ARA Asset Management Limited (SGX: D1R) is an asset management company, focusing on REITs.
The company has built a diverse suite of real estate investment trusts (“REITs”) and private real estate funds that are invested in the office, retail, logistics/industrial, hospitality and residential sectors in the Asia Pacific region.
Far East Hospitality Trust (SGX: Q5T) is a real estate investment trust. It has approximately 280 units of retail, office and serviced office commercial spaces. Its hotel properties include Village Hotel Changi, The Elizabeth Hotel, Orchard Parade Hotel.
Suntec Real Estate Investment Trust (SGX: T82U) is engaged in investing in income-producing real estate used for commercial purposes. The Company operates in three segments: retail, office and convention. An example is Suntec City.
On the surface, these 3 companies are not exactly related at all. True, all 3 companies deal with the property as their main source of income.
Yet, investors may not know that they can actually invest in one single entity to own all 3 companies at the same time.
Because the above are all the associates and investments of a single parent – Straits Trading Co Ltd (SGX: S20).
A simple chart will illustrate the story better.
Source from 2015 annual report
But does it make sense financially?
Well, let’s do a simple calculation.
Valuation of public listed associates:
In other words, if investors want to own ARA, Suntec and Far East, they can either buy these investments separately or invest in one company, which is Straits Trading – the proxy.
At a current price of S$1.99, Straits Trading’s market capitalisation is S$ 812 million. This is higher than its ownership of above stakes.
So does it still make sense to use the proxy?
The answer is it depends.
If investors are willing to dig further, they will realise that Straits Trading has other assets in its balance sheet – various securities and also a controlling stake in MALAYSIA SMELTING CORPORATION (KLSE: MSC).
Maybe is better to just look at the three as separate investments. After all, why bother about the complexities?
But for those who are willing to do some research, they may discover many interesting things about Straits Trading.
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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Lawrence Nga doesn’t own shares in any companies mentioned.