I first read his book in 2012. (His bio by the Singapore Business Review ‘Second Chance Properties appoints Bobby Jayaraman as Independent Non-Executive Director‘ is dated 18 Dec 2012). The book was borrowed from the Tampines Regional Library. The latest version has a chapter on Interest Rates and REITs. For your research, there are other REITs posts on this blog, these are mostly under the Econ & Eco History or Edu & Research categories.
This is another attempt to understand the markers of REIT wellbeing (Chapter 5). In Chapter 6, Jayaraman wrote of REIT valuation. It a very brief paragraph since he spoke at some length on property acquisitions in Chapter 5. A detailed study of overall past management performance would be wise in allocating greater value on the management. If memory serves me right, Benjamin Graham (the mentor of Warren Buffett), looks at dividend returns of companies for 20 years as one indicator whether to buy its stock. [Do correct me if I am mistake though!]
Returning to Chapter 5, it was a shock to read:
‘Most Singapore REITs…not proven to be great deal makers.’
by which I infer that the majority of SREITs (Singapore REITs), up to 2013, had made mediocre acquisitions. A positive instance nonetheless is found with CapitaLand Mall Trust (CMT) and its purchase of Iluma (now Bugis+). The buy was financed wholly through borrowed funds. From what I gather, the underlying potential was great since the property positioning was ‘excellent’. It was low risk ($299 million of a $7.9 billion portfolio). It seemed also that CMT had ‘value added’ in prior acquisitions like IMM, Raffles City and Junction 8.
The author considers an acquisition as worthwhile when it increases Distribution Per Unit (DPU) by ≥5%.