WE refer to The Business Times' Hock Lock Siew column on Sept 30, 2021 (Straits Trading shareholders' club a commendable initiative but it should re-think co-investment plan).

 

We thank Ben Paul for his kind commendation and valid concerns. We wish to clarify as follows:

 

Firstly, no shareholders - active or passive, big or small - will be disadvantaged. Any information, offer and announcements will be disclosed on the company' s website, which is accessible by the public too. Shareholders will be encouraged to register with the Shareholders' Club. In particular, those with shares held in CDP and nominee accounts. As an example, the ubiquitous alumni associations of schools and colleges do not have every alumnus signing-up. Registration will ensure engagement and activities are targeted and cost-efficient. Furthermore, the legal obstacles of personal data protection, spamming and scamming necessitate a dedicated platform for operations.

 

Secondly, Straits 5.0 encapsulates the company' s key milestones from 1880s to 2020s. One of the stated goals in the current decade, as reflected in Straits 5.0, is to create investment opportunities to broaden our investor base. Our own shareholders must have priority. Neither does the plan discriminate against any shareholders. We recognise the investment needs of both accredited investors (AI) and non-AI. Post-pandemic, we plan to enhance value for all shareholders as we have done amid the pandemic.

 

Lastly, the prevailing strict rules by the authorities governing AI and investments, including real estate, are meant to protect all-investors. If future investment opportunities are allowed by the authorities, we hope our shareholders would have gained investment knowledge and/or experience through our enhanced engagement.

 

We thank Mr Paul for his suggestions too. Given the above considerations, we assure our shareholders that Straits Trading is steadfast, as we have been in our 134-year journey, in creating shareholder value for all.

WITH property likely to remain a preferred choice among investors for long-term wealth creation, The Straits Trading Company is looking to become a major player in the securitisation of real estate. In doing so, it also hopes to create value and investment opportunities for its shareholders.

 

This comes as the company embarks on a transformation to broaden its investor base while allowing existing shareholders to actively participate in the continued growth of the company.

 

The company' s plan, dubbed Transformation 5.0, includes a new shareholders' club. Straits Trading aims to engage active shareholders as a community and give them access to opportunities to grow and co-invest with the group, said Eric Teng, chief executive officer of Straits Developments.

 

" Investing in the mothership is just one part of the deal, you can do a lot more things " said Mr Teng.

 

" The engagement would be more active rather than just the once a year kind of engagement, which is quite standard," he added.

 

Joining the Straits Trading Shareholders' Club is free and open to shareholders holding at least 100 shares.

 

Those who are part of the club will get priority to networking sessions, webinars and product launches.

 

Among the club' s objectives is to boost knowledge about Straits Trading as a conglomerate-investment company through interaction with management, curated market commentaries and opinion pieces.

 

This will help create a " relationship that is more sticky" , said Mr Teng.

 

Accredited investors will also get access to new investment opportunities.

 

For instance, Straits Trading has been working on allowing shareholders to have fractional ownership of high-quality real estate and property.

 

While the Covid-19 pandemic had redefined the way people perceive space, Mr Teng said, property ownership is still at the top of investors' minds in the search for a steady stream of passive income as a wealth creation vehicle.

 

Yet there are often high barriers to entry for quality real estate investments.

 

Straits Trading has therefore launched investment products that will allow retail accredited investors in its shareholders' club to invest in smaller amounts for a partial ownership of real estate and property.

 

" Our shareholders who are asset-rich and cash-poor can find opportunity in fractional investments and stay invested in the property space without necessarily buying the whole property," said Mr Teng.

 

The fractional ownership model allows a group of individuals to own a fraction of an asset or entity, as opposed to owning the entire property.

 

For instance, a S$1 million property can be owned by 10 unrelated individuals with each contributing S$100,000. Each investor can then receive one tenth of the total yield and also have the option of exiting the investment based on the prevailing market value of the property once it appreciates.

 

The first offerings for accredited investors of the club include fractional ownerships in a Good Class Bungalow (GCB) on Cable Road in Chatsworth Park, and a residential development at Woollerton Park in Gallop Green.

 

Straits Trading has set up two investment vehicles to hold the two assets. Both will issue notes with an annual cumulative interest of 3 per cent of the subscription price, with the possibility of the distribution of special interests upon the sale of the property after five years. The investment period may be shortened or extended depending on the market value.

 

Minimum investment amounts range from S$200,000 to S$500,000, with no lock-in period. Although Straits Trading will be able to sell these notes to any accredited investor, priority will be given to members of its shareholders' club.

 

Investors also have the flexility to sell their ownership to other interested parties.

 

Straits Trading is a diverse group, with businesses in property, resources and hospitality. It has a 52 per cent stake in tin smelter Malaysia Smelting Corp, and a 30 per cent stake in Far East Hospitality Holdings.

 

Real estate, however, is by far its biggest and most profitable business segment. The company is engaged in property development as well as fund management specialising in global real estate securities.

 

It also owns a stake in real estate manager Ara Asset Management, and a stake in commercial real estate investment trust Suntec Reit.

 

Straits Trading' s net profit was S$122.6 million for the six months ended June 30, 2021, up from S$5.5 million in the year-ago period. Revenue rose 62.2 per cent to S$219 million.

 

Nearly all of that gain was driven by the property segment. Property revenue grew 18.3 per cent year-on-year to S$23.5 million during the first half.

 

Net profit from real estate was S$125.4 million for the half-year, up from S$21.8 million across the same period the previous year. This was mainly due to fair value gains from the logistics properties portfolio in Australia as well as higher share of profits from a joint venture in South Korea.

 

Mr Teng said Straits Trading continues to be active in the property space and will be on the lookout for other opportunities it can bring to its shareholders' club.

 

" Property, particularly residential property, seems to be a big thing on Singaporeans' minds but we hope to move the needle to other things like hospitality and other forms of fractional products," he said.

 

He also does not believe offices will become obsolete despite the current widespread adoption of work-from-home arrangements.

 

There is still a future for office spaces in Singapore as long as these are not too expensive, he said.

 

Offices have already began to decentralise beyond the central business district, which is possible thanks to Singapore' s connectivity and transport infrastructure, said Mr Teng, citing business parks and heartland areas as examples for office locations.

 

On Aug 31, The Straits Trading Company Straits Trading: S20 +0.63% independent and non-executive director Tan Tiong Cheng acquired 20,000 shares of the company for a consideration of S$63,600.

 

At S$3.18 per share, this increased his total interest in the conglomerate-investment company from 0.01 per cent to 0.02 per cent.

 

Mr Tan served as president and subsequently as senior adviser of Knight Frank Asia-Pacific until his retirement on March 31, 2020.

 

He was the executive chairman of Knight Frank Pte Ltd' s Group of Companies until March 31, 2017.

 

Mr Tan is also an independent and non-executive director of UOL Group, the lead independent director of Heeton Holdings and a non-executive independent director of Amara Holdings.

 

On Aug 13, The Straits Trading Company reported an increase in H1FY21 (ended June 30) Ebitda to S$186.9 million, compared to S$27.7 million in H1FY20.

 

With the results, executive chairman Chew Gek Khim noted that despite the global pandemic, the group' s performance in H1FY21 demonstrated the resilience of its strategy as a conglomerate investment company, with both operations as well as financial investments in real estate, hospitality, and resources.