Singapore REITs: A Stable Investment Option for Different Risk Profiles

Singapore REITs: Low Risk Investments for Stable Returns or Are They?

Authors:

• Benedict S. K. Koh, Singapore Management University

• Nandini Vijayaraghavan

Publication Type:

Case Study

Publication Date:

June 2017

Abstract:

Sally Tan, an equity analyst at Prospero Asset Management Company PAMC, is tasked with advising on the inclusion of units from four Singapore Real Estate Investment Trusts REITs - CapitaLand Mall Trust CMT, Ascas REIT A-REIT, Soilbuild Business Space REIT Soilbuild REIT, and Parkway Life REIT P-Life REIT in three distinct portfolios managed by PAMC:

1. The Prudent Equity Fund, targeting equity investors with a low-risk appetite seeking stable and recurring divid income;

2. The Balanced Equity Fund, catering to moderate-risk investors ming for a balance between divid income and capital gns;

3. The Wealth Accumulation Fund, designed for high-risk investors who prioritize total returns without concern for the nature of those returns divid income versus capital gns, with an interest in foreign exposure.

The case provides data on each REIT's operational and financial performance, unit prices, distribution yields, alongside pertinent macroeconomic drivers as of November 2016. With over thirty REITs listed on Singapore Exchange SGX at that time, Singapore-based REITs have a sector-specific focus with their investments predominantly in the residential, retl, industrial, office, healthcare, and hospitality sectors. The selected REITs in this study represent the largest entities within the retl CMT, industrial A-REIT, and healthcare sectors, as well as an industrially-focused REIT that exhibited weaker performance, offering a comprehensive view of different REIT segments.

The primary educational objective is to familiarize participants with the economic drivers impacting REIT investments and assessing counterparty risks through sponsor analysis.

Keywords:

Real Estate Investment Trusts REITs, Portfolio Capitalization, Prudent Equity Fund, Balanced Equity Fund, Wealth Accumulation Fund, Financial Risk

Discipline:

Finance Finance Financial Management

Research Areas:

Finance

Data Source:

Field Research

Industry:

Banks and Diversified Financial Services

Geographic Coverage:

Singapore

Temporal Coverage:

November 2016

Educational Level:

Executive Education, Postgraduate, Undergraduate

Publisher:

Singapore Management University

Case ID:

SMU-17-0002

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Link to Full Text:

https:cmp.smu.edu.sgcase2871

The text has been translated from Chinese to English and slightly modified for better and coherence.
This article is reproduced from: https://ink.library.smu.edu.sg/cases_coll_all/184/

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