Oranong Chaitong
CEO, Prospect REIT Management Co., Ltd.
Manager of the Prospect Logistics and Industrial Property Leasehold Trust (PROSPECT)
 

Before investing in any type of asset, investors should always understand the investment thoroughly, including investments in trusts. It is essential to comprehend the nature of the trust before making an investment decision. Investors should study the information in the prospectus in detail regarding the investment policy, specifics of the properties being invested in, risks associated with borrowing, related risk factors, what influences the trust's returns, as well as dividend policies, fees, and various expenses. Additionally, it is advisable to inquire with sales representatives before deciding to invest. The following are the indicators to consider:

1. Type of Property to Invest In
The property to invest in can either be freehold or leasehold. If the property in the fund is freehold, it can appreciate in value in the future as surrounding land develops and inflation rises. In contrast, leasehold properties decrease in value over time as the lease term shortens, leading to reduced rental income and ultimately lower value at the end of the lease. Therefore, this type of fund often offers higher dividend rates.

2. Nature of the Assets
Investors should consider what type of properties the trust invests in, such as retail, industrial properties, office buildings, hotels, or exhibition centers. Each type generates different income streams. For instance, industrial and office funds typically have direct leases with individual tenants, while hotel funds may have a primary tenant with a mix of fixed and variable rent, leading to varying income volatility.

3. Location and Income Potential of the Trust's Properties
Evaluate whether the properties are in good locations, the level of competition, market supply, occupancy rates, and tenant mix. These factors will help investors gauge the income-generating potential of the trust.

4. Competence of the Trust Manager and Property Management
The personnel managing the trust play crucial roles that affect the future value and income of the properties. Therefore, it is essential to have a trust manager with experience in managing trusts and property executives who are well-versed in managing those specific projects.

5. Proportion of Trust Units Held by Specific Groups
After selling assets into the trust, the asset sponsor often retains units in the trust and continues to participate in management. Investors can consider whether the trust still has its original owners or experts involved, which can provide assurance that the trust will be managed continuously during its establishment. If there are no asset sponsors holding units, but the trust manager and property executives have experience and expertise, the significance of unit ownership may be diminished.

6. Review of Historical Performance
Examine past performance in terms of income, expenses, and profits. Is there growth in income and profits? If profits are increasing, it will likely lead to higher dividends for unit holders, as regulations require a payout of 90% of adjusted profits.

7. Dividend Yield (%)
The annual dividend paid to investors expressed as a percentage of the unit's selling price. This can be assessed based on previous years' rates or promised rates (in the case of newly issued trusts). Investors should evaluate whether the expected return is sufficient.

8. Net Asset Value (NAV)
The net asset value represents the total value of the trust's assets minus its expenses and liabilities. Typically, assets are calculated at market value (mark to market). This ratio can indicate whether the trust is overvalued or undervalued compared to its net asset value.

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