Stapled Security (REIT) Singapore: Why Some Trusts Combine a REIT and a Business Trust
How CDL Hospitality Trusts and Far East Hospitality Trust legally bolt two entities into one unit
A stapled security is a single tradeable instrument on SGX that combines a unit in a REIT with a unit in a business trust, ‘stapled’ together under a stapling deed so the two cannot be bought, sold, or transferred separately, even though they remain legally distinct entities.
Not financial advice. All figures for educational reference only. Data as at July 2026.
- CDL Hospitality Trusts and Far East Hospitality Trust are Singapore’s two primary examples of this structure, each pairing a REIT with a companion business trust.
- The REIT component typically owns the real estate, while the business trust component can hold operating leases and generate income the REIT itself is restricted from earning directly.
- Stapled securities trade as one line on SGX with a single price and ticker, even though investors are legally holding interests in two separate trusts simultaneously.
- This structure emerged largely to work around REIT restrictions on operating hotel and hospitality assets directly, since REITs generally cannot run an operating business themselves.
- Distributions from a stapled security can come from both the REIT and business trust components, and the tax treatment of each portion can differ, so investors should check the distribution breakdown.
Table of Contents
What Is Stapled Security?
Singapore’s REIT regime restricts a REIT from directly operating a business — a hotel REIT, for instance, cannot itself run hotel operations, take on operational risk, and pocket variable operating profit the way a hotel operator would. Yet hospitality assets often generate meaningful upside from strong operating performance, not just fixed rental income. The stapled security structure was designed to capture both.
Under a stapling deed, a REIT and a business trust are combined so that every unit of the REIT is permanently paired with a unit of the business trust, and the two trade together as a single security under one SGX ticker. CDL Hospitality Trusts (CDLHT), stapled under a deed dated 12 June 2006, combines CDL Hospitality Real Estate Investment Trust (H-REIT) with CDL Hospitality Business Trust (HBT). Far East Hospitality Trust similarly combines Far East H-REIT with Far East H-BT.
In this arrangement, the REIT component typically owns the physical hotel or serviced residence properties and earns rental-style income, while the business trust component can hold master leases or, in some structures, capture variable income tied to hotel operating performance — something the REIT itself is constrained from doing directly.
How It Works in Singapore
An investor buying a stapled security through their brokerage account is, in legal terms, simultaneously acquiring a unit in the REIT and a unit in the business trust — but the transaction, the price, and the SGX counter are all unified. You cannot sell only the REIT portion and keep the business trust portion, or vice versa; they move together for as long as the stapling deed remains in force.
| Feature | REIT Component | Business Trust Component |
|---|---|---|
| Typical role | Owns physical real estate | Holds leases / operational-linked income |
| Regulatory basis | CIS regulations / Property Funds Appendix | Business Trusts Act |
| Direct operating income | Generally restricted | Can be structured to capture variable performance |
| Trading | Single stapled security, one SGX ticker, one price | |
Source: Far East Hospitality Trust and CDL Hospitality Trusts stapling deed disclosures, SGXNET, 2026.
Distributions paid to unitholders can be sourced from both the REIT and the business trust legs, and because the two entities sit under different regulatory and tax frameworks, the portion attributable to each can carry different tax treatment. Distribution statements typically break down how much of a payout came from each component.
Governance in a stapled structure is also layered — the REIT is managed by a REIT manager while the business trust is overseen by a trustee-manager, and while these are often related entities within the same sponsor group, unitholders reviewing corporate actions or voting on an EGM resolution should be aware they are technically dealing with decisions that can touch both entities simultaneously, not a single unified board.
Globally, stapled structures aren’t unique to Singapore — Australia in particular has a long history of stapled real estate and infrastructure trusts using a similar rationale, combining a passive property-owning entity with an operating entity to capture both rental and operational income streams within one listed security.
Worked Example
An investor buys 1,000 units of CDL Hospitality Trusts on SGX. In doing so, they simultaneously become a unitholder of both H-REIT (which owns the physical hotel properties) and HBT (the companion business trust). When CDLHT declares a distribution, the payout may combine rental-style income from H-REIT with income the manager has structured through HBT — but the investor simply receives one combined distribution per stapled unit held, without needing to track the two components separately for the purpose of buying, holding, or selling.
Advantages
- Captures upside a pure REIT can’t. The business trust leg can be structured to pick up income tied to hotel operating performance that a REIT alone would be restricted from earning.
- Simple to trade despite complex legal structure. Investors buy and sell one security on SGX, without needing to manage two separate holdings.
- Sector-appropriate design. For hospitality assets, where operating performance swings meaningfully with occupancy and room rates, this structure aligns the investment vehicle with the underlying asset class better than a pure REIT.
- Established, well-understood structure in Singapore. With two long-listed examples (CDLHT since 2006, FEHT since 2012), the mechanics are well documented and understood by analysts and investors.
Risks and Limitations
- More complex tax treatment. Because distributions can come from two differently regulated entities, understanding the tax character of your payout requires reading the distribution statement, not just the headline DPU figure.
- Two sets of governance to track. Investors researching a stapled trust need to understand both the REIT manager’s and the business trust trustee-manager’s decisions, adding complexity versus a single-entity REIT.
- Structural risk if regulations change. Any future change to how REITs or business trusts are regulated in Singapore could, in principle, affect how existing stapled structures operate.
- Fewer comparable structures. With only two prominent Singapore examples, cross-comparison against a wide peer set is more limited than for standard REITs.
Stapled Security vs Standard REIT
| Feature | Stapled Security | Standard REIT |
|---|---|---|
| Legal entities involved | Two (REIT + business trust) | One (REIT only) |
| Can capture operating-linked income | Yes, via the business trust leg | Generally no, restricted from direct operations |
| Trading | Single stapled security, one ticker | Single REIT unit, one ticker |
| Common sector fit | Hospitality (hotels, serviced residences) | Retail, office, industrial, data centres |
| Singapore examples | CDL Hospitality Trusts, Far East Hospitality Trust | Most other SGX-listed REITs |
The Bottom Line
Stapled securities let Singapore hospitality trusts combine a real-estate-owning REIT with an operationally flexible business trust in one tradeable unit, capturing upside a pure REIT structure could not. For unitholders, the practical experience of buying and selling is simple even though the legal structure underneath is more layered than a standard S-REIT.
Related Terms:
Frequently Asked Questions
What is a stapled security in the context of Singapore REITs?
It’s a single tradeable instrument that combines a unit in a REIT with a unit in a business trust, bound together under a stapling deed so they can only be bought, sold, or transferred as one combined security, even though the two underlying entities remain legally distinct.
Which Singapore REITs use the stapled security structure?
CDL Hospitality Trusts and Far East Hospitality Trust are the two primary SGX-listed examples, both in the hospitality sector, each combining a REIT component with a companion business trust.
Why do hospitality trusts use a stapled structure instead of a pure REIT?
REITs face restrictions on directly operating a business, such as running hotel operations. Pairing the REIT with a business trust allows the structure to potentially capture income tied to hotel operating performance that a standalone REIT could not earn directly.
Can I buy just the REIT portion of a stapled security without the business trust portion?
No. Once units are stapled under the deed, they trade as a single security. You cannot separately buy or sell only the REIT or only the business trust component while the stapling arrangement remains in force.
Does a stapled security's distribution get taxed differently from a regular REIT distribution?
Potentially, yes. Because the distribution can be sourced from two differently regulated entities — the REIT and the business trust — the tax character of each portion can differ, so it’s worth reviewing the distribution statement rather than assuming uniform tax treatment.
Is a stapled security riskier than investing in a standard REIT?
It carries a different risk profile rather than simply more risk — investors gain potential upside from operating-linked income but take on the added complexity of tracking two governance structures and understanding a less common structure with fewer directly comparable peers on SGX.
Who manages a stapled security's REIT and business trust components?
The REIT component is overseen by a REIT manager, while the business trust component is overseen by a trustee-manager. These are often related entities within the same sponsor group, but unitholders should understand that governance decisions can technically touch both entities, rather than assuming a single unified management structure.
Disclaimer: This glossary entry is for educational purposes only and does not constitute financial advice. Data sourced from official regulator and industry websites as at July 2026.