter. In 2022, there were 9 meetings conduct by physical meeting and electronic means. The procedures are as follows:
- Company Secretary shall send out the invitation together with meeting agenda and supporting documents with necessary contents for consideration to every Director at least 7 days prior to the meeting date, so that the Directors will have sufficient time to review the information prior to the meeting.
- The proposed agenda for the Board of Directors’ meeting shall be about the operations of FTREIT including the operating results, the annual budget, the distribution payment, the arrangements for unitholder’s meeting, investment in additional assets, related party transactions, business and investment plans, funding plans as well as progress in the implementation of the business plan.
- In every meeting, the number of attending Directors shall be more than one half of total Directors. Every Director has the right to one vote. Any Director who has a conflict of interest in any matter shall have no right to vote on such matter.
- In the meeting, the Chairman will oversee the allocation of sufficient time for management to provide documents and information to debate important issues, and sufficient time for the Directors to discuss the important issues. All Directors are free to comment and propose the agenda.
- Minutes with the record keeping of all related documents will be recorded accurately, in a complete and checkable manner. The minutes which are certified by the Board of Directors shall be kept as evidence for future reference.
Rules for proper use of inside information
The Board of Directors has regulated policies governing the use of internal information and the trading transactions of FTREIT, in order to promote equality and fairness towards all unitholders and to prevent Directors, Management or employees who can access material information from taking benefit for themselves or for others.
- Directors, Management and all employees must never utilize material information that has not been disclosed to the public for their own or others’ benefit and must strictly abide by the confidentiality policy regulated by the Company.
- Directors, Management and all employees are allowed to invest in FTREIT’s units. However, in order to prevent possible conflicts of interest, Directors, Management and employees who can access material information, as well as their spouses, partner, or children not having yet become sui juris are prohibited from buying, selling, transferring or getting transferred FTREIT’s units under the following circumstances:
- Within a one-month period before the financial statement is disclosed to the general public.
- Before considering investment or divestment of assets.
- Before the distribution payment to unitholders.
The announcement during silent period via internal media in REIT Manager and Frasers property Thailand’s office area.
Information disclosure to unitholders
The REIT Manager has emphasized the importance of information disclosure to unitholders in a sufficient, accurate, complete, fast, and transparent manner. Also, the information disclosure of FTREIT shall comply with rules and guidelines of information disclosure of the Securities and Exchange Commission and the Stock Exchange of Thailand.
Key principles of information disclosure
- Information to be disclosed must be accurate, complete, clear, and timely.
- Must comply with the rules and regulations of information disclosure accurately and completely.
- Every unitholder has equal right to receive the information.
Channels of Information Disclosure
- Investor Relations Department
Investor Relations (IR) fully takes charge of providing information and collecting opinions from unitholders, investors, and analysts on a regular basis, as well as presenting operational performance and compiling comments. In this regard, unitholders or investors can contact IR at 02-483-0529 or email: firstname.lastname@example.org
FTREIT’s information is disclosed on website;
- Unitholder Meeting
The REIT Manger held 2022 Annual General Unitholders Meeting on 27 January 2022 at 2.00 p.m. to report operating performance, the business plan, industry and business trends, distribution payment to unitholders, and answered questions.
- Investor Meeting
Throughout 2021, the REIT Manager has allowed opportunities for analysts, unitholders, and institutional investors in Thailand and overseas to meet with management via different arrays of activity on a continuous basis, as a way of sharing information operating performance, strategic plan, operational directions, and summarising key events throughout the year.
Due to the situation of Covid-19 is still continuously spreading, all meetings in 2022 were held through a video conference, the details are as follows:
- Joining Opportunity Days conducted by the Stock Exchange of Thailand
- Joining domestic and international roadshows
- Holding analyst meeting
- Joining conference calls
IR Events in 2022
|Events||No. of times|
|Annual General Meeting of Unitholders 2022||1|
|Extraordinary General Meeting of Unitholders No.1/2022||1|
|Opportunity Day by the Stock Exchange of Thailand||4|
|Roadshows to provide the operating performance (December 2021 and May 2022)||2|
Guidelines of arranging the unitholder meeting
The REIT Manager shall arrange a unitholder meeting as Annual General Meeting within 4 months after the end of the fiscal year. Other meetings of unitholders shall be called Extraordinary General Meetings. The REIT Manager shall hold the Extraordinary General Meeting in line with the Trust Deed and related laws as follows:
- When the REIT Manager considers that it is appropriate to call the unitholders’ meeting
- When the REIT Manager is required by the Trust Deed to get a resolution from the unitholders to carry out the following activities:
- The acquisition or disposal of FTREIT’s major assets with the value equal to or over 30% of the total asset value;
- The issuance of debentures or any debt instruments;
- The increase or decrease of FTREIT’s paid-up capital, as indicated in the Trust Deed;
- The connected transactions with the REIT Manager or connected persons with the REIT Manager, with the transaction value equal to or above THB 20 million or higher or more than 3% of net asset value, whichever is higher;
- The change of benefits and the capital returned to the unitholders;
- The change of Trustee;
- The change of REIT Manager and the appointment of new REIT Manager;
- The amendment of Trust Deed that significantly impacts the rights of unitholders or the increase of fees and/or expenses to be higher than the maximum rate specified in the Trust Deed;
- The cancellation of the Trust;
- Any other circumstance that the Trustee and/or the REIT Manager deem necessary and appropriate to propose to the unitholders’ meeting and to get resolution for such matter;
- Any other circumstance required by the Securities and Exchange Commission.
- When unitholders with a total number of units not less than 10% of total units sold make a written request to the REIT Manager to call for a Unitholders Meeting with clear reason stated in the request, the REIT Manager shall arrange a Unitholders’ Meeting within 1 month after the date of receiving such request.
|Details||2022 Annual General Meeting||Extraordinary General Meeting No. 1/2022|
|Date & Time||27 January 2022
|20 June 2022
|Before the meeting|
|Unitholders were involved in proposing the meeting agendas. Guidelines on meeting agenda proposal were posted on the Stock Exchange of Thailand’s channels and the FTREIT website.||
During 15 August - 15 October 2021
Nevertheless, proposal for agenda was made for the meeting.
|Kept unitholders informed of the meeting date well ahead of time for full participation. Communication on the matter was made through the Stock Exchange of Thailand’s channels and the FTREIT website.||Since 5 November 2021||Since 6 May 2022|
|Publishing of the invitation in daily newspaper not less than 3 days before the meeting day.||During 10 - 12 January 2022||During 6 - 8 June 2022|
|Posted the meeting notice both in Thai and English on the FTREIT website.||Since 30 December 2021||Since 31 May 2022|
|Thailand Securities Depository Co., Ltd. (TSD) distributed the invitation prior to the meeting not less than 7 days or 14 days (as the case may be). This provided unitholders with enough time to acknowledge the meeting agenda and to examine the information.||Started on 12 January 2022; 15 days prior to the meeting.||Started on 2 June 2022; 18 days prior to the meeting|
|On the meeting day|
The meeting was held via electronic means. Unitholders can join the meeting, vote, ask questions, and express opinions in the meeting via a webcast with online voting facility.
|After the meeting|
|Submitted the meeting’s resolutions and accompanying details i.e. the number of votes for each agenda to the Stock Exchange of Thailand and posted on FTREIT’s website on the day of the meeting so that absent unitholders could immediately access the information.||27 January 2022
|20 June 2022
|Prepared the meeting minutes and distributed via the Stock Exchange of Thailand’s channels and FTREIT’s website within 14 days after the meeting.||Disclosed on 10 February 2022||Disclosed on 4 July 2022|
CONSIDERATION OF INVESTMENT AND MANAGEMENT OF FTREIT
According to Board of Directors meeting No. 9/2022 on 2 August 2022, REIT Manager’s Directors has reviewed and developed new strategies, and also conducted the business plan to response with current business situations.
Investment in Core Assets
- Conduct due diligence on assets;
- Organize valuation of assets under investment as specified in the Trust Deed;
- Establish risk prevention measures or remedy measures for potential damage caused by breach of agreement or non-enforcement under lease agreement, and disclose such risk prevention measures to the Trustee and unitholders in case of leasehold investment in the form of sub-lease.
For acquisition of additional core assets, the REIT Manager shall take additional actions as follows:
- Propose to the Trustee for consideration and approval of investment in assets as specified in the Trust Deed and related laws.
- Apply for approval for investment in assets as follows:
2.1 Investment in assets owned by the REIT Manager or a connected person
- For transactions valued over THB 1 million or equal to or above 0.03% of the net asset value of FTREIT, whichever is higher, an approval must be obtained from the Board of Directors;
- For transactions valued equal to or above THB 20 million or over 3% of the net asset value of FTREIT, whichever is higher, an approval must be obtained by resolution of a meeting of unitholders;
- The REIT Manager shall appoint a financial advisor regarding connected transactions to be entered into with the REIT Manager so that the Board of Directors and/or unitholders can make informed decision on approval of investment in such assets;
- The REIT Manager shall prohibit a person who is connected to the assets under disposal from participating in approval of investment in such assets.
2.2 Investment in assets owned by a person who is not the fund manager or a connected person
- For investment in assets with value equal to or above 10%of total asset value of FTREIT, an approval must be obtained from the Board of Directors;
- For investment in assets with value equal to or above 30% of total asset value of FTREIT, an approval must be obtained by a majority vote of unitholders attending the meeting.
Criteria for Investment in Core Assets and Equipment
Acquisition of core assets and equipment by FTREIT must be in accordance with the criteria specified in the Trust Deed. The material details are summarized below:
- It must be an investment in property in category of land and factory, warehouse and/or office buildings for acquisition of ownership or possessory right;
- In case of acquisition of possessory right, the property must be acquired by means of issuance of a Nor.Sor.3 Kor. In case of leasehold, the property must be acquired by means of issuance of a title deed or a possessory right deed in a form of Nor. Sor. 3 Kor;
- Properties to be acquired must not be enforced under the law on property rights or dispute unless the REIT Manager and the Trustee jointly consider and issue a written opinion that such enforcement under the law on property rights or such dispute has no material effect on making profit from the property and the conditions of acquisition of such property will benefit unitholders;
- An agreement for acquisition of a property must not specify an agreement or an obligation that may prevent the Trust from disposing the property at a fair price (at the time of disposal) such as a pre-emptive right at fixed price;
- Properties and/or assets to be acquired which are classified as core assets as prescribed in the notification of The Capital Market Supervisory Board must be ready for profit making with offering (if any) for each issuance including borrowing amounts (if any). FTREIT may make investment in projects under construction where the total value of investment amount for acquisition and development of the property until ready for assets of FTREIT (after offering of units) and FTREIT must be able to prove that there is sufficient working capital for such development without affecting the survival of the Trust;
- Properties to be acquired must be fully evaluated including verification of title deed for disclosure to investors at least six months prior to application for acquisition but not exceeding one year preceding investment in such property with a minimum of two appraisers who are approved by the Securities and Exchange Commission;
- Properties to be acquired must have minimum aggregate value of TH 500 million for the first-time investment in core assets;
- In case of indirect investment in core assets by FTREIT, it must be an investment in property specified in (1) - (7) above through unitholding in a company incorporated with objectives to engage in the same business as FTREIT as specified in the Trust Deed. Such investment must meet the following criteria:
- FTREIT must hold shares in such company in a ratio as prescribed in the notification of the Securities and Exchange Commission or The Capital Market Supervisory Board;
- FTREIT must be able to prove that there are measures or mechanisms to enable the Trustee and the REIT Manager to take care of and control such company to ensure the operation as specified in the Trust Deed and the criteria of the Securities and Exchange Commission in a similar manner as if FTREIT were making direct investment in such core assets.
- If value of properties to be acquired is above 5% higher than the minimum valuation price assigned by the valuation company within one year preceding the acquisition, facts and reasons for acquisition at such price must be provided.
Disposal of Core Assets
The REIT Manager may consider disposing of core assets of FTREIT under the following procedures:
- The REIT Manager must have core assets valuated by an independent valuator in accordance with the criteria specified in the notification of Office of the Securities and Exchange Commission;
- Disposal of core assets must be over and contain transaction details and approval procedures as specified in the Trust Deed and it must be approved by the trustee or a resolution of a meeting of unit holders in the same manner as acquisition of the assets.
- Disposal of core assets in the following categories is permitted only when necessary and appropriate and with approval from the Board of Directors:
- Disposal of core assets within one year from the date on which the trust acquires such core assets;
- Disposal of core assets that FTREIT acquired back to the previous owner.
Management of Core Assets
In relation to management of core assets of FTREIT, the Company as the REIT Manager appoints a Property Manager who is selected based on experience in management of each type of property in which FTREIT will make investment. The REIT Manager appointed FPIT as the Property Manager for warehouses and FPT as the Property Manager for factories, (please see details in the topic “Property Manager”). The REIT Manager supervises and controls the Property Manager by the following means:
- The REIT Manager establishes a marketing policy and strategy in property management for the Property Manager to comply with;
- The REIT Manager controls and oversees the Property Managers’ performance on a regular basis and checks accuracy and completeness of property-related tasks such as rental fee, outstanding payment, marketing activities, property condition, repair expenses, and insurance of core assets.
SELECTION OF PROPERTY MANAGERS
The REIT Manager may appoint one or more juristic person to act as property manager(s) to manage assets of FTREIT. Property Managers must be competent to manage and have knowledgeable people in estate management with not less than 3 years’ experience. The REIT Manager is responsible for property management fees and FTREIT is responsible for other costs incurred by the property management, such as maintenance fees, etc. However, if a new Property Manager is appointed, the REIT Manager informs the trustee of the appointment within 15 days of the appointment of the new Property Manager.
Property Managers have a 5-year contract which can be renewed automatically. However, REIT Manager may change or appoint additional Property Managers within the terms outlined in the contract, when one of the following occurs:
- Property Managers do not perform their duties according to terms and conditions of the contract of appointment and Property Managers do not remedy this within 60 days after receipt of notice from REIT Manager to rectify such non-performance.
- If the rental rate of FTREIT’s properties under management of any Property Manager is less than 50% for 3 consecutive months and if the annual performance of the property is less than the performance estimate specified in the annual operating plan that Property Managers have proposed and had approved by the REIT Manager for a consecutive period of more than 2 years except in case of force majeure.
- Property Managers were ordered by the court to be in receivership or the court has appointed the official receiver to manage all, or a significant proportion, of the properties under the responsibility of the Property Manager.
- Property Managers lack the ability to act as Property Managers as determined by the REIT Manager and do not fix such disability within 60 days.
MONITORING PROPERTY MANAGERS’ PERFORMANCE
The management of properties of FTREIT, the REIT Manager supervises Property Managers appointed by FTREIT to achieve its purpose and to preserve the best benefit of FTREIT and unitholders. The REIT Manager has a system for executing and supervising Property Managers as follows;
- Monthly Monitoring
- Asset Management Department assigns Property Managers to submit a summary of factory visits of potential customers with customers’ names and phone numbers. In addition, they need to submit report on the lease of the main properties, and property repair or maintenance report.
- Finance and Accounting Department monitors the completeness of the rental received in FTREIT’s accounts in each month.
- Finance and Accounting Department investigates the unpaid rental report and check out the overdue rental tracking records. The property management department ensures that Property Managers follow the unpaid process and audit the tracing process include a copy of the notice (if any).
- Asset Management Department examines the documents used in marketing to find tenants to ensure that such documents are not conducive to a conflict of interest in finding tenants of Property Managers by performing at least the examination of the presentation of each rental property equally, without regard to the ownership title and check on the pricing of property rental as a price advantage to any property owner or not.
Asset Management Department will contact the potential customers in item (1) by random to verify that the Property Managers are acting in a neutral manner without favoring any one property owner.
- Semi Annual Monitoring
Every 6 months, or when appropriate, Asset Management Department meets with Property Managers to announce marketing policies, strategies and asset management. Property Managers provide information about the competition, relevant industry conditions, and issues that
- Annual Monitoring
- Asset Management Department audits properties with Property Managers and property appraiser to ensure that the core assets of FTREIT are in normal operation. For the purposes of the annual property appraisal, it must be established that no additional construction or extension, except that which has received permission from FTREIT, has been made.
- Property Management Department reviews and audits the quotations, coverage and premium rates and confirms that the primary coverage is included in the main insurance document in order to ensure that the core asset is properly insured as required by the company.
- Property Maintenance
- In event of repairs and maintenance, the cost is not allowed to exceed the amount approved by FTREIT for Property Managers to carry out their own procurement. However, every month, Property Management Department reviews and audits the correctness of the repairs and maintenance items prepared by Property Managers.
- In event that repair and maintenance costs are more than the amount approved by FTREIT:
- For urgent cases, Property Managers must first obtain the approval from Property Management Department, via phone or E-mail.
- For non-urgent cases, Property Managers send the letter of approval to Property Management Department including details of the property such as property number, name of the lessee, damaged property photos, and the amount of money to ask for approval. The supporting documentation must illustrate the necessity and appropriateness of the proposed costs, by including photographs of property damage, or comparison of prices from more than one service provider.
- Property Management Department prepares a letter of approval of the cost limit for the Property Managers with copies of the letter being kept as evidence and sends the documents to Finance and Accounting Department for further processing.
INTEREST TRACKING PROCEDURE
The Company as the REIT Manager has appointed FPT, FPIT and may appoint other persons as deemed appropriate to collect revenue and manage spending of FTREIT. In these regards, the Company has a procedure to track the interests of FTREIT which requires the appointed person to submit a report of such to the REIT Manager such as lease income report, lease cost report, selling and administrative expenses report, outstanding debt report, debt collection report, occupancy report, repair and maintenance hiring report and tenant’s core assets insurance report.
SELECTION AND NOMINATION OF DIRECTORS AND MANAGEMENT
The REIT Manager shall select the personnel to be responsible for the management of FTREIT based on his/her experience in the related functions, to ensure that such person could manage FTREIT for the maximum benefit of the unitholders. The REIT Manager shall consider the qualifications of the candidate as defined by the guidelines of the Securities and Exchange Commission (SEC) as follows:
- Having work experience in the field of investment management or management of revenue generating real estate for not less than 3 years within the period of 5 years before the date of joining the company (depending on circumstances);
- No prohibited characteristics of authorised personnel of the Management in accordance with the Capital Market Supervisory Board’s concerning the qualification of a person in the capital market;
- Directors or others who are assigned (depending on circumstances) will select a suitably qualified candidate according to the criteria as specified by Legal and Compliance department together with Investor Relations.
REIT MANAGER FEE
|Management Fee (Base Fee)||0.25% per annum of the Trust’s total assets|
|Performance Fee||3.00% per annum of net income from rental and service agreement|
|Incentive fee||5.00% per annum of Trust’s net operating income|
|Commission fee for acquiring a new tenant||In proportion to rental and service periods but not over 3 months based on the latest rental and service rate of new tenant|
|Commission fee for buying/selling/ transferring leasehold/receiving leasehold||3.00% of the value of buying/selling/transferring leasehold/ receiving leasehold|
REIT Manager fees in 2021 - 2022 were THB 395.47 million and THB 418.31 million, respectively.
|1.||0.060% per annum of total asset value for a portion not exceed 15,000 million Baht|
|2.||0.045% per annum of total asset value for a portion that exceed 15,000 million up to Baht 30,000 million Baht|
|3.||0.030% per annum of total asset value for a portion that exceed 30,000 million Baht|
Trustee fees in 2021 – 2022 were THB 21.05 million and THB 21.26 million, respectively.
As the REIT Manager, Frasers Property Industrial REIT Management (Thailand) Co., Ltd. appointed KPMG Phoomchai Audit Ltd. as FTREIT’ s auditor for 2022 according to minutes resolution of Board of Directors Meeting No. 2/2022 on 5 November 2021, which was announced in the Annual General Unitholders Meeting 2022 on 27 January 2022.
Details of Audit fees in 2021 - 2022 are as follows:
|Other service fee||112,000||10,500|