Analyzing Singapore REITs for Portfolio Stability and Diversification: A Risk Assessment

Singapore REITs: Assessing their Suitability for Stable and Diversified Investments

Introduction:

Sally Tan, an equity analyst with Prospero Asset Management Company PAMC, has been tasked with recomming units of four Singapore Real Estate Investment Trusts REITs for three distinct PAMC portfolios targeting investors across various risk appetites:

1. The Prudent Equity Fund catering to low-risk equity investors seeking stable and recurrent divid income.

2. The Balanced Equity Fund med at investors with a moderate risk tolerance expecting a mix of divid income and capital gns.

3. The Wealth Accumulation Fund for high-risk investors focused on total returns, indifferent between divid income and capital gns while pursuing exposure to international markets.

The case study provides comprehensive data on the operating performance, financials, unit prices, distributions, and macroeconomic drivers influencing these REITs as of November 2016. With more than thirty REITs listed on Singapore Exchange SGX, this selection includes prominent players in retl CapitaLand Mall Trust - CMT, industrial sectors Ascas REIT - A-REIT and healthcare Parkway Life REIT - P-Life REIT. The inclusion of Soilbuild Business Space REIT Soilbuild REIT, with its weak operational and financial standing, offers an opportunity to compare the performance of stronger and weaker REITs.

Objective:

The primary learning objective is to acqunt participants with the economic drivers, risks associated with REIT investments, and the assessment of counterparty risk.

Key Learning Areas:

1. Understanding the dynamics and impact of retl market trs on CapitaLand Mall Trust CMT.

2. Analyzing industrial market conditions influencing Ascas REIT's performance.

3. Evaluating healthcare sector fluctuations affecting Parkway Life REIT P-Life REIT.

4. Risk profiling of REITs with varied business stability and financial health profiles.

5. Conducting counterparty analysis of REIT sponsors to assess their creditworthiness.

Keywords:

• Real Estate Investment Trusts REITs

• Portfolio Capitalization

• Prudent Equity Fund

• Balanced Equity Fund

• Wealth Accumulation Fund

• Financial Risk

Disciplines:

Finance and Financial Management

Research Areas:

Finance

Data Sources:

Field Research

Geographic Coverage:

Singapore

Temporal Coverage:

November 2016

Education Level:

Executive Education, Postgraduate, Undergraduate

Publisher:

Singapore Management University

Case ID:

SMU-17-0002
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