Corporate Governance

AIMS APAC REIT (“AA REIT” or the “Trust”) is a real estate investment trust constituted pursuant to the trust deed dated 5 December 2006 (as amended, varied or supplemented from time to time) (“Trust Deed”). AA REIT is listed on the Mainboard of Singapore Exchange Securities Trading Limited (the “SGX-ST”) and is externally managed by AIMS APAC REIT Management Limited (the “Manager”), who holds a capital markets services licence issued by the Monetary Authority of Singapore (“MAS”) to conduct real estate investment management activities. The sponsor of AA REIT is AIMS Financial Group (the “Sponsor”).

The Manager has general powers of management over the assets of AA REIT. The Manager’s main responsibility is to manage the assets and liabilities of AA REIT in the best interests of the unitholders of AA REIT (“Unitholders”). This is done with a focus on generating rental income and, where appropriate, increasing the value of AA REIT’s assets over time so as to enhance the returns from the investments, and ultimately distributions and total return to the Unitholders.

The primary role of the Manager is to set the strategic direction in AA REIT and make recommendations to HSBC Institutional Trust Services (Singapore) Limited, in its capacity as trustee of AA REIT (the “Trustee”), on any acquisition, divestment and enhancement of the assets of AA REIT in accordance with the stated investment strategy of AA REIT.

Other main functions and responsibilities of the Manager include:

1. using its best endeavours to ensure that the business of AA REIT is carried out and conducted in a proper and efficient manner and to conduct all transactions with or on behalf of AA REIT at arm’s length and on normal commercial terms;
2. ensuring compliance with relevant laws and regulations. The framework of relevant legislations and guidelines governing AA REIT include:
   1. the Listing Manual issued by SGX-ST (the “Listing Manual”);
   2. the Securities and Futures Act 2001 (“SFA”);
   3. the Code on Collective Investment Schemes (including Appendix 6 thereon on property funds) (the “Property Funds Appendix”);
   4. the Code of Corporate Governance 2018 (the “CG Code”);
   5. written directions, notices, codes and other guidelines that may be issued by the MAS from time to time;
   6. the Trust Deed; and
   7. tax rulings issued by the Inland Revenue Authority of Singapore on the taxation of AA REIT and its Unitholders
3. preparing annual business plans for review by the Board of Directors of the Manager (each, a “Director” or collectively, “Directors” or “Board”), including forecasts on revenue, net property income, capital expenditure, explanation of major variances to previous plan(s), commentary on key issues and relevant assumptions. These plans explain the performance of AA REIT’s assets;
4. managing the finances of AA REIT, including accounts preparation, capital management, coordination of the budget process, forecast modelling and corporate treasury functions;
5. attending to all regular communications with the Unitholders; and
6. supervising the property manager, AIMS APAC Property Management Pte. Ltd. (“Property Manager”) which performs the day-to-day property management functions (including but not limited to lease management, property management, maintenance and administration) pursuant to the property and investment management agreements in respect of the properties located in Singapore, and the Australian Investment Manager, AA REIT Management Australia Pty Limited, in respect of properties located in Australia.

The Manager also considers sustainability issues in key impact areas and integrates these considerations as part of its management of AA REIT. The sustainability efforts of the Manager and AA REIT are set out in the Sustainability Report.

AA REIT, constituted as a trust, is externally managed by the Manager and therefore, has no personnel of its own. The Manager appoints experienced and well-qualified personnel to run the day-to-day operations of the Manager and AA REIT. All Directors and employees of the Manager are remunerated by the Manager and not by AA REIT.

The Trust Deed outlines certain circumstances under which the Manager can be removed by notice in writing given by the Trustee upon the occurrence of certain events which includes by way of a resolution duly proposed and passed by a simple majority of the Unitholders present and voting at a meeting of the Unitholders duly convened and held in accordance with the provisions of the Trust Deed.

We believe that strong and effective corporate governance is imperative to the long-term success of AA REIT. Accordingly, we are committed to upholding high standards of corporate governance and operate in keeping with the spirit of the CG Code when discharging our responsibilities as the Manager.

The Corporate Governance report describes the corporate governance policies and practices that were in place during the financial year ended 31 March 2024 (“FY2024”) from the CG Code, and where applicable, the Listing Manual and the Companies Act 1967 (“Companies Act”).

For FY2024, AA REIT has complied with the principles of the CG Code in all material aspects and, where there are variations from any of the provisions of the CG Code, explanations are provided together with reasons for the variations as well as details of how the practices adopted are consistent with the aim and philosophy of the relevant principle of the CG Code.

The Board’s conduct of affairs

Principle 1:
The company is headed by an effective Board which is collectively responsible and works with Management for the long-term success of the company.

Board’s duties and responsibilities

The Board is responsible for the overall management and corporate governance of the Manager and of AA REIT. It provides leadership, sets strategic directions and ensures that the necessary financial and human resources are in place for the Manager to meet its objectives in managing the assets and liabilities of AA REIT in the best interests of the Unitholders. The Board oversees the management of AA REIT by setting standards and goals for the management team of the Manager (“Management”), monitors the achievement of the targets set and Management’s performance. It also establishes a framework of prudent and effective controls, which enables risks to be assessed and managed to safeguard the Unitholders’ interests and the assets of AA REIT.

The Board also makes key decisions and provides guidance and direction to Management at these meetings. The Manager has adopted a set of internal guidelines which sets out the limits of its financial authority. The Board’s approval is required for material transactions, including but not limited to the acquisition, redevelopment and/or divestment of investment properties, material asset enhancement initiatives, adoption of the valuation of properties, annual budget for operating/ capital expenditure, distributions to Unitholders, bank borrowings and hedging strategies, release of business updates, half year and full year financial results as well as arrangements in relation to bank signatories. Such matters are clearly communicated to the Management in writing. Appropriate delegations of authority and approval sub-limits are also provided at Management level to facilitate operational efficiency. The Board also reviews the risks to the assets of AA REIT and acts upon recommendations from both the internal and external auditors of AA REIT.

The Board and special board committees (“Board Committees”) may also make decisions by way of resolutions in writing. In each meeting where matters requiring the Board’s approval are to be considered, all members of the Board participate in the discussions and deliberations, and resolutions in writing are circulated to all Directors for their consideration and approval.

Directors of the Manager are fiduciaries and are collectively and individually obliged to act objectively in the best interests of AA REIT and its Unitholders. Directors hold the Management accountable for their performance. Where any Director has a conflict of interest or appears to have a direct/deemed interest in a particular matter under discussion by the Board, such Director will be required to declare his or her interest, recuse himself or herself from deliberation on the matter and abstain from voting on the matter. Compliance by such Director will be duly recorded in the minutes of meeting or written resolutions. To set the appropriate tone-from-the-top, the Board has put in place a code of conduct and ethics applicable to all employees of the Manager to set the desired organisation culture as well as to ensure proper accountability within the Manager.

The Board is also responsible for identifying key stakeholder groups and recognises that their perceptions affect AA REIT’s reputation.

Board meetings and activities

The Board meets regularly, at least once every quarter and as warranted by particular circumstances, to discuss and review the strategies and policies and their execution, and the affairs of AA REIT.

The Manager’s Constitution permits Board meetings to be held by way of telephone or video conference or similar communication equipment or any other form of audio or audiovisual instantaneous communication by which all persons participating in the meeting are able to hear and be heard by all other participants, at least four times each financial year. If a Director is unable to attend a Board meeting or Board Committee meeting, he/she will still receive all the Board papers tabled for discussion at that meeting. The Director will review the Board papers and will advise the chairman of the Board (the “Chairman”) or Board Committee if he/ she has any views and comments on the matters to be discussed so that they can be conveyed and tabled at the meeting for discussion.

In FY2024, the Board had been updated during Board meetings and/or (as required) at specially convened meetings by the relevant professional advisors, auditors and Management in areas that may affect AA REIT’s business such as relevant legislation and regulations, corporate governance practices, changes in risk management, financial reporting standards and other industry-related matters. Management also provides the Board with information in a timely manner through regular updates on financial results, market trends and business developments. Directors are also encouraged to participate in industry conferences, seminars and training programmes in connection with their duties.

Management provides the Board with complete, timely and adequate information on all AA REIT and/or Manager matters which require the Board’s deliberation. Proposals to the Board and/or Board Committees for decisions or mandates sought by Management are in the form of Board papers and/or Board Committee papers that contain explanatory background to the matter, facts, analysis, resources needed, conclusions and recommendations.

Ongoing reports relating to the operational and financial performance of AA REIT are provided to the Board periodically to enable them to exercise effective oversight over AA REIT. Directors are briefed by the Management during Board meetings, at specially convened sessions or via circulation of Board papers. Any material variances in respect of budgets and forecasts are also duly disclosed and explained to the Board. Additionally, reports by independent external analysts on AA REIT are forwarded to the Board from time to time to keep Directors apprised of analysts’ views on AA REIT’s performance.

The company secretary of the Manager (the “Secretary”) works with the Chairman and the chief executive officer of the Manager (“Chief Executive Officer or CEO”) to ensure that Board papers and the agenda are provided to each Director in advance of the Board meetings so that they can familiarise themselves with the matters prior to the Board meetings. Senior executives who can provide additional insights into matters to be discussed are also requested to attend the Board meetings to address any questions that the Board may have. AA REIT’s auditors are also invited from time to time to attend such meetings.

The Board has separate, independent and unfettered access to Management and the Secretary as well as to any information that it may require at all times. The Secretary or her designated representative attends all Board meetings and Board Committee meetings to record the minutes of the meeting. The Secretary renders assistance to the Board as may be necessary and helps to ensure that the applicable rules and regulations are complied with. The appointment and removal of the Secretary is a Board reserved matter.

The Directors, either individually or as a group, may at the Manager’s expense seek independent professional advice where necessary to discharge their duties effectively.

Board committees
In the discharge of its functions, the Board is supported by Board Committees which also serve to ensure that there are appropriate checks and balances. These Board Committees are the Audit, Risk and Compliance Committee (“ARCC”) and the Nominating and Remuneration Committee (“NRC”). The ARCC and NRC are chaired by non-executive independent directors (“Independent Directors”) and report to the Board.

The Board may form other Board Committees from time to time. The composition of each Board Committee is also reviewed regularly, and as and when there are changes to Board membership. Where appropriate, changes are made to the composition of the Board Committees to ensure there is a balance of diversity of skills, experience and gender, and fostering active participation and contributions from Board Committee members.

The Board comprises members with a breadth of skills and experience in accounting and finance, banking and capital markets, real estate, chemical, construction, investment, merger & acquisitions, legal, innovation and technology, fast moving consumer goods and environmental, social and governance. The current Board members are as follows:

The profiles of the Directors and other relevant information are set out on pages 19 to 22 of the FY2024 Annual Report.

Each of these Board Committees operates under delegated authority from the Board with clear written terms of reference. However, the Board retains overall responsibility for any decisions made by the Board Committees. Other Board Committees may be formed as dictated by business imperatives and/or to promote operational efficiency.

Information on the ARCC can be found in the section “Audit, Risk and Compliance Committee” of the FY2024 Annual Report. Information on the NRC can be found in the “Board membership”, “Board performance” and “Remuneration matters” sections of the FY2024 Annual Report.

The Manager is also assisted by the Business Review Committee (“BRC”), which comprises senior representatives from the Manager and the Sponsor to review the business operations and asset management of AA REIT. Where appropriate, the Manager will submit the recommendations of the BRC to the Board for consideration. The minutes of meetings of the BRC are circulated to the Board for information.

The number of Board and Board Committee meetings held in FY2024 as well as the attendance of each Director at these meetings are set out in the table below:

n/a Not applicable
¹ Mr George Wang and Mr Chong Teck Sin are not a member of the ARCC and the NRC, respectively.
² Mr Peter Michael Heng stepped down as Non-Executive Independent Director with effect from 1 November 2023.

The Manager issues a formal letter of appointment to each Director upon appointment, setting out the Director’s duties and obligations. Newly appointed Directors undergo an induction and orientation program upon their appointment, where they are briefed on their roles and responsibilities as Directors of the Manager, business activities of AA REIT and its strategic directions and the contribution the Directors would be expected to make, including the time commitment and any participation in Board Committees.

Newly appointed Directors will also be brought on site visits to selected AA REIT properties to gain a better understanding of AA REIT’s business and operations. A Director who has no prior experience as a director of a listed company will be required to attend the necessary modules of the Listed Entity Director (“LED”) Programme conducted by the Singapore Institute of Directors in order to acquire relevant knowledge of what is expected of a listed company director. The LED Programme focuses on comprehensive training of directors on compliance, regulatory and corporate governance matters which should allow first time directors to have a broad understanding of the roles and responsibilities of a director of a listed company under the requirements of the Companies Act, the Listing Manual and the CG Code. Additionally, starting from 1 February 2024, a Director who has no prior experience as a director of a REIT manager will also be required to attend the training on essentials for directors of REIT managers conducted by the REIT Association of Singapore. The Manager allocates each Director with an annual training budget and recommends relevant and/or necessary training courses and programmes for the Directors’ participation.

Board composition and guidance

Principle 2:
The Board has appropriate level of independence and diversity of thought and background in its composition to enable it to make decisions in the best interests of the company.

Board independence

The Board considers and assesses the independence of each Director in accordance with the requirements of the Listing Manual, the CG Code and the Securities and Futures (Licensing and Conduct of Business) Regulations (“SF(LCB) Regulations”). The SF(LCB) Regulations requires at least half of the Board to comprise independent directors where the Unitholders do not have the right to vote on the appointment of directors of the Manager. Provision 2.2 of the CG Code provides that independent directors make up a majority of the Board where the Chairman is not independent. Provision 2.3 of the CG Code further provides that non-executive directors should make up a majority of the Board.

Mr George Wang, Chairman of the Board, is the founder and Chief Executive Officer of the Sponsor and is not an Independent Director. The current composition of the Board is in keeping with prevailing guidelines and regulations, consisting of four members, of whom majority are Independent Directors.

Under Provision 2.1 of the CG Code, an independent director is one who is independent in conduct, character and judgement, and has no relationship with AA REIT/the Manager, its related corporations, its substantial Unitholders/ shareholders or its officers that could interfere or be reasonably perceived to interfere with the exercise of a director’s independent business judgement in the best interests of AA REIT.

Regulations 13D to 13H of the SF(LCB) Regulations impose additional independence requirements on the Directors. Under the SF(LCB) Regulations, a Director is considered to be independent if the Director:

1. is independent from the management of the Manager and AA REIT;
2. is independent from any business relationship with the Manager and AA REIT;
3. is independent from every substantial shareholder of the Manager and every substantial unitholder of AA REIT;
4. is not a substantial shareholder of the Manager or a substantial unitholder of AA REIT; and
5. has not served as a director of the Manager for a continuous period of nine years or longer.

A Director who does not satisfy any condition mentioned in the aforementioned (a) to (c) may nevertheless be treated as an Independent Director of the Manager if the Board is satisfied that the Director is able to act in the best interests of all Unitholders of AA REIT as a whole.

The independence of each Independent Director is reviewed and assessed by the NRC annually, taking into consideration independence requirements set out in the Listing Manual, the CG Code as well as the SF(LCB) Regulations. The NRC assesses whether each of the Independent Directors has any relationships or circumstances which could affect his or her independent status and makes its recommendations to the Board. If the Board deems a Director to be independent notwithstanding the existence of such relationships or circumstances, it shall disclose such information in full and provide its reasons accordingly. Each Independent Director is required to recuse himself or herself from the assessment of his or her independence.

The following paragraph sets out the outcome of the assessment carried out by the NRC on the independence of the Independent Directors for FY2024:

During the year, the Independent Directors, being Mr Peter Michael Heng¹ , Mr Chong Teck Sin, Mr Chia Nam Toon and Ms Vivienne Zhaohui Yu do not have any relationships and are not faced with any of the circumstances identified in the CG Code, SF(LCB) Regulations and Listing Manual, or any other relationships which may affect their independent judgement. The NRC considered whether each of them has demonstrated independence in character and judgement in the discharge of his/her responsibilities as a Director and concluded that each of them has acted with independent judgement. The NRC is therefore of the view that the Independent Directors have exercised independent judgement in the discharge of his or her duties and responsibilities.

Pursuant to Regulation 13E(b)(i) of the SF(LCB) Regulations and the CG Code, the Board, after considering the assessment and recommendation of the NRC above, is satisfied that:

All Independent Directors (i) are independent from the management of the Manager and AA REIT during FY2024; (ii) are independent from any business relationship with the Manager and AA REIT during FY2024; (iii) are independent from every substantial shareholder of the Manager and every substantial Unitholder of AA REIT during FY2024; (iv) are not a substantial shareholder of the Manager or a substantial Unitholder of AA REIT during FY2024; and (v) have not served as a Director of the Manager for a continuous period of nine years of longer as at the last day of FY2024.

Mr George Wang is the founder and Chief Executive Officer of the Sponsor, which owns the Manager, the Property Manager and such other Sponsor-related entities as set out on page 19 of the FY2024 Annual Report and is a substantial Unitholder of AA REIT. Therefore, during FY2024, Mr George Wang is deemed to have a management relationship with a related corporation of the Manager and a business relationship with the Manager and AA REIT. Mr Wang is a substantial shareholder of the Manager and a substantial Unitholder of AA REIT. Mr Wang has served on the Board for more than nine years as at 31 March 2024 as he was first appointed to the Board on 7 August 2009. As at 31 March 2024, Mr George Wang was able to act in the best interests of all Unitholders of AA REIT as a whole and the Board is satisfied that Mr George Wang was able to act in the best interests of all Unitholders of AA REIT as a whole.

The Directors actively participate in setting and developing strategies and goals for Management as well as reviewing and assessing Management’s performance. This enables Management to benefit from the external, diverse and objective perspectives of the Directors on issues that are brought before the Board. The Independent Directors meet informally without the presence of Management regularly on a need-to basis and the Chairman of such meeting will communicate feedback of such meetings to the Chairman of the Board and/or the Board, as appropriate.

¹ Mr Peter Michael Heng stepped down as Non-Executive Independent Director with effect from 1 November 2023

Board diversity policy

The Manager is committed to building a diverse and inclusive culture which promotes the inclusion of different perspectives and insights. The Board, with the recommendation of the NRC, has adopted a board diversity policy (“Board Diversity Policy”) which sets out the Manager’s approach to achieve diversity on its Board.

Under the Board Diversity Policy, the NRC will, when nominating qualified and suitable candidates for appointment to the Board, ensure that the Board remains sufficiently diverse to reflect a range of viewpoints to facilitate effective decisionmaking. With diverse skills, experience and gender being important aspects of diversity, the NRC will strive to ensure that there is adequate mix of skills, experience and gender on the Board. To this end, our Board Diversity Policy includes a target of at least 20% representation of female Directors on the Board.

In determining the optimum composition for the Board, the Board Diversity Policy also provides for the NRC to consider a combination of factors, including differences in:

• Skills, industry and business experiences;
• Gender;
• Age;
• Geographical background and nationalities; and
• Tenure of service

The Board has adopted a skills matrix which classifies the skills, knowledge, and professional experience of the Board into several broad categories such as:

• Accounting and finance;
• Banking and capital markets;
• Real estate and construction;
• Investment;
• Mergers and acquisitions;
• Legal;
• Innovation and Technology; and
• Environmental, social and governance.

The Board reviews, on a regular basis, whether the composition and mix of the Board remain appropriate for the Manager’s purpose and strategic objectives and whether the skills covered are relevant to address existing and emerging business and governance issues of the Manager and AA REIT. The final decision on selection of Directors will be based on merit against the objective criteria set and after giving due regard for the benefit of diversity on the Board.

AA REIT is committed to implementing the Board Diversity Policy, and any progress made towards the implementation of such policy, will be disclosed in the Annual Report, as appropriate. The NRC will review the Board Diversity Policy and objectives from time to time as appropriate and if necessary, recommend changes for the Board’s approval.

During FY2024, the Board has reviewed its size and composition and is of the view that the current Board comprise Directors with an appropriate balance and diversity of skills, experience, knowledge and gender which is relevant to AA REIT’s operations and evolving needs of AA REIT’s business.

Chairman and Chief Executive Officer

Principle 3:
There is a clear division of responsibilities between the leadership of the Board and Management, and no one individual has unfettered powers of decision-making.

The roles of Chairman and Chief Executive Officer are separate and the positions are held by two separate persons in order to ensure an appropriate balance of power, increased accountability and greater capacity of the Board for independent decision-making. The Chairman and the Chief Executive Officer are not related to each other.

There is clear separation of roles and responsibilities between the Chairman and the Chief Executive Officer which has been set out in writing. The Chairman is responsible for the overall leadership and management of the Board to ensure its effectiveness on all aspects of its role. This includes setting the agenda of the Board in consultation with the Chief Executive Officer and ensuring that adequate time is available for open discussion and robust debate of all agenda items, in particular strategic issues. The Chairman also ensures that the Directors receive complete, adequate, clear and timely information. In addition, the Chairman facilitates the contribution of Independent Directors, encourages constructive relations between the Independent Directors and Management, ensures effective communication with Unitholders and promotes a high standard of corporate governance. The Chairman also ensures that the Board works together with integrity and competency and that the Board engages Management in constructive debate on strategy, business operations, enterprise risk and other plans. On the other hand, the Chief Executive Officer has full executive responsibilities over the business directions and operational decisions in the day-to-day management of the Manager and AA REIT.

Provision 3.3 of the CG Code provides for the appointment of an independent director to be the lead independent director in certain circumstances, including where the Chairman is not independent. The Lead Independent Director has the discretion to hold meetings with the Independent Directors without the presence of the Non-Independent Directors and Management as he deems appropriate or necessary and to provide feedback to the Chairman after such meetings. The Lead Independent Director is available to Unitholders if the Unitholders have concerns and for which contact through the Chairman, the Chief Executive Officer or the Chief Financial Officer, has failed to resolve or is inappropriate.

Board membership

Principle 4:
The Board has a formal and transparent process for the appointment and re-appointment of directors, taking into account the need for progressive renewal of the Board.

Nominating and Remuneration Committee (NRC)

The NRC members are appointed by the Board and support the Board in nominating matters relating to the Manager in accordance with the NRC’s written terms of reference. The NRC currently comprises three Directors, the majority of whom, including the NRC Chairperson, are Independent Directors. The current members of the NRC are as follows:

The composition of the Board, including the selection of candidates for new appointment to the Board, is determined using the following principles:

• the Board should comprise Directors with a broad range of commercial experience, including expertise in accounting and finance, banking and capital markets, real estate, construction, investment, merger and acquisitions, legal, innovation and technology, environmental, social and governance;
• the Board should comprise Directors with balance and diversity of thought and background to facilitate effective decision-making; and
• at least half of the Board should comprise Independent Directors.

The NRC administers nominations to the Board, reviews the structure, size and composition of the Board and reviews the performance and independence of the Directors. In addition, as part of regulatory requirements, prior approval from MAS is sought for any change of the Chief Executive Officer or of any appointment of Director. Directors of the Manager are not subject to periodic retirement by rotation.

Roles and responsibilities of NRC

The NRC has written terms of reference setting out its scope and authority in performing the functions of the nominating committee, which include assisting and/or making recommendation to the Board in matters relating to:

• the review of the structure, size and composition of the Board and the Board Committees;
• the review of succession plans for Directors, in particular the appointment and/or replacement of the Chairman, the Chief Executive Officer and key management personnel;
• the development of a transparent process and criteria for evaluation of the performance of the Board, its Board Committees and Directors, including assessing whether Directors are able to commit enough time to discharge their responsibilities and the maximum number of listed company board representation which a Director may hold;
• the review of training and professional development programmes for the Board and its Directors, including but not limited to, training on sustainability matters as prescribed by the SGX-ST;
• the appointment of Directors (including alternate directors, if any);
• the review and confirmation of the independence of each Director annually; and
• the Manager’s targets, plans and timelines for achieving diversity on the Board (including the review of the Manager’s progress in achieving such diversity targets within the timelines).

The Manager adopts a comprehensive and detailed process in the selection of new Directors. The selection of candidates is evaluated taking into account various factors, including the current and mid-term needs and goals of AA REIT, and hence, the Manager, as well as the relevant expertise of the candidates and their potential contributions. Candidates may be put forward or sought through contacts, recommendations or through external consultants. The Board, in consultation with the NRC, will consider AA REIT’s and the Manager’s strategic goals, business direction and needs. The NRC will conduct interviews with the candidates, and nominate the candidate deemed most suitable for appointment to the Board. As more than half of the Board comprises Independent Directors, the Manager will not be voluntarily subjecting any appointment or re-appointment of Directors to voting by Unitholders.

In FY2024, none of the Directors has appointed an alternate director.

Review of Directors’ ability to commit time

The NRC considers whether each Director is able to and has been adequately carrying out his/her duties as a Director, taking into consideration, inter alia, the Director’s other publicly listed company board representations and other principal commitments. In addition, the NRC also takes into consideration, inter alia, a qualitative assessment of each Director’s contributions as well as any other relevant time commitments. Although some of the Directors have other listed company board representations and commitments, the Board has determined through a formal assessment of the Board’s performance that each individual Director has devoted sufficient time and attention to his/her role as a Director and to the affairs of the Manager. Based on the attendance and level of participation at the Board and Board Committee meetings held in FY2024, the Board is of the view that such appointments do not hinder the Directors from discharging their duties adequately and diligently and therefore believes that it would not be necessary to prescribe a maximum number of listed company board representations a Director may hold. The Board does not wish to exclude from consideration suitable individuals who, despite the demands on their time, have the capacity to participate and contribute as members of the Board.

Board performance

Principle 5:
The Board undertakes a formal annual assessment of its effectiveness as a whole, and that each of its board committees and individual directors.

The NRC performs an annual assessment on the effectiveness of the Board as a whole, each of its Board Committees and individual Directors. Each Director will complete a questionnaire and the aggregated evaluation results will be reported to the NRC. Following the NRC discussion and review of the overall evaluation, the NRC will recommend to the Board key areas for improvement and follow-up action, where necessary, with a view of enhancing the effectiveness of the Board, the Board Committees and individual Directors in the discharge of its and their duties and responsibilities.

Board evaluation as an ongoing process

In FY2024, this evaluation was conducted internally. However, the NRC has the discretion to engage external consultants to conduct the evaluation, if it deems necessary. In respect of the Board’s and Board Committees’ assessment, the evaluation categories covered in the questionnaire include Board composition, performance and strategy, Board procedures, environmental, sustainability and governance, access to information by the Board, management of the Manager’s performance, Director’s development, risk management and internal controls. As part of the questionnaire, the Board also considers whether the creation of value for Unitholders has been taken into account in the decision-making process. A Director’s peer evaluation was also carried out wherein each Director assesses other members of the Board. The evaluation categories include Director’s contributions, conduct and interpersonal skills, knowledge of the industry and business which AA REIT and the Manager operate in as well as strategic thinking. In FY2024, the NRC is of the view that the Directors, the Board as a whole and the Board Committees have fared well against the performance criteria, as positive ratings were received for all the attributes in the evaluation categories. Accordingly, the NRC is satisfied with the performance of the Directors, the Board and the Board Committees.

The Board takes cognisance that contributions by an individual Director may be in the form of providing objective perspectives on issues, facilitating business opportunities and strategic relationships with external parties and being accessible to Management outside of formal Board and/or Board Committee meetings.

Principle 6:
The Board has a formal and transparent procedure for developing policies on director and executive remuneration, and for fixing the remuneration packages of individual directors and key management personnel. No director is involved in deciding his or her own remuneration.

Principle 7:
The level and structure of remuneration of the Board and key management personnel are appropriate and proportionate to the sustained performance and value creation of the company, taking into account the strategic objectives of the company.

Principle 8:
The company is transparent on its remuneration policies, level and mix of remuneration, the procedure for setting remuneration, and the relationships between remuneration, performance and value creation.

AA REIT, constituted as a trust, is externally managed by the Manager and accordingly, it has no personnel of its own. The Manager appoints experienced and qualified personnel to manage the day-to-day operations of the Manager and AA REIT.

The NRC has written terms of reference setting out the scope and authority in performing the functions of a remuneration committee, which include assisting the Board in matters relating to:

• reviewing and making recommendation to the Board on the Manager’s remuneration framework for the Board and key management personnel by taking into account all relevant legal and regulatory requirements including the principles and provisions of the CG Code. In doing so, the NRC shall ensure that:
  1. a significant and appropriate proportion of executive Directors’ and key management personnel’s remuneration is structured so as to link rewards to corporate and individual performance. The performancerelated remuneration must be aligned with the interests of Unitholders and promotes the long-term success of AA REIT;
  2. the remuneration of non-executive Directors is appropriate to the level of contribution, taking into account factors such as effort, time spent and responsibilities; and
  3. the remuneration is appropriate to attract, retain and motivate the Directors to provide good stewardship of AA REIT and key management personnel to successfully manage AA REIT for the long term;
• reviewing and recommending to the Board on the specific remuneration packages for each Director, Chief Executive Officer and key management personnel;
• reviewing the ongoing appropriateness and relevance of the Manager’s remuneration policy;
• obtaining reliable and relevant market benchmarks through the appointment of independent remuneration consultants whenever deemed necessary; and
• considering all aspects of remuneration, including termination terms. When reviewing the Manager’s obligations arising in the event of the termination of an executive Director’s or key management personnel’s contract of service, it is to ensure that such contract of service contains fair and reasonable termination clauses which are not overly generous.

No member of the NRC is involved in any decision relating to his or her own remuneration.

The remuneration policy adopted by the Manager is in line with AA REIT’s business strategies and enables the Manager to attract, motivate, reward and retain quality employees. Key management personnel remuneration which is payable wholly in cash comprises a fixed component, a variable component and other employee benefits. The fixed component comprises the base salary and compulsory employer’s contribution to the employees’ Central Provident Fund (“CPF”). The variable component is in the form of short-term and longer-term bonuses, and the Board, with the support of the NRC, reviews the eligibility of employees for such bonuses on an annual basis. The NRC also takes reference from the local market practices in setting the Manager’s employee remuneration and benefits policies. Currently, there are no unit-based incentive schemes or award schemes in place to reward employees as part of the remuneration package. The NRC has access to independent remuneration consultants as and when required. No external remuneration consultants were engaged for FY2024.

The compensation structure for the variable component is comprehensive and structured, and directly linked to corporate and individual performance, as well as the performance of AA REIT through the incorporation of appropriate key performance indicators (“KPIs”) that are specific, measurable, result-orientated and time-bound. A year-end review is carried out to measure actual performance against the KPIs while taking into consideration qualitative factors such as business environment, regulatory landscape and industry trends to determine a variable year-end bonus that is commensurate with the performance achieved. A portion of the variable year-end bonus is deferred for key employees to incentivise them to strive for short and longer term performance. In determining the actual quantum of the variable component of the remuneration to be paid, the NRC would take into account the extent to which the KPIs have been met. The KPIs of the Manager include distribution per unit (“DPU”) growth of AA REIT. This will allow alignment of the Manager’s employees’ interests with those of AA REIT’s Unitholders and other stakeholders and promotes the long-term success of AA REIT.

The Chairman and Independent Directors are paid fixed basic fees for their Board and Board Committee memberships by the Manager. In determining the quantum of the fees, the Manager took into account factors such as effort, time spent and responsibilities of the Chairman and Directors, and they are not overcompensated to the point that their independence may be compromised. Chairman and Directors’ fees are reviewed periodically to benchmark such fees against the amounts paid by other listed real estate investment trusts. No Director decides on his or her own fees. Currently, there are no unitbased incentives or awards in place to reward Directors as part of the remuneration package. The NRC will periodically review and re-evaluate this option.

Director’s fees

Directors’ fees are paid by the Manager. For FY2024, the fees paid in cash were as follows:

1. Chairman fee effective from 1 July 2023.
2. Mr Ko Kheng Hwa stepped down as the Non-Executive Lead Independent Director on 31 March 2023.
3. Includes a S$2,500 fee for chairing the FY2022 AGM in July 2022.
4. Mr Peter Michael Heng stepped down as the Non-Executive Independent Director with effect from 1 November 2023.
5. Mr Chia Nam Toon was appointed as Non-Executive Independent Director on 8 February 2023 and FY2024 includes a S$2,500 fee for chairing the FY2023 AGM in July 2023.
6. Ms Vivienne Zhaohui Yu was appointed as Non-Executive Independent Director on 1 February 2023.

Remuneration policy for key management personnel

The Board is cognisant of the requirements under Principle 8 and Provision 8.1 of the CG Code for listed issuers to make certain remuneration disclosures, inter alia, the amounts and breakdown of the Chief Executive Officer’s remuneration, and the names, amounts and breakdown of the remuneration of at least the top five key management personnel (who are not Directors or the Chief Executive Officer) in bands no wider than S$250,000 and in aggregate the total remuneration paid to these key management personnel.

However, the Board has reviewed, assessed and decided against such disclosures for the following reasons:

• the spirit of Principle 8 of the CG Code is to enable shareholders of the company to assess the remuneration levels of the Chief Executive Officer and key management personnel vis-à-vis the performance of the company as the remuneration is paid by the company and would impact the net returns to shareholders. However, in the current structure of AA REIT, the remuneration of the Directors and employees of the Manager are not paid out of the Deposited Property (as defined in the Trust Deed) of AA REIT (listed issuer). Instead, they are remunerated directly by the Manager, which is a private company. The fees that the Manager received from AA REIT for FY2024 have been fully disclosed under the “Interested Person Transactions” section of the 2024 Annual Report;
• there is no misalignment between the remuneration of the Directors and the key management personnel of the Manager, and the interests of the Unitholders given that their remuneration is not linked to the gross revenue of AA REIT and is paid out of the assets of the Manager and not out of AA REIT. In addition, the remuneration policy and performance-based compensation structure of the Manager have been disclosed to facilitate a better understanding of the relationships between remuneration, performance and value creation; and
• given the confidentiality and sensitivity of remuneration matters, the Board firmly believes that the disclosure of the remuneration of the Chief Executive Officer and the top five key management personnel of the Manager (whether in exact quantum or in bands of S$250,000) would be prejudicial to the interests of AA REIT and its Unitholders. The current management team has been serving the Manager and AA REIT effectively. It is important for the Manager to retain such talent for the long-term interests of AA REIT and its Unitholders and to ensure the stability and continuity of the business operations with a competent and experienced management team at the helm. In view of the competitive conditions and the specialised skill sets required in the Singapore real estate and Singapore REIT industry, such disclosure of remuneration may potentially result in staff movement. Therefore, the Board believes that not disclosing the remuneration will be in the best interests of AA REIT and the Unitholders and the interests of AA REIT and the Unitholders will not be prejudiced as a result of such non- disclosure.

The Manager believes that, notwithstanding the variation from the abovementioned Provisions, the current disclosures remain consistent with the aims and philosophy of Principle 8 of the CG Code.

In FY2024, there were no employees of the Manager who were substantial shareholders of the Manager, substantial Unitholders of AA REIT or immediate family members of a Director, the Chief Executive Officer, any substantial shareholder of the Manager or any substantial Unitholder of AA REIT.

Risk Management and Internal Controls

Principle 9:
The Board is responsible for the governance of risk and ensures that Management maintains a sound system of risk management and internal controls, to safeguard the interests of the company and its shareholders.

Role of the Board and ARCC in ensuring sound internal controls and effective risk management practices

The Board recognises the importance of sound internal controls and effective risk management practices to good corporate governance. As such, the Manager has put in place a system of internal controls comprising procedures and processes to safeguard AA REIT’s assets, Unitholders’ interests and to manage risks. The Board has overall responsibility for risk governance, determines AA REIT’s levels of risk tolerance and risk policies and oversees the Manager in the design, implementation and monitoring of the risk management and internal controls systems, including financial, operational, compliance and information technology controls. The ARCC assists the Board in overseeing the risk management framework and policies for AA REIT.

The Board, in consultation with Management, has established a risk identification and management framework and has implemented risk management policies and processes covering areas of significant risks such as anti-money laundering and countering of terrorism, financial risk management, outsourcing risk, business continuity risk and technology risk management to ensure that AA REIT maintains a sound system of risk management and internal controls to safeguard Unitholders’ interests and AA REIT’s assets as well as achieving strategic objectives and value creation. The framework strengthens AA REIT’s capability to recognise and capitalise on new challenges and opportunities so as to value-add to Management’s decision-making, business planning and operational management and as a protection for investors.

The internal auditors conduct reviews of the adequacy and effectiveness of the material internal controls (including financial, operational, compliance and IT controls) and risk management systems and any material non-compliance or lapses in internal controls together with corrective measures recommended by the internal auditors are reported to and reviewed by the ARCC. The Board, through the ARCC, reviews the adequacy, effectiveness, independence, scope and results of the internal audit function to ensure that a robust risk management framework and internal control system is maintained.

Risk and Compliance

The Risk and Compliance department is headed by the senior manager, risk and compliance (the “Senior Manager, Risk and Compliance”) from the Sponsor and its role is to provide oversight and co-ordination of risk management to the Manager and AA REIT. The Senior Manager, Risk and Compliance is assisted by the Risk and Compliance Officers. Periodic updates will be provided by the Senior Manager, Risk and Compliance to the ARCC on AA REIT’s and the Manager’s risk profiles. Such updates would include an assessment of key risks, current status, mitigating measures put in place, effectiveness of such mitigating measures, and any action plans to be undertaken by Management to manage such risks.

Information on risk management can be found in the section “Risk Management Report” on pages 128 to 130 of the FY2024 Annual Report.

Board’s comment on internal controls and risk management

The Board has received assurance from the Chief Executive Officer and the Chief Financial Officer of the Manager that:

(a) the financial records have been properly maintained; (b) the financial statements of AA REIT and its subsidiaries (“Group”) and the Trust give a true and fair view of the operations and finances of the Group and the Trust which comprise the financial position and portfolio holdings of the Group and the Trust as at 31 March 2024, and (c) the total return, distributable income and movements in Unitholders’ funds of the Group and of the Trust and cash flows of the Group for the year then ended in accordance with the recommendations of Statement of Recommended Accounting Practice 7 “Reporting Framework for Investment Funds” issued by the Institute of Singapore Chartered Accountants, the applicable requirements of the Code of Collective Investment Schemes issued by the Monetary Authority of Singapore, and the provisions of the Trust Deed. The Board has also received assurance from the Chief Executive Officer and the relevant key management personnel that the system of risk management and internal controls in place are adequate and effective to address the risks that the Manager considers relevant and material to the current business environment as at 31 March 2024.

Based on the enterprise risk management framework established and maintained by the Manager, work performed by the internal and external auditors, reviews conducted by Management and various Board Committees including the ARCC as well as the assurance from the Chief Executive Officer and relevant key management personnel, the Board is of the opinion that the system of risk management and internal controls was adequate and effective to address the risks (including financial, operational, compliance and information technology risks), which the Board considers relevant and material to its current business environment as at 31 March 2024. The ARCC concurs with the Board on its opinion. No material weaknesses in the systems of risk management and internal controls were identified by the Board or the ARCC in the review for FY2024.

The Board notes that the system of risk management and internal controls established provides reasonable but not absolute assurance that AA REIT will not be adversely affected by any event that could be reasonably foreseen as it strives to achieve its business objectives. In this regard, the Board also notes that no system can provide absolute assurance against the occurrence of material errors, poor judgement in decision-making, human error, fraud or other irregularities.

Audit Committee

Principle 10:
The Board has an Audit Committee which discharges its duties objectively.

Audit, Risk and Compliance Committee (ARCC)

The ARCC members are appointed by the Board. The ARCC is comprised entirely of non-executive Independent Directors.

The current members of the ARCC are:

Members of the ARCC are appropriately qualified to discharge their responsibilities as they possess the requisite recent and relevant accounting or related financial management expertise or experience. None of the ARCC members are former partners or Directors of AA REIT’s existing auditing firm, KPMG LLP, within the previous two-year period, nor does any of the ARCC members have any financial interest in KPMG LLP. The number of ARCC meetings held and corresponding attendance for the financial year are set out on page 118 of the FY2024 Annual Report.

The ARCC is governed by written terms of reference and has explicit authority to investigate any matter within its terms of reference. The ARCC has full access to and cooperation by Management, the internal and external auditors and has full discretion to invite any Director or senior executive to attend its meetings. The ARCC is reasonably resourced to enable it to discharge its functions properly. The ARCC is kept updated whenever there are changes to the financial reporting standards or issues that may have an impact on the financial statements of AA REIT.

Key Responsibilities of ARCC:

• reviewing the significant financial reporting issues and judgements so as to ensure the integrity of the financial statements of AA REIT and any announcements relating to its financial performance;
• reviewing and reporting to the Board at least annually on the adequacy and effectiveness of the Manager’s internal controls, including financial, operational, compliance and information technology controls as well as risk management systems;
• reviewing the assurance from the Chief Executive Officer and Chief Financial Officer on the financial records and financial statements and the assurance from the key management personnel regarding the adequacy and effectiveness of the risk management and internal control systems;
• reviewing the adequacy, effectiveness, independence, scope and results of the external audit and the Manager’s internal audit functions;
• making recommendations to the Board on the proposals to the Unitholders on the appointment, re-appointment and removal of the external auditors and approving the remuneration and terms of engagement of the external auditors; and
• reviewing the policy and arrangements for concerns about possible improprieties in financial reporting or other matters to be safely raised, independently investigated and appropriately followed up on.

Role of the ARCC Chairperson

The ARCC Chairperson is responsible for ensuring the ARCC meetings are run efficiently and that each agenda item is thoroughly and thoughtfully discussed by all members of the ARCC. The ARCC Chairperson is often the key contact between the ARCC members and the Board, as well as senior management and the auditors. Responsibilities of the ARCC Chairperson also generally include the planning and conducting of the ARCC meetings, overseeing reporting to the Board, encouraging open discussion during ARCC meetings and maintaining active ongoing dialogue with management and both internal and external auditors.

Reviews conducted by ARCC during the year:

During FY2024, the ARCC’s activities included the following:

• The ARCC performed independent reviews of AA REIT’s business updates, half year and full year financial results before recommending to the Board for approval on the release of the financial statements and SGXNET announcements relating to AA REIT’s financial statements. In conducting its review of the audited financial statements of AA REIT prepared by Management of the Manager, the ARCC also assessed significant financial reporting issues and judgements, including the consistency and appropriateness of accounting policies and the quality and completeness of disclosures so as to ensure the integrity of the financial statements of AA REIT and any SGXNET announcements relating to AA REIT’s financial statements. The ARCC also reviewed the key audit matter as reported by the external auditors for FY2024, as set out below. The key audit matter for this financial year remains unchanged from the previous financial year.

  Key audit matter

  How the issue was addressed by the ARCC

  Valuation of investment properties

  The external valuations are conducted by independent professional valuers who have the appropriate recognised professional qualifications and recent experience in the location and category of properties being valued. The valuers are changed at least once every two years to provide independent and fresh perspectives to the valuation process. The valuers have substantially considered all known information as at the date of valuation into their valuation assessment. The external auditors reviewed the external valuations prepared by the independent professional valuers and noted that the valuation methodologies used which included capitalisation, discounted cash flows and/or direct comparison were consistent with generally accepted market practices. The external auditors also determined that the key assumptions used in the valuations, were generally within the range of market data available as at 31 March 2024. Where assumptions were outside the expected range, the additional factors considered by the external valuers were consistent with other corroborative evidence. The ARCC held discussions with the external auditors and Management to assess the valuation methodologies and assumptions applied including the reasonableness of the market rental growth, capitalisation rates, discount rates and terminal capitalisation rates adopted by the valuers as well as comparable market transactions and are satisfied that the valuation method and estimates are generally within the range of market data as at 31 March 2024 and the valuation reports are prepared in accordance with recognised appraisal and valuation standards. The valuation of investment properties was an area of focus for the external auditors. Please refer to pages 144 to 146 of the FY2024 Annual Report for the key audit matter as reported by the external auditors in the Independent Auditors’ report for FY2024.

Based on the review and discussions with Management and the external auditors, the ARCC is of the view that the financial statements prepared by Management are fairly presented and conform to generally accepted accounting principles in all material aspects.

• In performing its duties, the ARCC had met the external auditors without the presence of Management once during the year and confirmed that they had full access to and received full co-operation and support from the Management.
• The ARCC reviewed and approved the audit plan and scope of the external auditors on the audit of the full year financial statements.
• The ARCC also reviewed the nature and extent of the non-audit services provided to AA REIT by the external auditors for the financial year and was satisfied that the nature and extent of such services would not prejudice the independence and objectivity of the external auditors.

The aggregate amount of fees paid and payable by the Group to the external auditors for FY2024 was approximately S$310,000, of which audit fees amounted to approximately S$255,000 and non-audit fees amounted to approximately S$55,000. The non-audit fees paid/payable to the external auditors mainly related to tax compliance services and other tax services. The ARCC is satisfied that the external auditor’s independence will not be affected by the provision of the nonaudit services.

The ARCC has assessed the quality of work carried out by the external auditors based on factors such as time spent and the experience of the audit team assigned. The ARCC is satisfied with the adequacy, independence and objectivity of the external auditors and has recommended to the Board the re-appointment of KPMG LLP as the external auditors of AA REIT at the forthcoming annual general meeting.

The Board confirms, on behalf of AA REIT, that AA REIT has complied with the requirements of Rules 712 and 715 of the Listing Manual in respect of the suitability of the auditing firm for AA REIT.

• The ARCC reviewed and approved the internal audit plan and scope of the internal auditor’s work and its audit programme. It reviewed the findings during the year and Management’s responses thereto and it satisfied itself as to the adequacy of the internal audit function. The ARCC also met the internal auditors without the presence of Management once during the year and confirmed that they had full access to and received full co-operation and support from the Management.
• The ARCC reviewed the enterprise risk management framework and the policies and procedures put in place by Management to ensure that AA REIT’s risk management and internal control systems are adequate and effective.
• The ARCC reviewed interested person/interested party transactions to ensure compliance with the Listing Manual and the Property Funds Appendix.

Whistle blowing policy

The Manager adopts a zero-tolerance stance against any form of illegal activity, including corruption, bribery and other impropriety involving its employees and associates, and will take all necessary steps to eradicate such conduct if discovered. Accordingly, a whistle blowing policy (the “Whistle Blowing Policy”) has been put in place to provide a channel through which employee, director, executive, manager or other officer or contractor of the Manager (each, a “Whistleblower”) may report in good faith and in confidence any reportable conduct, which in the view of the Whistleblower, is:

1. dishonest;
2. a fraudulent misappropriation of assets;
3. corrupt;
4. illegal or a breach of any applicable laws (including theft, drug sale/use, violence or threatened violence and criminal damage against property);
5. unethical (either representing a breach of the Manager’s code of conduct or generally);
6. other serious improper conduct or gross mismanagement;
7. an unsafe work-practice; or
8. any other conduct which may cause financial or non-financial loss to the Manager or be otherwise detrimental to the interests of the Manager,

and arrangements are in place for independent investigation with appropriate follow-up action. Under the Whistle Blowing Policy, the Manager ensures that the identity of the Whistleblower is kept confidential and remains committed to protecting the Whistleblower against detrimental or unfair treatment. All employees can notify in writing of any reportable conduct to the Whistleblower protection officer (the “Whistleblower Protection Officer”) or the Chairperson of the ARCC. The email address of the Whistleblower Protection Officer is compliance@aimsapac.com, and the Whistle Blowing Policy is available on AA REIT’s website at https://www.aimsapacreit.com/whistle-blowing.html.

The ARCC is designated as the independent function to investigate all whistleblowing reports and is responsible for oversight and monitoring of whistleblowing. The ARCC reviewed the Whistle Blowing Policy and is satisfied that reportable conduct may be raised in confidence and that arrangements are in place for the independent investigation of such matters and for appropriate follow-up action.

In FY2024, the Whistleblower Protection Officer or the Chairperson of the ARCC did not receive any report of reportable conduct.

Role of internal auditor

The ARCC decides on the appointment, termination and remuneration of the internal audit services and has a policy of assessing the need to rotate the internal audit function on a triennial basis. In 2023, BDO LLP Singapore (“BDO”) was appointed by the ARCC to provide internal audit services to review and assess the adequacy of AA REIT’s internal control systems, including financial, operational, compliance and information technology controls over a three-year internal audit plan period. The internal auditor is independent of Management and reports directly to the ARCC and administratively to the Chief Executive Officer. BDO has unfettered access to all the Manager’s documents, records, properties and personnel, including unrestricted access to the ARCC and has appropriate standing within the Group. To ensure that the internal auditor’s activities are performed competently, the internal auditor is guided by the Standards for Professional Practice of Internal Auditing set by The Institute of Internal Auditors and recruits and employs suitably qualified professional staff with the requisite skill sets and experience.

BDO’s role as the internal auditor is to assist the ARCC to reasonably ensure that Management maintains a sound system of internal controls by periodically monitoring the effectiveness of key controls and procedures. BDO’s scope of work includes risk assessments and compliance audits in order to check that internal controls are aligned with business objectives and in place to address related risks.

In FY2024, BDO conducted audit reviews on the internal audit plan approved by the ARCC covering financial, operational, compliance and information technology controls using a risk-based auditing approach. Upon completion of each audit assignment, BDO reported their audit findings and recommendations to Management who responded on the actions to be taken. BDO also submitted internal audit reports, at least twice yearly, to the ARCC on the audit findings and follow-up actions taken by Management based on the recommendations. Through the ARCC’s review of the internal audit reports, the ARCC is satisfied as to the independence, adequacy and effectiveness of the internal audit function with respect to FY2024 and the ARCC is of the view that the internal auditor is adequately resourced to perform its functions.

Principle 11:
The company treats all shareholders fairly and equitably in order to enable them to exercise shareholders’ rights and have the opportunity to communicate their views on matters affecting the company. The company gives shareholders a balanced and understandable assessment of its performance, position and prospects.

Principle 12:
The company communicates regularly with its shareholders and facilitates the participation of shareholders during general meetings and other dialogues to allow shareholders to communicate their views on various matters affecting the company.

The Manager adopts the principle that all Unitholders should be treated fairly and equitably. It facilitates the exercise of ownership rights by all Unitholders through its commitment to ensuring continuous, clear and timely communication with Unitholders to promote a better understanding of AA REIT’s business, and to promote a system of effective disclosure to key stakeholders.

The Listing Manual requires a listed entity to disclose to the market matters that could or might reasonably be expected to have a material effect on the price or trade of the entity’s securities. The Manager upholds a strong culture of continuous disclosure and transparent communication with Unitholders, various stakeholders and the investing community. The Manager’s disclosure policy requires timely and full disclosure of all material information relating to AA REIT by way of public releases or announcements through the SGX-ST via SGXNET and on its corporate website at https://www.aimsapacreit.com on an immediate basis, where required by the Listing Manual. Where immediate disclosure is not practicable or not so required by the Listing Manual, announcements are made as soon as possible to ensure that Unitholders, stakeholders and the general market have parity of access to the information.

ANNUAL GENERAL MEETING

The Company has planned for its upcoming Annual General Meeting (“AGM”) on 29 July 2024 to be held in a wholly physical format, at the Stephen Riady Auditorium @ NTUC 1 Marina Boulevard, #07-01, Singapore 018989 (“AGM 2024”). There will be no option for Unitholders to participate virtually. Arrangements relating to attendance at the AGM 2024, submission of questions in advance of the AGM 2024, addressing or substantial and relevant questions prior to the AGM 2024 and voting by Unitholders (themselves or through duly appointed proxies) will be set out in the Manager’s notice of AGM dated 27 June 2024.

The Manager provides Unitholders with the opportunity to participate effectively in and vote at general meetings of shareholders and be informed of the rules, including voting procedures, that govern such meetings.

Responses to all substantial and relevant questions are published on AA REIT’s website and on SGXNET prior to the AGM. Unitholders are allowed to vote by appointing the chairman of the AGM as their proxy to attend and vote on their behalf at the AGM.

An AGM is held after the close of each financial year. The notice of AGM setting out all items of business to be transacted at the AGM is published on SGXNET and AA REIT’s website. All Unitholders are entitled to receive a printed version of the Annual Report and circulars on items of special business (if necessary). Unitholders are sent a notice of AGM and a proxy form with instructions on the appointment of proxies. As and when an extraordinary general meeting is to be held, Unitholders will receive a copy of the circular, containing details of the matters to be proposed and a proxy form with instructions on the appointment of proxies, for Unitholders’ consideration and approval. Notices of all general meetings are issued via SGXNET. Prior to voting at an AGM or any other general meeting, voting procedures will be made known to the Unitholders to facilitate them in exercising their votes. An independent scrutineer is also appointed for the purpose of vote-taking and validation of votes at general meetings.

The Manager strives to give Unitholders a balanced and understandable assessment of AA REIT’s performance, position and prospects. Unitholders are given the opportunity to raise questions and clarify any issues they may have relating to the resolutions to be passed at the AGMs. All Directors (including the chairpersons of the respective Board Committees), Chairman of the Board, Chief Executive Officer, senior management of the Manager would be in attendance and the external auditors of AA REIT would also be present to address Unitholders’ queries including any query on the conduct of audit and the preparation and content of the auditor’s report. Directors’ attendance at general meetings held during the financial year is disclosed on page 118 of the FY2024 Annual Report.

Any Unitholder who is unable to attend a general meeting is allowed to appoint up to two proxies to attend and vote on the Unitholder’s behalf. A Unitholder who is a relevant intermediary (including but not limited to nominee companies, custodian banks or CPF agent banks), is entitled to appoint more than one proxy to vote on its behalf at the meeting through proxy forms sent in advance, provided that each proxy must be appointed to exercise the rights attached to a different unit or units held by such Unitholder, where the number of units shall be specified. The Manager has also taken measures to cater for the multiple proxy regime, in anticipation of attendance by beneficial Unitholders, such as those holding units through the CPF Investment Scheme, at general meetings.

Provision 11.4 of the CG Code requires an issuers’ constitution to allow for absentia voting at general meetings. However, voting in absentia by mail, email or fax has not been implemented until concerns relating to issues of authentication of Unitholders’ identity and other related security issues in this regard have been satisfactorily resolved. The Manager is of the view that its practice is consistent with Principle 11 of the CG Code as Unitholders have adequate opportunities to communicate their views on matters affecting AA REIT even when they are not attending at general meetings. For example, Unitholders may appoint proxies to participate, on their behalf, at general meetings.

A separate resolution is proposed for each substantially separate issue at general meetings to safeguard Unitholders’ interests and rights. The Manager conducts poll voting for the Unitholders and/or proxies present at the general meeting for the resolutions proposed at the general meeting to ensure transparency in the voting process and to better reflect the interests of Unitholders. The total number of votes for or against such resolutions and the respective percentages are made known to Unitholders at the general meeting and announced via SGXNET following the general meeting. Minutes of the general meeting recording the substantial and relevant comments made and questions raised by Unitholders, and responses from the Board and Management, are made available on AA REIT’s website.

Distribution policy

Provision 11.6 of the CG Code encourages companies to have a policy on payment of dividends. The Manager’s policy is to distribute at least 90.0% of AA REIT’s taxable income, comprising substantially its income from the letting of its properties, after deduction of allowable expenses. The actual level of distribution will be determined at the Manager’s discretion taking into account the needs of AA REIT for capital expenditure, working capital requirement and the liquidity position of AA REIT. Since AA REIT’s listing in 2007, AA REIT has distributed 100.0% of its taxable income to Unitholders.

Unitholder engagement

The Manager has a dedicated investor relations department that regularly interacts and communicates with Unitholders and stakeholders. The investor relations function is headed by the Chief Executive Officer. The Manager has put in place an investor relations policy (the “Investor Relations Policy”) which outlines AA REIT’s principles and framework to promote effective communication with Unitholders and to provide them with timely and equal access to all publicly available information of AA REIT so that Unitholders can continue to exercise their rights in an informed manner. The Investor Relations Policy also sets out the Manager’s commitment to engage Unitholders and stakeholders through regular, effective and fair communication. The Manager conducts regular briefings and conference calls with analysts, institutional investors and media representatives which generally coincide with the release of AA REIT’s results or disclosure of material transactions. During these briefings, the Manager reviews AA REIT’s most recent performance or explains the transaction (where applicable) and solicits views of Unitholders and addresses their concerns. Unitholders’ views are also solicited during general meetings as the Unitholders are given the opportunity to raise questions and clarify on any issues.

As provided for in the Investor Relations Policy, investors may subscribe to email alerts on AA REIT’s corporate website for all announcements and SGXNET filings issued by AA REIT. Active Unitholder engagement, and continuous and informed dialogue between the Manager and Unitholders is a central tenet of good corporate governance. Unitholders may, at any time, direct questions, request for publicly available information and provide comments and suggestions to Directors or the Manager. Such questions, requests and comments can be addressed to the Investor Relations team via the Investor Relations contact available at AA REIT’s website at investorrelations@aimsapac.com. Please refer to the “Investor Relations” section of the FY2024 Annual Report for more information of the Manager’s investor relations activities.

Principle 13:
The Board adopts an inclusive approach by considering and balancing the needs and interests of material stakeholders, as part of its overall responsibility to ensure that the best interests of the company are served.

The Manager believes that engaging stakeholders is critical for the long-term performance of AA REIT. The Manager has identified its key stakeholder groups based on importance, representation, responsibility, dependency and proximity to AA REIT’s business. Such stakeholders include investors, analysts, media, tenants, banks, staff as well as the local community. The Manager adopts an inclusive approach by considering and balancing the needs and interests of key stakeholders, including sustainability issues, as part of the overall strategy to ensure that the best interests of stakeholders and the longterm business value of AA REIT are served. The Manager is committed to sustainability and incorporates the key principles of environmental and social responsibility, and corporate governance in AA REIT’s business strategies and operations. The Manager has arrangements in place to identify and engage with key stakeholder groups from time to time to gather feedback on the sustainability issues most important to them.

Details of AA REIT’s sustainability strategy, including its stakeholder engagement process and initiatives, can be found in the “Sustainability Report” section of the FY2024 Annual Report.

The Manager maintains AA REIT’s corporate website at https://www.aimsapacreit.com to facilitate communication and engagement with stakeholders and ensure that stakeholders have access to timely information on AA REIT.

Dealings in AA REIT units

In line with Rule 1207(19) of the Listing Manual on Dealings in Securities, AA REIT has devised and adopted its own internal compliance code to provide guidance to its officers with regard to dealing by AA REIT and its officers in securities. AA REIT issues a memorandum to the Directors, officers and employees of the Manager on restrictions on dealings in the units in AA REIT:

1. during the period commencing two weeks before the announcement of the Group’s quarterly business updates and one month before the announcement of the Group’s half year and full year results and ending on the date of announcement of the relevant business updates/results; and
2. at any time while in possession of unpublished material or price sensitive information.

The Directors and employees of the Manager are also advised not to deal in the units on short-term considerations. Each Director is required to give written notice to the Manager of the particulars of:

1. units in AA REIT, being units held by him or her, or in which he or she has an interest and the nature and extent of that interest;
2. debentures or units of debentures in AA REIT which are held by him or her, or in which he or she has an interest and the nature and extent of that interest; and
3. such other securities, securities-based derivatives contracts or units in a collective investment scheme as the MAS may prescribe, which are held, whether directly or indirectly, by him or her, or in which he or she has an interest and the nature and extent of that interest.

(Collectively referred to as the “Relevant Securities”)

The written notice must be given within two business days after the date he or she becomes a Director, or becomes a holder of, or acquires an interest in the Relevant Securities (whichever last occurs).

The Director should also give written notice to the Manager of particulars of any change in respect of the Relevant Securities, and such written notice must be given within two business days after the Director becomes aware of the change.

In addition, the Manager is required to announce via SGXNET the particulars of its holdings in the units and any changes thereto within one business day after the date on which it acquires or disposes of any units, as the case may be.

Dealings with conflicts of interest

The following main principles and procedures have been established to address potential conflicts of interest which may arise in managing AA REIT:

1. the Manager is dedicated to managing AA REIT and will not directly or indirectly manage other real estate investment trusts;
2. all executive officers of the Manager are employed by the Manager;
3. all resolutions in writing of the Directors of the Manager in relation to matters concerning AA REIT must be approved by a majority of the Directors including at least one Independent Director;
4. Independent Directors constitute majority of the Board;
5. in respect of matters in which the Sponsor and/or its subsidiaries have an interest, direct or indirect, any Directors appointed by the Sponsor and representing its interests shall abstain from voting on such matters. In such matters, the quorum must comprise a majority of the Independent Directors of the Manager and shall exclude such Directors of the Sponsor and/or its subsidiaries; and
6. in respect of matters in which a Director or his/her associate has an interest, direct or indirect, such interested Director is required to disclose his/her interest and will abstain from voting on resolutions approving the said matter.

Code of conduct and ethics

The Manager adheres to an ethics and code of business as prescribed in its employee handbook (“Employee Handbook”) that deals with issues such as confidentiality, business conduct, work discipline and conflict of interest. The policies also set out work procedures and incorporate internal controls which ensure that adequate checks and balances are in place. The Manager also seeks to build and maintain the right organisational culture through its core values, educating its employees on good business conduct and ethical values.

All employees of the REIT Manager are required to make a declaration on an annual basis on any conflict of interest, any litigation issues and dealing in AA REIT units. As for new employees, they are briefed on the requirements set out in the Employee Handbook and are required to read and acknowledge the guidelines listed therein when they join the Manager.

Business continuity management

The Manager has also put in place Business Continuity Plan (“BCP”) for crisis management to response to business disruption to ensure resumption of business as unusual and minimise impact of adverse business interruptions.

Under the BCP, Management has identified the critical business functions, processes and resources, service recovery time and performed business impact analysis.

As part of the BCP, the Manager has performed disaster recovery tests simulating different scenarios to test the effectiveness of processes, procedures and escalation protocols. This holistic approach under the BCP serves to ensure organisational and staff preparedness and readiness to deal with adverse business disruptions such as acts of terrorism, cyber attacks, data breaches and epidemics.

This approach aims to minimise the negative impacts on operations, financial and reputation on AA REIT and allows the Manager to fulfil its obligations as the Manager to AA REIT.

Interested person/interested party transactions

The Manager has established an internal control system to ensure that all transactions with “interested person” (as defined in the Listing Manual) and “interested party” (as defined in the Property Funds Appendix) are undertaken at an arm’s length basis and on normal commercial terms and will not be prejudicial to the interests of AA REIT and the Unitholders. As a general rule, the Manager must demonstrate to the ARCC that such transactions satisfy the foregoing criteria which may include obtaining (where practicable) quotations from parties unrelated to the Manager, or obtaining two independent valuations of each of those real estate assets, with one of the valuers commissioned independently by the Trustee (having been conducted in accordance with paragraph 8 of the Property Funds Appendix).

The Manager maintains a register to record all interested person/interested party transactions which are entered into by AA REIT and the basis, including any quotations from unrelated parties and independent valuations obtained to support such basis, on which they are entered into. Further, the following procedures will be adhered to:

1. all transactions (either individually or as part of a series or if aggregated with other transactions involving the same interested person/party during the same financial year) will be subject to review and approval of the ARCC at regular intervals;
2. transactions (either individually or as part of a series or if aggregated with other transactions involving the same interested person/party during the same financial year) equal to or exceeding 5.0% of the Group’s net tangible assets will be reviewed and approved prior to such transactions being entered into, on the basis described in the preceding paragraph by the ARCC which may, as it deems fit, request advice on the transaction from independent sources or advisors, including the obtaining of valuations from independent professional valuers. Furthermore, under the Listing Manual and the Property Funds Appendix, such transactions would have to be approved by the Unitholders at a meeting of Unitholders; and
3. the ARCC’s approval shall only be given if the transactions are at arm’s length and on normal commercial terms and consistent with similar types of transactions with third parties which are not interested person/interested parties.

Where matters concerning AA REIT relate to transactions entered into or to be entered into by the Trustee for and on behalf of AA REIT with an interested person/interested party (which would include relevant associates thereof), the Trustee is required to ensure that such transactions are conducted on normal commercial terms, are not prejudicial to the interests of AA REIT and the Unitholders and are in accordance with all applicable requirements of the Property Funds Appendix and/ or the Listing Manual relating to the transaction in question. Furthermore, the Trustee has the ultimate discretion under the Trust Deed to decide whether or not to enter into a transaction involving an interested person/interested party. If the Trustee is to sign any contract with an interested person/interested party, the Trustee will review the contract to ensure that it complies with the requirements relating to interested party transactions in the Property Funds Appendix (as may be amended from time to time) and the provisions of the Listing Manual relating to interested person transactions (as may be amended from time to time) as well as other guidelines as may from time to time be prescribed by the MAS and the SGX-ST to apply to real estate investment trusts.

AA REIT will, in compliance with Rule 905 of the Listing Manual, announce any interested person transactions if such transaction, by itself or when aggregated with other interested person transactions entered into with the same interested person during the same financial year, is 3.0% or more of the Group’s latest audited net tangible assets.

Details of all interested person transactions (equal to or exceeding S$100,000 each in value) entered into by AA REIT during the financial year are disclosed on page 222 the FY2024 Annual Report.

Availability of Trust Deed

A copy of the Trust Deed and of any supplementary deed (including any amending and restating deed) are available for inspection at the registered office of the Manager during usual business hours.

Fees payable to the Manager

Pursuant to the Trust Deed, the Manager is entitled to receive fees payable out of the Deposited Property as defined in the Trust Deed) of AA REIT.

The methodology for the computation of the fees is disclosed on page 162 under the “Notes to the Financial Statements” section of the FY2024 Annual Report.

The management fees are earned by the Manager for the management of AA REIT’s portfolio of properties. The various fees earned by the Manager are further elaborated below:

1. Base fee
   The Manager is responsible for the ongoing management of the assets and liabilities of AA REIT for the benefit of the Unitholders. Accordingly, the Manager should be fairly compensated for its efforts in the overall management of AA REIT and it should enable the Manager to cover its operational, administrative and compliance overheads incurred in the management of the portfolio. The base management fee is calculated as a percentage of the Deposited Property (as defined in the Trust Deed) of AA REIT as it provides an appropriate metric to determine the resources required for managing the assets. As AA REIT grows its portfolio size, the complexity of management increases and the Manager is expected to expend greater effort in fulfilling its responsibilities.
2. Performance fee
   The performance fee is only payable when the Manager has achieved certain levels of growth in the DPU in the current financial year relative to the previous financial year. As the year-on-year growth of the DPU is in line with the interests of the Unitholders, the performance fee will spur the Manager to seek growth opportunities or embark on cost savings initiatives to improve the performance of AA REIT. The performance fee is calculated as a percentage of the Deposited Property (as defined in the Trust Deed) of AA REIT as it provides an appropriate metric to determine the resources required for such efforts taken to achieve the growth in DPU and aligns the interests of the Manager with Unitholders. The Manager is motivated and driven to achieve DPU growth by ensuring the long- term sustainability of the assets through proactive asset management strategies and asset enhancement initiatives. The performance fee is paid annually, in compliance with the Property Funds Appendix.
3. Acquisition fee and Divestment fee
   These fees are essential to incentivise the Manager to continue to deliver long-term sustainable income to Unitholders, source for growth opportunities and yield-accretive acquisitions for AA REIT and to efficiently recycle capital through the divestment of under- performing or non-core assets. The Manager would have to carry out additional work as well as incur additional resources and time to source for various opportunities before a potential acquisition or divestment opportunity materialises into an eventuality. As such, the Manager should be fairly compensated for the efforts expended, costs incurred as well as time taken for such transactions.

Risk management is a fundamental part of AA REIT’s business strategy to ensure the interests of Unitholders are protected.

Risk Governance

The Board of Directors bears the responsibility for overseeing risk governance. In fulfilling this duty, the Board is assisted by the ARCC to offer a comprehensive review of risk management practices. The ARCC convenes quarterly, or more frequently as necessary with attendance from the Chief Executive Officer and other key management staff.

Supporting the ARCC in its functions are the Senior Manager of Risk and Compliance, alongside Risk and Compliance Officers.

Risk Management Process

Management has implemented an ERM framework to create a robust and rigorous corporate governance structure. This approach systematically identifies significant risks confronting AA REIT, assesses their impact on business processes, and proactively manages them in a consistent and structured manner. Within this framework, key risks, mitigating measures and Management actions undergo continual identification, review and monitoring.

A robust internal control system and an effective independent audit review process comprise the ERM framework. These components collectively address financial, operational, compliance, information technology, environmental, and climate change risks, thereby safeguarding the interests of Unitholders and protecting AA REIT’s assets.

The Manager is responsible for designing and implementing effective internal controls. The internal auditor conducts independent reviews to evaluate the design and implementation of controls, providing the ARCC with reasonable assurance regarding the adequacy and effectiveness of the internal control system.

AA REIT conducts an annual review and regularly updates its risk management systems and methodologies to effectively address risks in alignment with current business conditions, thereby safeguarding capital and enhancing value for Unitholders. Key risks identified during FY2024 include but are not limited to the following:

EXTERNAL RISKS

Economic and geopolitical risk

Global geopolitical tensions continue to weigh on global supply chains resulting in elevated costs to the business and pose challenges to the global economy.

To manage such risks, the Manager continues to work on cost optimisation/saving initiatives, prudent capital management to strengthen its balance sheet and maintain sufficient financial flexibility. The Manager also keeps abreast on the real estate market through research and closely monitoring economic, geopolitical and political developments worldwide. Strategic acquisitions are pursued to fortify the portfolio’s resilience.

Environmental and climate change risks

AA REIT is exposed to climate-related physical risks such as rising sea levels, extreme weather events, and transition risks stemming from regulatory changes.

To mitigate these risks, the Manager strives to implement environmentally friendly initiatives, set carbon emission reduction targets, and enhance energy and water efficiency across the portfolio. Environmental risk due diligence is conducted as an integral part of investment evaluation, with ongoing monitoring of physical risks over the existing assets and continuous review of AA REIT’s sustainability roadmap to drive Environmental, Social and Governance (“ESG”) performance. The Manager will strive to achieve Green Mark Certification for buildings which undergo redevelopment and asset enhancement initiative, where economically feasible and viable.

For more information, please refer to the Sustainability Report on pages 86 to 114 of the FY2024 Annual Report.

STRATEGIC RISKS

Investment Risk

All investment proposals comprising acquisitions of new properties/investments, asset enhancement initiatives of existing properties and re-developments are subject to rigorous assessment and reviewed by Management and the BRC before a recommendation is made to the Board. The role of the BRC is set out on page 118 of the FY2024 Annual Report. Risk assessment is an important aspect of the evaluation process. Investment proposals submitted to the Board for approval is accompanied by assessment of risk factors and risk mitigation strategies.

Market Risk

AA REIT’s portfolio is subject to real estate market risks such as the volatility in rental rates and occupancy rates due to supply and demand for logistics, industrial and business park properties which may have an adverse effect on property yields. To mitigate such risks, the Manager has established a high quality and diversified tenant base across a range of industries and adopts proactive tenant management strategies to retain and prospect tenants. Regular engagement and feedback with key stakeholders, investors and tenants are conducted to align expectations and to stay relevant. Where the opportunity arises, the Manager will embark on asset enhancement activities and redevelopment opportunities to enhance the value, performance and competitiveness of the properties in AA REIT’s portfolio.

Operational Risk

The Manager’s operating activities are focused on generating sustainable rental income to deliver stable distributions and long-term capital growth to Unitholders. Measures include prompt lease renewals to reduce vacancies, prudent control of property expenses and an annual maintenance and capital expenditure programme to maintain and enhance AA REIT’s properties. The Manager has also established operating and reporting policies and procedures to manage day-today operational activities, which are reviewed and updated periodically to ensure relevance and effectiveness as well as compliance with the latest regulation. The Manager also procures insurance policies such as Industrial All Risks (including business interruption) to mitigate against certain financial losses.

Occupational health and safety risks

The Manager puts the health and safety of its stakeholders first. Safety protocols are integrated into AA REIT’s Standard Operating Procedures, with regular property inspections conducted by the Property Manager to ensure compliance with regulatory requirements and renewal of licenses and permits.

FINANCIAL RISKS

Foreign Exchange Risk

AA REIT’s exposure to fluctuation of the AUD against the SGD is mitigated by a natural hedge through the use of Australian dollar denominated borrowings and currency forwards to hedge the foreign currency income distributable from Australia. As at 31 March 2024, the AUD borrowings hedge approximately 66% of the carrying value of AA REIT’s investments in Australia.

Interest Rate Risk

The Manager adopts a proactive interest rate management strategy to manage the risk associated with adverse movement in interest rates. The Manager monitors interest rate risk regularly to limit AA REIT’s interest exposure from adverse movements in floating interest rates. The Manager enters into hedging transactions to partially mitigate the risk of interest rate fluctuations through the use of interest rate swaps (including forward starting interest rate swaps) and/or fixed rates borrowings. As at 31 March 2024, 75.0% (or 72.9% excluding forward starting interest rate swaps) of AA REIT’s total borrowings have been hedged, with its interest cover at 4.1 times.

Liquidity Risk

The Manager maintains an efficient use of cash and debt facilities in order to balance borrowing costs and ensure sufficient availability of credit facilities to meet its financial obligations, working capital and committed capital expenditure requirements. In addition, the Manager also monitors AA REIT’s cash flow position and requirements to meet any operational needs and short-term financing obligation as well as compliance with the Property Funds Appendix in relation to limits on total borrowings. AA REIT’s ability to raise funds from both banks and capital markets has enabled AA REIT to diversify its sources of funding to avoid over-reliance on any single source of funding. As at 31 March 2024, the Group has total cash and bank balances of S$17.8 million and undrawn committed facilities of approximately S$135.7 million to fulfil their liabilities as and when they fall due. There is no refinancing requirement until 3Q FY2025.

COMPLIANCE RISKS

Regulatory and Compliance Risks

The Manager, being a capital markets services licence holder, is required to comply with the applicable laws and regulations governing AA REIT and the Manager, as listed on page 115 of the FY2024 Annual Report. Any changes in these regulations may affect AA REIT’s operations and results. The employees of the Manager keep abreast of changes in legislation and regulations through training and participating in briefings, seminars, and talks. Various internal procedures have been implemented to facilitate staff awareness and ensure adherence with applicable laws and regulations.

Cyber Security and Information Technology (“IT”) Risks

Digitalisation exposes the business to IT-related threats which may compromise the confidentiality, integrity and availability of AA REIT’s information, assets and systems. IT controls and cybersecurity measures are regularly reviewed and enhanced on an ongoing basis to address IT-related risks. Training on IT security awareness is conducted regularly to raise cyber security awareness on evolving threats such as phishing, hacking attempts and other threats. On an annual basis, the Manager reviews its Business Continuity Plan and conducts a disaster recovery exercise to test and ensure timely recoverability of its critical IT systems.