4 August 2014

Source: Channel News Asia

Singapore is Asia’s biggest trust listing destination, with around 50 real estate investment trusts (REITs) and business trusts to date in the Singapore market and a combined market capitalisation of roughly US$60 billion.

There has been a growing range of unusual investment options — largely made available through business trust listings — ranging from golf courses and overseas shopping malls to data centres.

Croesus Retail Trust — which owns six malls in Japan — says it is able to offer investors a more competitive pay-out structure by listing as a business trust in Singapore.

Like REITs, business trusts pay dividends out of cash flows rather than from accounting profits, making it an attractive fund-raising structure for infrastructure firms such as port operators — which generate a steady income from fees, but hold depreciating assets that suppress accounting profits.

But business trusts differ from REITs in that it does not face caps on debt gearing or on how much assets under development it can hold.

Analysts say this means investing in business trusts carries relatively more risk than in REITs, and investors should demand a higher yield. Singapore-listed REITs have an average annual yield of six per cent.

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