Business trust listings on SGX on the rise

Business trust listings on SGX on the rise

THE number of business trusts listed on the Singapore Exchange has been growing steadily, though their performances have been uneven.

Data from SGX My Gateway - the Singapore bourse operator's investor education portal - showed at least two new business trust listings per year since 2010.

The 12-month returns of the business trusts vary from a 37.6 per cent decline for First Ship Lease Trust, to an 18 per cent gain for CitySpring Infrastructure Trust. The combined market capitalisation of business trusts on the bourse amounts to more than $18 billion.

Business trusts offer market participants an alternative method of investing in cash-generating assets such as infrastructure, real estate and transportation businesses.

These listings are enterprises set up as trusts rather than companies and, as hybrid structures, incorporate elements of both companies and trusts.

Like a company, a business trust operates and runs like an enterprise but, unlike a company, is not considered a distinct legal entity.

A business trust is created by a trust deed under which the trustee has legal ownership of the trust's assets, and manages the assets in the interests of the trust's beneficiaries.

The Singapore Exchange (SGX) has seen five business trust listings since last year - a 50 per cent jump in that time - bringing the total number of business trusts listed on its boards to 15.

In comparison, there are 23 real estate investment trusts (Reits) listed.

The newest business trusts are Croesus Retail Trust (CRT) and Asian Pay Television Trust (APTT), which made their debuts last month.

The 12-month price changes for the two are a 0.54 per cent gain for CRT, and an 11.86 per cent decline for APTT.

APTT invests in media-related assets, while CRT holds retail property in Japan.

More business trust listings are in the pipeline - reports have named General Electric-backed Aircraft Capital Trust and the aircraft leasing business of finance firm Investec.

Other candidates include Global Telecommunications Infrastructure Trust.

A recent CIMB report said "Reit and business trust initial public offerings (IPOs) have become the flavours of the day", as investors remain hungry for yield in the current low interest-rate environment.

While business trust returns have been weaker historically compared with Reits, they might pick up this year.

A recent DMG report put the average yield from a selected group of business trusts at 6.26 per cent for this financial year.

The latest debutantes on SGX - Croesus Retail Trust and APTT - have projected yields above 8 per cent. These figures compare favourably with the traditionally popular Singapore Reits.

A DMG report forecast that a basket of Reit counters would have an average weighted dividend yield of 5.07 per cent for this financial year.

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