Stoneweg E-Reit manager unveils proposed conversion to stapled group

[SINGAPORE] The manager of Stoneweg European Reit (Stoneweg E-Reit) announced its proposed conversion into a stapled group to reap benefits including improved tax efficiency, among others.  

The stapled entity will be known as Stoneweg European Stapled Trust and will comprise Stoneweg E-Reit and Stoneweg European Business Trust. 

Speaking on the rationale behind the move, the manager on Thursday (Apr 3) said that the proposed stapling will benefit unitholders in several ways. 

A stapled entity would be more resilient to market cycles as it would be less reliant on passive rental income compared to a Reit, the manager added. 

“Balancing the more passive income stability of a Reit with the growth potential of a business trust, (makes a stapled group) more resilient,” it noted. 

The manager added that the stapling will enhance corporate structure and has potential to optimise tax efficiency and the holding structure of properties.

While the Reit component enjoys preferential tax treatment in Singapore, a stapled Reit-business trust structure could allow for greater tax structuring flexibility, especially in Europe, it said. 

The proposed stapling will be effected by way of Stoneweg European Reit constituting Stoneweg European Business Trust. 

Units in Stoneweg European Business Trust will be distributed to unitholders of Stoneweg E-Reit by way of a distribution in specie, after which the Reit will be stapled to the business trust to form Stoneweg European Stapled Trust. 

The newly formed stapled entity will be managed by the manager of Stoneweg E-Reit and the trustee-manager of Stoneweg European Business Trust. 

The proposed stapling will be subject to the approval of unitholders at the Reit’s extraordinary general meeting.  

Units of Stoneweg E-Reit closed Wednesday 2 per cent or 0.03 euro higher at 1.54 euros.