addition, all materials pertaining to the transaction, including but not limited to pitching materials, term sheets, board papers and presentations, discussions relating to the transaction, minutes of meeting, clarifications to Board members and follow ups, etc. will not be distributed or shared with the conflicted Director. In such matters, the Board may also seek external professional advice to assist in its deliberations; • matters in which any of the shareholders of the Manager has an interest (whether directly or indirectly), the nominee Director appointed by the relevant shareholder shall abstain from voting and recuse himself/herself from any discussion in such matters and the quorum must comprise a majority of the Independent Directors. In addition, all materials pertaining to the transaction, including but not limited to pitching materials, term sheets, board papers and presentations, discussions relating to the transaction, minutes of meeting, clarifications to Board members and follow ups, etc. will not be distributed or shared with the conflicted Director; • all IPTs equal to or exceeding S$100,000 in value must be reviewed by the ARCC and approved by a majority of the ARCC members. If a member of the ARCC has an interest in a transaction, he/she will, where appropriate, abstain from voting and recuse himself/herself from the discussion; • under the Trust Deed, other than a meeting convened for the removal of ESR-REIT Management (S) Limited as the manager of ESR-REIT, the Manager, the controlling shareholders of the Manager and their respective associates are prohibited from voting or being counted as part of a quorum for any meeting of Unitholders convened to approve any matter in which the Manager or any of its associates has a material interest; • if the Manager is required to decide whether or not to take any action against any person in relation to any breach of any agreement entered into by the Trustee for and on behalf of ESR-REIT with an affiliate of the Manager, the Manager shall be obliged to consult with a reputable law firm (acceptable to the Trustee) for legal advice on the matter. If the law firm is of the opinion that the Trustee, on behalf of ESR-REIT, has a prima facie case against the party allegedly in breach under such agreement, the Manager is obliged to take appropriate action in relation to such agreement; and • the Manager ensures that the CEO is fully committed to ESR-REIT’s operations as he is employed full-time in the day-to-day operations of the REIT and the Manager and that he does not take up any executive role in another entity. In 2022, an ad-hoc Transaction Review Committee (“TRC”), a subcommittee of the Board, was set up to assist the Board in ensuring the process from pitching to closing of any open/close tender bids transaction relating to Interested Parties (i.e., IPT): a. is conducted on an arm’s length and transparent basis including parity of information to all bidders and confidentiality of bids; b. has adhered to relevant rules in Chapter 9 of the SGX Listing Manual as well as Property Funds Appendix; and c. demonstrated a higher standard of good corporate governance process and exercised due care, skill and diligence as compared to transactions with no bidding process. The TRC is not expected to be a standing committee but rather an “adhoc” committee depending on the type of IPT being contemplated and/or as directed by the Board. For IPTs that are in the ordinary course of business (e.g., individual asset or portfolio acquisitions), the TRC may not be activated as the typical IPT governance processes would have been covered by the ARCC. DISCLOSURES ON FEES PAYABLE TO THE MANAGER Pursuant to the CIS Code, where fees are payable to the Manager out of the deposited property of ESR-REIT, the methodology and rationale for each type of fee payable should be disclosed. Details of the methodology are disclosed in Note 1 of the audited financial statements for FY2025. The various fees earned by the Manager are elaborated below: Management Fees The Manager is entitled to receive a base fee and performance fee for the management of ESR-REIT’s portfolio. The payment for the total of base fee and performance fee is capped at 0.8% of ESR-REIT’s total deposited property value per annum under Clause 15.1.3 of the Trust Deed. The amount in excess of the fee cap will be carried forward for payment in future financial years. (a) Base Fee The Base Fee enables the Manager to cover operational and administrative overheads incurred in the management of the portfolio. The fee is computed at 0.5% per annum of the deposited property value in accordance with Clause 15.1.1 of the Trust Deed, subject to there being no double-counting of fees where a related party of the Manager has charged an asset management fee to a subsidiary of ESR-REIT. The fee is calculated at a percentage of asset value as the asset value provides an appropriate metric to determine the resources for managing the assets. Based on the Manager’s election, the fee is payable in cash, units or a combination of both. Under the Trust Deed, the cash component of the base fee is payable monthly in arrears within 30 days after the last day of each calendar month while the unit component of the base fee is accrued and issued within 30 days after the last day of each calendar quarter. The issue price for the Manager’s base fees payable in units is determined based on the volume weighted 113 ESR-REIT ANNUAL REPORT 2025
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