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Finian Tan gears up for twin Reit ventures
Sources say they may have features not usually found in conventional Reits
By: Arthur Sim
Venture capitalist and former banker Finian Tan is getting ready to launch two new Reits, or real estate investment trusts, industry sources say.
The Reits are likely to be managed by Harvard Fund Management, in which Dr Tan's Vickers Financial Group has a substantial stake.
The independent Reits are expected to hold third-party properties that may include industrial and office buildings, car parks, or possibly hospitality and leisure assets.
A listing by the end of the year is expected. It is also understood that an upside is likely to be offered to prospective sellers of buildings through a Reit structure that allows them to keep up to 100 per cent of the ownership value of their properties through the Reit units, which may be capitalised later.
Sellers of the properties will even be offered the opportunity to manage and maintain the buildings, leaving the Reit managers at Harvard Fund to focus on new acquisitions and strategic planning.
Several familiar names are linked to Dr Tan's Harvard Fund Management. They include former Kim Eng Securities managing director Douglas Ooi and Member of Parliament R Ravindran.
Also on board as a substantial shareholder is Chan Wang Kin, CEO.
He was for a brief period the director of corporate finance at Mapletree Investments - the property unit of Temasek Holdings - and was involved in initiating a Reit there. It is, however, understood that this previous Reit has no connection with Mapletree's upcoming logistics Reit.
Mr Ooi's involvement does not come as a surprise. In February this year, the semi-retired broker announced that he was joining Dr Tan's private-equity firm Vickers Financial Group as managing director and a key shareholder.
Vickers Financial Group is not linked to the former Vickers Capital or DBS Vickers Securities.
Mr Ooi, who is a director at Harvard, is thought to be cash-rich after selling his entire stake in Kim Eng and is expected to provide some of the funds needed for the possible Reits.
Lawyer R Ravindran, who is an MP for Marine Parade GRC, is a Harvard director.
When contacted, Dr Tan said he was not ready to discuss the details of the Reits - but details have already been surfacing.
Of the new Reits that are said to be coming out, the first will probably be an industrial Reit involving industrial buildings, with those owned by listed First Engineering Group thought to be topping the list.
Sources have estimated that the industrial Reit will start from a base of $300 million to $500 million.
A unique feature of the Reit may be that instead of a huge capital investment, the fund may be structured such that prospective sellers of buildings may decide to keep a stake in their properties through the Reit units.
If these sellers have an interest in the form of units, they may be expected to keep their buildings' tenancy performing optimally. The fund managers may not be responsible for managing or maintaining the asset.
In Singapore, most Reit managers have associate property management arms that focus on managing and enhancing the properties. To structure the Reit this way is unconventional, and it is not clear if the Singapore Exchange and the Monetary Authority of Singapore will go along with the idea if Harvard Fund Management proceeds with the Reit.
However, if Dr Tan's credentials are anything to by - he has been managing director at Credit Suisse First Boston, Asia-Pacific head of Draper Fisher Jurvetson ePlanet, board member of ST Electronics and even co-chairman of the Romancing Singapore Task Force - it should be interesting to see how the Reit or Reits will shape up.