Tuesday, April 18, 2017

My 'First' AGM experience

Date: 4/18/2017
Updated: 4/19/2017 (on REIT DPU composition)

There are two counters I'm holding have planned AGM today: CCT@10am and First Reit@9.30am, well, since it is my 'First' AGM, First REIT, by its very name, sounds better to me.

I hold First REIT only for less than a year, one of the reasons I like First REIT is its quarterly dividends.

Not being in SG for a decade, I was a bit disoriented when I walked out of Somerset MRT station and was lost in 313@Orchard shopping mall, the security lady pointed me the wrong way, I had to walk out of the mall to Orchard road under the hot sun to figure out my direction to the right venue.
Never attended any AGM  in China before, I'm totally new to the SG AGM and its procedure.

Registration is pretty easy, there are few clerks helping at the counter with IC presented to verify my number of units, the outgoing chairman Albert Saychuan Cheok shook hands with the earlier birds, including me:)

There are few interesting(and few very basic or strange) questions fired by unitholders during the Q&A session, Dr. Ronnie Tan Keh Poo(CEO & Deputy chairman) hold the mic answering majority of those, which I think it will be better if he let his fellow board directors the chances to answer some of the financial questions which he is not so acquainted with.

A show-up of 100+ shareholders, flocking to the adjacent ballroom for refreshment when Dr. Tan adjourned the meeting for counting of the votes on resolutions.

A few takeaways:
  • A "Greenfield" private hospital needs 3-4 years to reach Op CF positive
  • A hospital makes money when occupancy rate stays above 60%
  • First REIT issued a perceptual notes(MAS classified as security) of 5.625% interest, renewable every 5-year
  • Total debt S$400+m, gearing at 31+%(still some room to 45% MAS regulation)
  • First REIT's current average interest on bond is slightly below 4%
  • Growth strategy: acquire 1-2 hospital per annum from Sponsor (LK group)

One thing I don't really get from Dr. Tan's presentation (dare not to ask) is:
Is "-Capital" in DPU a return of unitholder's own investment? if so, it casts a concern to me, while I'd much prefer a 6.6% yield, I definitely wouldn't like it to be achieved in this manner.

Read more DPU articles after STE highlight some of his comment, First REIT's dividend history, but no idea of % of 'capital' return from it.

REIT's distribution comprises the following types:
i) Taxable income
ii) Tax-exempt income
iii) Capital distribution
iv) Other gains distribution

The Trustee and Manager will deduct income tax at the prevailing corporate tax rate (currently at 17%) from the distributions made to Unitholders that are made out of the taxable income of REIT. This applies unless, the beneficial owners are individuals or qualifying Unitholders. In such instances, the Trustee and Manager will make the distributions to such Unitholders without deducting any income tax.A qualifying Unitholder refers to:
  1. A company incorporated and tax resident in Singapore;
  2. A non-corporate Singapore constituted or registered entity (eg. registered charities, town councils, statutory boards, registered co-operative societies and registered trade unions);
  3. A Singapore branch of a company incorporated outside Singapore;
  4. An international organisation that is exempt from tax on such distributions by reason of an order made under the International Organisations (Immunities and Privileges) Act (Cap. 145).
  5. An agent bank or a Supplementary Retirement Scheme ("SRS") operator who act as nominee for individuals who have purchased Units in the Trust under the Central Provident Fund Investment Scheme or the SRS respectively; or
  6. A nominee who can demonstrate that the Units are held for beneficial owners who are individuals or who fall within the classes of Unitholders listed in (a) to (d) above.
Distributions made to foreign non-individual Unitholders will be subject to a final withholding tax rate of 10% (until 31 March 2020 unless otherwise stated).

The above tax ruling does not apply to gains from the sale of real properties. Such gains, if they are considered as trading gains, are assessable to tax on the Trust. Where the gains are capital gains, the Trust will not be assessed to tax and may distribute the capital gains to Unitholders without having to deduct tax at source.

Any distributions made by the Trust to Unitholders out of tax-exempt income and taxed income would be exempt from Singapore income tax in the hands of all Unitholders, regardless of their corporate or residence status.

Capital distribution is regarded as "return of capital" in the hands of the Unitholders for Singapore tax purposes and is not subject to Singapore income tax.

CCT's hardcopy AR doesn't even print a section on "Notice of AGM", what a strange thing; I have to find its date/timing via web search.


  1. Hi ,below link (article )may give you some insight on how REIT pay out their distribution ...either by operating cash flow or capital ,,, and how it may effect the REIT's long term DPU's sustainability ..


    Cheers ...

  2. another good analysis from DBS ...


  3. thanks STE, the correct link is

  4. no uncle888, i didn't think about it, besides my mobile doesn't function properly after 2G shutdown.