A-REIT: Ascendas Real Estate Investment Trust and some background

I thought I would not look at REITs again. But in life, things change. [The only constant is change as some have said. On perhaps a digressive note, those teaching/tutoring General Paper (GP) could consider drawing links between consumerism and REITs – I just might myself!]

Let us take a look at the below:

Advertorial for exposition
Advertorial for exposition

Some things that pop out to me:

  • 130 properties at Dec 2015
  • Operates in Singapore and Australia
  • 8th biggest ‘industrial landlord in Australia’ (Feb 2016)
  • Australia properties has alluring traits ‘…long weighted average lease expiry of 6.1 years’ [What does this mean though?] Assets there have contractual terms with ‘built-in annual rental escalation’ at 3.3%
  • A-REIT garnered the Most Transparent Company Award awarded by the Securities Investment Association (Singapore) under the REITS & Business Trusts for 11 years [Upon further research, the 3 runners-up were CapitaMall Trust; K-REIT Asia; and Suntec REIT. That was in 2012. In 2015, the winner was again Ascendas Real Estate Investment Trust; with runners-up being CapitaMall Trust; and Keppel REIT.]
  • It has won the Singapore Building & Construction Authority – Greenmark Gold and Platinum Awards [With research, it seems to have won in 2011 with Changi Business Park Phase Three. No recorded award for the Greenmark in 2016.]

Learning Points from Monetary Authority of Singapore’s MoneySENSE

The website states the last update at 17July 2014.

  • REIT dividends (also called ‘income distributions’) are tax-exempt income; REITs ‘must pay out at least 90% of net income after tax’ so that they can to ‘…enjoy tax exempt status by Inland Revenue Authority of Singapore [IRAS] (subject to certain conditions)’
  • Akin to actively or passively managed mutual funds/exchange traded funds, REITs have to pay fees. These include property managers fees, annual managers’ fees,  ‘trustees’ fees and other expenses…’ and taxes under foreign legal regimes (if any) before investors get the payout
  • Some risks (yes, there are more!):
    • When insolvency occurs, ‘…the assets of the REIT will be used to pay off debtors first.’ The unit holders/investors receive the leftover.
    • Pertaining to liquidity (that if you need your money back), REITS ‘may be relatively less liquid compared to funds investing in financial securities such as stocks and bonds… difficult to quickly find buyers and sellers for property, especially if the value of the property is high… may be difficult for REITs to vary their investment portfolio or sell its assets on short notice…’
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