OREANDA-NEWS. November 10, 2015. As noted in the Market Update - Business Trusts with International Assets Average 8% Distribution Yield (click here), Singapore Exchange (SGX) lists 10 business trusts with assets located across Asia and Europe. Since the report in mid-September, the 10 Business Trusts have averaged a 2% gain.

Of the 10 Business Trusts, five of the trusts are categorised to the Financials sector according to the Global Industry Classification Standard (GICS®). Business Trusts offer investors a new way to invest in cash-generating assets, including infrastructure, real estate and transportation assets. Business Trusts are business enterprises set up as trusts, instead of companies. They are hybrid structures with elements of both companies and trusts. Like a company, a business trust operates and runs a business enterprise. But unlike a company, a business trust is not a separate legal entity.

As illustrated below, a Business Trust is created by a trust deed under which the trustee has legal ownership of the trust assets and manages the assets in the best interest of the beneficiaries of the trust.

Singapore Business Trust structure

Business Trusts are funded by unitholders and lenders, who are entitled to periodic distributions and interest payments respectively. The single responsible entity for the trust is a Trustee Manager, who has a role similar to a REIT’s Asset Manager and Trustee combined. The Trustee Manager provides management and trustee services, and receives a fee in the process.

Asset Location of the 10 Business Trusts

These 10 business trusts have a combined market capitalisation of S\\$13.3 billion and maintain an average indicative dividend yield of 9.1%. In the year thus far, the 10 trusts averaged a 0.5% total return, taking the three-year total return to 13.1%.

The five best performers in the year-to-date were First Ship Lease Trust (+71.6%), Keppel Infrastructure Trust (+11.7%), Ascendas India Trust (+11.5%), Religare Health Trust (+8.3%) and Croesus Retail Trust (+0.5%). Together, these five trusts averaged a 20.7% total return in the abovementioned period.

As of 5 November, the three trusts trading closest to their 12-month lows were Rickmers Maritime, Asian Pay Television Trust and Accordia Golf Trust. The three trusts trading furthest from their 12-month lows were First Ship Lease Trust, Indiabulls Properties Investment Trust and Religare Health Trust. Note that there will be two trusts going ex-dividend in the next two weeks – Ascendas India Trust on 13 Nov (2.74 cents) and Indiabulls Properties Investment Trust on 17 Nov (0.06 cents).