SINGAPORE (May 3): Singapore Exchange is the largest global REIT platform in Asia, with a market capitalisation of US$70 billion ($95.4 billion).
“We have the largest global REIT platform. You could start with a US portfolio and decide 10 years later to pick up European assets, and investors here would not have a problem with that,” says Ronald Tan, director of Equity Capital Market at the SGX, during Manulife US Real Estate Investment Trust’s Investor Day event.
The first reason why REIT maangers love to list here is the city state has an established private bank- ing and wealth management centre, viewed as second only to Switzerland and they have access to a wide pool of wealthy investors — and not just high-net-worth individuals (HNWIs).
Secondly, global and Asian institutional investors have offices in Singapore. In addition, the city state has become an attractive place for the wealthy, including those from Europe, Switzerland and Asia, to set up family offices.
For instance, Quarz Capital (Asia) is based here and regularly invests in REITs. Wealthy Chinese investors such as Tong Jinquan and Gordon Tang and the companies they control also invest in REITs.
“Access to capital is critical,” Tan emphasises.
Another reason is the fee income from the REIT.
“After selling into REITs in Singapore, the sponsors can continue to receive fee income,” Tan says.
Most markets in Asia adopt the external manager model for listed REITs where the manager is owned by the sponsor and can garner fees.
This means fees are a lot more aligned to unitholder interests.
For instance, the base fee component of Eagle Hospitality Trust, which has lodged its preliminary IPO, and ARA US Hospitality Trust, which has lodged its IPO with the Monetary Authority of Singapore on Thursday, is a percentage of distributable income. Performance fee is calculated on the y-o-y growth in distribution per security.
To find out the other reasons why REIT managers are drawn to list in Singapore, login and read, "SGX explains why Singapore is Asia’s largest global REIT platform" in this week's The Edge Singapore (Issue 880, week of May 6) which is on sale now. Or subscribe here
