Home' Trinidad and Tobago Guardian : June 4th 2015 Contents Director of Stallion Prop-
erty Trust (SPT), Joseph
Rahael, says one of the
risks associated with
real estate investment is illiquidity, and
that a new investment opportunity backed
by his family will provide liquid access to
a portfolio of properties.
SPT intends to commence trading on the T&T Stock
Exchange (TTSE) in July 2015. It launched its Initial Public
Offering (IPO) on May 18.
The trust is a real estate investment trust offering 5,072,957
common units, 100,000; three-year three per cent fixed income
units and 180,945 seven-year 4.5 per cent fixed income unit.
Collectively, SPT hopes to raise $382.4 million from the sale
of units to the public with that money being used to pay off
debt used to acquire the properties.
The trust was given a AA' credit rating by CariCris. An
individual as well as a large investor, including banks and
insurance companies and trade unions can invest in the trust
once they register with a stockbroker.
Rahael spoke to the Business Guardian on Tuesday, at Amera
Caribbean Development Ltd's No1 El Socorro Extension office,
Substantiating his point for an investment in SPT, Rahael
said: "For instance, if you were to buy property as an investment
and paid $1 million or $2 million for it, and you needed to sell
that property to get $100,000 you couldn't sell piece of it,
you have to sell the whole thing.
He added: "If you decided you wanted to sell the entire
property, you'll have to go to the market contact a real estate
broker, put it on the market, you might have to price it, it
may go up or down depending on what kind of feedback you
get from the market place. When you finally get a buy, you
then need to hire a lawyer, you have to take three months for
it to close, the buyer may not close. There are all sorts of risks
associated with selling the property and that Is the liquidity
Investing in SPT allows the investor to diversify their invest-
ments across nine properties without having to physically
purchase any of those properties.
The risk with this investment is mitigated due to the diverse
set of properties. Comparing that to an individual investor,
he said: "If you are a single investor
and you bought one property you
have the risk associated with it. If a
tenant you have there were to leave,
you no longer getting rent, what do you do? You'll have to
try to find another tenant, you'll have to spend money to ren-
The trust owns Endeavour Holdings Ltd (EHL). This com-
pany's investment portfolio consists of nine properties with
a total market value of $831.6 million, according to its prospectus.
The properties are leased out to commercial tenants who are
bound by the terms of the lease for a particular period, which
means that the revenue from the properties is predictable.
The property managers of the trust are:
• Ernst & Young Services Ltd, financial advisers;
• Terra Caribbean, independent valuer,
• Brent Augustus & Associates Ltd, independent valuer,
• First Citizens Trustee Services Ltd, the trustee/administrator,
• T&T Central Depository Ltd, the registrar/transfer agent,
• First Citizens Brokerage and Advisory Services Ltd, the
• Amera Caribbean Development Ltd, the property manager,
• Hamel Smith & Co attorneys-at-law, the legal adviser
• PwC Chartered Accountants, auditor.
Now that the IPO closes on June 12, director of the trust,
Joseph Rahael spoke to Business Guardian to outline what
SPT is about and the benefits of investing in a real estate
According to Rahael, anyone can invest in SPT since the
investor can invest any amount they can afford once they
register with a stockbroker.
"When you are investing in real estate, you may not find
a property that meets your budget. You may have $100,000
to invest, you may not find a property for that. Good real
estate goes at a premium and it is not always available, so you
may only find properties that are outside of your budget," he
What's a real estate investment trust?
This is an entity or trust with multiple owners that own
or operate income-producing real estate. Rahael said pub-
licly-trade trusts have the added benefit of being listed on the
TTSE. When this is done, it gives the investor the flexibility
and liquidity to sell their shares on the TTSE. This can be
compared to the long drawn-out process of selling a property
to obtain cash which can be time-consuming especially, if the
investor needs the money right away.
First Citizens Trustee is the third party which is responsible
for administering the trust. The trustees are the ones who
operate the trust on behalf of the trust holders.
"The members of the public will be comforted in knowing
that a third-party professional trust management company
is operating the trust."
Another benefit of investing in SPT is that the construction
risk is eliminated completely.
Since September 2014, the Central Bank has been increasing
its repo rate and, on Monday, it increased the rate by 25 basis
points. Given that SPT is a real estate trust, Rahael said the
increase interest rates should not deplete the value of the
"What an investor should be looking at is what are the
returns they can get in the marketplace, as compared to the
returns they can get in the SPT.
"An investor may look at the repo rate to get an indication
of where rates will be heading. Despite those repo rate increases
the three-year government bond yield is below two per cent.
The seven-year government bond is just over two and a quarter
per cent. Our fixed income units for three years is paying three
per cent. The rate on our seven-year is four and a half; much
higher than the yields that are associated with investing in
He added that repo rates would have an impact on a bank's
"We are paying three per cent on the three-year fixed income
units and 4.5 per cent on the seven-year fixed income units,
this means that we are reducing our lending costs. It creates
value for us because we are reducing costs of our debt and
it creates value for the investor because they are getting a
Approved by SEC
Referring to SPT's legitimacy, he said SPT had to submit
documentation to the local Securities and Exchange Commission
"We met with the SEC and got all requisite approvals. The
TTSE has fully blessed this offering so all our approvals are
in place, all of our marketing stuff has gone by them for their
approval. The prospectus has been approved by stock exchange
and the SEC."
Now that the company has gone through the approval agen-
cies, he said business people generally would want the red
tape reduced as much as possible.
"Certainly there are areas of opportunity for improvement,
particularly when it comes to timeliness. Both organisations---
the SEC and the TTSE---were thorough in their review of the
prospectus and all of our submissions. They were co-operative
in our discussions."
The prospectus, the financial statements, marketing doc-
umentation, amalgamation documents, articles of association,
bye-laws and legal documents all had to be submitted to TTSE
and SEC collectively.
BUSINESS GUARDIAN www.guardian.co.tt JUNE 2015 • WEEK ONE
Stallion allows liquid
PHOTOS COURTESY STALLION PROPERTY TRUST
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