BHG Reit's 'engineered' IPO unnerves investors

THE biggest gripe investors have with the latest mainboard aspirant, BHG Retail Reit, is its low distribution yield and use of a sponsor waiver - a kind of financial engineering - to artificially inflate the yield to a more palatable level.

BHG Retail Reit (a pure China retail real estate investment trust) is set to become the lone Singapore Exchange (SGX) Mainboard listing this year.

The sponsor's waiving of some or all of its share of distributions from 2016-2020 is projected to boost its yield from 4.5 per cent to 6.3 per cent in 2016. This brings it more in line with Singapore Reits' average distribution yield of 6-7 per cent.