The external manager model adopted by most locally listed trusts is not common in more developed markets such as the US and Australia, and the managers of some successful REITs here have been able to make fortunes for themselves.
However, valuations that managers garner in a transaction, to the extent that they are known, vary widely.
Saizen REIT’s manager, for example, is being sold at a seemingly low price because it is not actually managing any assets.
On the other hand, while Croesus Retail Trust (CRT) has been reporting stable distributions per unit since its listing in 2013, its units traded at relatively high yields because local investors were not familiar with its retail malls in Japan.
The managers that never get transacted are those that run the biggest and most successful REITs in the market, such as CapitaLand Mall Trust (CMT) and CapitaLand Commercial Trust (CCT).
These managers also seem to charge relatively low fees.
For instance, CCT paid asset and property management fees totalling only $21.7 million last year, equivalent to just 0.25% of its assets under management of $8.5 billion.
By comparison, Cambridge Industrial Trust — with an asset size of $1.4 billion — paid asset and property management fees of $9.17 million for the July-to-September quarter alone.
REIT investors should perhaps ask themselves which managers are creating value for them, and which are not.