Real estate funds in Singapore, whether listed or unlisted, have conventionally been constituted as unit trusts. The launch of the variable capital company ("VCC") structure in January 2020 provided a new alternative.
Despite the establishment of over 540 VCCs as of mid-2022, there are no real estate funds listed on the SGX-ST that are constituted as VCCs — most have adopted the unit trust structure, and clients often view VCCs with some unfamiliarity.
Comparing the two structures, we argue that the VCC offers clear legal advantages — including statutory segregation of sub-fund assets and limited liability — while generally enjoying similar tax treatment to a unit trust. We set out the case for the VCC as the structure of choice for real estate funds going forward.
If you have any questions or require any additional information, please contact Soh Chun Bin.
