Originally posted by shade343:
A business trust is similar to a real estate investment trust. Basically, its a model that allows investors to invest in an asset(s) in return for trust units. A trust will be appointed to own the assets on behalf of the unit holders. Majority of cashflow generated by the asset(s) will then be distributed to the unit holders on a timed basis.
Business trust are flexible as they allow investors to invest in anything that are capable of generating recurrent earnings such as e.g( a cruise ship, a hotel, a fleet of taxis etc etc).
MAS and SGX has yet to formalise the guidelines and regulations behind business trust but it is expected that they will follow a similar regulation to that of reits.
Yield of business trust would depend on the price which one bought the units and the ability of the assets to generate good cashflow. The yield would also depend on the type of asset involved. If the assets are depreciative in nature, a higher yield may be given to investors to compensate for the depreciation.
Which are depreciating and appreciating assets business trusts?