Estado civil

Name Market Cap ($m)

Office (7)

CapitaCommercial Trust 3,158.6

Frasers Commercial Trust 485.3

Indiabulls Properties Invest 530.8

K-Reit Asia 2,267.3

Mapletree Commercial Trust 1,603.2

Suntec Reit 2,536.0

Treasury China Trust 366.5

Total 10,947.7

Retail (7)

CapitaMall Trust 5,808.1

CapitaRetail China Trust 795.6

Frasers Centrepoint Trust 1,196.0

Fortune Reit 6,601.3

Lippo Malls Indonesia Retail 804.6

Perennial China Retail Trust 544.0

Starhill Global Reit 1,136.7

Total 16,886.3

Industrial (8)

Ascendas India Trust 542.0

Aims Amp Capital Industrial 432.8

Ascendas Real Estate Inv Trust 4,149.3

Cache Logistics Trust 631.4

Cambridge Industrial Trust 588.7

Mapletree Industrial Trust 1,774.9

Mapletree Logistics Trust 2,159.4

Sabana Shariah Comp Ind Reit 572.5

Total 10,851.0

Hospitality (2)

Ascott Residence Trust 1,146.8

CDL Hospitality Trusts 1,608.6

Total 2,755.4

Healthcare (2)

Parkwaylife Real Estate 1070.80

First Real Estate Invt Trust 483.3

Total 1,554.1

Residential (1)

Saizen Reit 173.3

Total 173.3

S-Reits Aggregate 43,167.8

Source: Bloomberg, OIR estimates (Updated as at 16 January 2012)

Glossary

Here is a short explanation of important terms in real estate and investing used in this book.

For some terms, a more detailed explanation can be found in the appropriate sections.

Readers are also encouraged to further research these terms and concepts on their own.

• Basis point (bp). One basis point is 1/100 of 1%.

• Capital markets. This refers to a market for securities where companies and governments can raise funds through debt-type instruments (for example, bonds, commercial paper) or equity.

• Capitalisation rate or “cap rate”. A commonly used term in real estate. It is the net property income (NPI) divided by the property value. Let us say an office building produces an NPI of S$10 million per year and its capital value is S$150 million. In this case, the cap rate of the building is: 10/150 = 6.6%.

• Cap rate compression. As the cap rate for a property is reduced, its capital value moves up. This process is called “cap rate compression”. For example, a mall that produces NPI of S$20 million a year is valued at S$250 million, giving it a cap rate of 8% (20/250). Let us say that over the next two years the NPI remains the same but there is increased

optimism on malls resulting in a valuation of S$350 million. This means that the cap rate of the mall has compressed from 8% to 5.7% (20/350).

• Commercial mortgage-based securities (CMBS). This is a type of loan which was popular before the 2008–2009 global financial crisis. The idea behind this was to pool together (or “securitise”) several loans and sell that to investors as a yield product. Most of these loans were originated by investment banks such as JP Morgan and Goldman Sachs.

Since the loans were not on the banks’ books, the quality of the loans was weak and many of them defaulted. This was one of the reasons behind the sub-prime crisis in 2008.

• Dividend payout ratio. The ratio of dividend paid to net income. The higher the ratio, the more the company is paying out in dividends but it also means that the sustainability of dividends is riskier as a drop in net income will lead to lower dividends.

• Gearing. Also known as leverage. It is the ratio of debt to total property value. If the total value of debt you have on your balance sheet is S$200 million, and the value of all your properties is S$1 billion, then your gearing is: 200/1000 = 20%.

• Liquid investment. An investment that can be easily bought or sold. A blue-chip share is a liquid investment as it can be sold quickly through your broker while most physical

properties are fairly illiquid in that it takes time to arrange for viewings and to seal a deal.

• Margin of safety. A concept in value investing. It is the difference between the price paid for an asset versus its “intrinsic” or real value which is subjective. The greater the

difference, the greater the margin of safety. To illustrate this, let us say you managed to buy a landed property in good condition during a depressed market at close to the cost of just the land. In such an event, the margin of safety for the investment is high as there is not much room for the price to fall further.

• Net asset value (NAV). A very important concept in investing. It is the value of a firm’s assets minus its liabilities. This is also known as book value. Let us say a REIT has S$100 million in properties, S$10 million in cash and S$20 million in bank loans, the NAV of the REIT in this case is equal to (100 + 10) – 20 = S$90 million.

• Net property income (NPI). This is the gross revenue of a property minus property-related expenses such as maintenance and utilities. This is a key measure of the earnings power of a property.

• Rights issue. A rights issue is a way for companies to raise capital through issuing new shares. The shares are offered to the existing shareholders, usually at a discount to the trading price. The higher the discount, the greater the dilution for shareholders that do not subscribe to the rights issue.

• Stabilised asset. A property which is functioning at its normal potential. For example, a newly developed mall will take time to fill up with tenants. The first few months may see high tenant turnover till a good, sustainable tenant mix is found. Once this happens, the mall is said to be stabilised. This usually takes around a year.

• Singapore Inter Bank Offered Rate (SIBOR). This is the rate at which banks lend funds to each other. This rate can be for different tenures such as one month, three months, or longer, and is reported in The Business Times every day. SIBOR is used as a base to set floating rate loans and is thus used as a proxy for interest rates in Singapore.

• Volatility. This has a precise mathematical meaning but is generally used to describe short-term fluctuations in market price for any asset. Office and hospitality REITs are generally more volatile than retail REITs.

• Yield. A general term used to describe the return on an investment. Let us say you deposit S$100,000 in a bank account at 2% annual interest rate. Your annual yield is then: 2% × 100,000 = S$2,000. In general, the riskier the investment, the higher the yield demanded by the market.