OREANDA-NEWS. Business Trusts are business enterprises set up as trusts, instead of companies. Singapore Exchange (SGX) lists 10 Business Trusts whose focus is aligned with five different sectors – Industrials, Utilities, Consumer Discretionary, Financials, and Healthcare. This is in accordance with the Global Industry Classification Standard (GICS®).

These 10 Business Trusts have a combined market capitalisation of S\\$13.6 billion. More than half of the combined market capitalisation of the 10 business trusts represent the industrials sector, through Straits Times Index (STI) constituent Hutchison Port Holdings Trust as well as Rickmers Maritime.

Business Trust Structure

Investors who look for stable and regular returns can explore Business Trusts to gain exposure to big ticket items such as real estate, infrastructure and shipping assets. Business Trusts invest in cash-flow generating assets and can pay dividends from operating cash-flows as opposed to a listed company that can only pay dividends out of accounting profits. Business Trusts are managed through a trust deed, with the trustee-manager maintaining full legal ownership of the trust assets.

Should unitholders wish to remove a trustee-manager, it must be supported by a 75% vote majority. Unlike Real Estate Investment Trusts (REITs), Business Trusts do not have gearing limits and are not obligated to distribute dividends.

Business Trust Swings

Of the 10 trusts, eight have a history of swinging less than the STI on day to day basis over the past five years. This is gauged through beta. According to SGX StockFacts, five year beta measures the portion of a stock’s price that changes in response to changes in the pricing in the overall stock market. A beta of 1 indicates that the market-sensitive portion of the stock’s price has the same volatility as the overall market. A beta greater than 1 indicates that the stock is relatively more sensitive to volatility in the market; a beta less than 1 indicates a more muted response. It is important to also note that beta does not provide a complete past measure of the risks associated with the growth stock.

Over the past five years, the three Business Trusts that displayed the least volatility relative to the broader market were Croesus Retail Trust, Hutchison Port Holdings Trust, Keppel Infrastructure Trust, Asian Pay Television Trust and Rickmers Maritime. Over the past six months, the relative volatility of Croesus Retail Trust, and Hutchison Port Holdings Trust has picked up with six month beta ratios of 0.3 and 0.7 versus the longer term observations provided by SGX StockFacts at 0.2 and 0.4 respectively.

The average five year beta for the 10 Business Trusts is 0.6 suggesting a more muted performance of the trusts that the STI over the period.

Business Trust Yields

Their average dividend yield of the 10 Business Trust is 7.7%.In the year to date, the 10 trusts have averaged price gains of 3.2%, with dividends boosting the return 7.5% in the year thus far. The average dividend yield of the Business Trusts is more than twice the Singapore Fixed Income Index (SFI) yield at 3.0%.

Of the 10 trusts, the five best performers in terms of year-to-date total returns were First Ship Lease Trust (+75.5%), Ascendas India Trust (+15.8%), Religare Health Trust (+8.8%), Keppel Infrastructure Trust (+7.7%) and Asian Pay Television (+3.7%). The tables below are sort by market capitalisation. Note clicking on a trust’s name will take you to its relevant page on SGX StockFacts.

Hutchinson Port Holdings Trust

Hutchison Port Holdings Trust invests in, develops, operates, and manages deep-water container ports in Guangdong Province of the People’s Republic of China, as well as in Hong Kong and Macau. It owns interests in four deep-water container ports located in Kwai Tsing, Hong Kong; and Shenzhen, China. It also invests in other types of port assets, including river ports, as well as undertakes certain port ancillary. The trust was incorporated in 2011 and is based in Singapore.

Keppel Infrastructure Trust

Keppel Infrastructure Trust invests in a large and diversified portfolio of core infrastructure assets located in jurisdictions with well-developed legal frameworks. Its portfolio consists of assets in excess of S\\$4 billion. The trust was formed in 2007 and is based in Singapore.

Asian Pay Television Trust

Asian Pay Television Trust owns, operates, and maintains pay-TV and broadband businesses in Taiwan, Hong Kong, Japan, and Singapore. The trust provides basic cable TV, and premium digital cable TV services; and value-added services, such as broadband Internet access and cable telephony services, as well as premium digital television programming to households and businesses. It serves approximately 1.1 million homes. The trust was founded in 1999 and is based in Singapore.

Ascendas India Trust

Ascendas India Trust is involved in the ownership of real estate properties and other assets in India, which are primarily used as business space. It is also involved in the development, ownership, and management of information technology parks in Hyderbad, Bangalore, and Chennai. The trust was formed in 2007 and is based in Singapore.

Religare Health Trust

Religare Health Trust is a business trust that provides medical and clinical establishment services in India. The trust invests in medical and healthcare assets in Asia, Australasia, and emerging markets in the rest of the world. Their portfolio consists of 12 Clinical Establishments, four Greenfield Clinical Establishments, and two Operating Hospitals. Religare Health Trust was founded in 2011 and is based in Singapore.

Accordia Golf Trust

Accordia Golf Trust owns, operates, and maintains golf courses and golf course related assets in Japan. Their portfolio consists of 89 strategically located golf & country clubs across the various regions in Japan. The trust was incorporated in June 2014 and is based in Singapore.

Croesus Retail Trust

Croesus Retail Trust is a real estate investment firm with investments specialised in a portfolio of retail real estate assets located in Japan and across the Asia-Pacific region. The trust’s portfolio consists of seven retail properties valued approximately at S\\$1.0 billion. The trust was formed on May 7, 2012 and is based in Singapore.

Indiabulls Properties Investment Trust

Indiabulls Properties Investment Trust engages in the development, management, and lease of commercial spaces in India. The trust is also involved in the development and sale of residential property. Its portfolio consists of two commercial developments and three residential developments. Indiabulls Properties Investment Trust was formed on May 7, 2008 and is based in Singapore.

Rickmers Maritime

Rickmers Martime is a business trust that owns and operates containerships primarily under long-term fixed-rate time charters to container liner companies.. The trust’s portfolio includes 16 modern and high-quality containerships with a total capacity of 66,410 TEU. The trust operates in Australia, Italy, France, Japan, South Korea, Singapore, Denmark, and internationally. Rickmers Maritime is based in Singapore.

First Ship Lease Trust

First Ship Lease Trust is a Singapore registered business trust that operates as a ship owner and provider of leasing services on a long-term bareboat charter basis to the international shipping industry. The trust owns a fleet of vessels that are chartered or leased across major shipping sub-sectors, and presently has a diversified portfolio of 23 modern and high quality oceangoing vessels comprising containerships and a variety of tankers. The trust was formed in 2007 and is based in Singapore.

More on Business Trusts

As maintained by the Monetary Authority of Singapore (MAS), a Business Trust is a trust that runs and operates a business enterprise. Registered business trusts must have a trustee-manager whose role is to safeguard the interests of beneficiaries (referred to as ‘unitholders’ under the Business Trusts Act) of the trust and to manage the business of the trust.