Singapore’s Straits Trading Lists Bond Backed by Tokenised Townhouse on SDAX

Singapore’s Straits Trading has tokenised a corporate bond linked to a landed home in the city’s posh District 10 through which it can raise up to S$7 million ($5.32 million), marking the conglomerate’s first fractionalised real estate-linked asset listed on the digital trading platform SDAX.

Now broken down into fractional units, the debt instrument backed by Straits Trading’s development arm, Straits Developments, provides investors with a fixed 3 percent annual interest rate and up to 10 percent non-guaranteed additional interest at maturity.

“Fractional assets present a great opportunity for more investors to be involved in the various investment options that we have,” Eric Teng, chief executive officer of Straits Developments, said in a statement.

SDAX noted in the statement on 11 January that the special interest at redemption of the note will depend on the underlying property’s sale price or valuation. As a result, in addition to earning stable income interest, investors can also benefit from the appreciation of the asset, a freehold townhouse in the Gallop Green complex in the Woollerton Park residential enclave.

Semi-Detached and Fractionalised

While the announcement did not disclose further details on the linked asset, a filing by SGX-listed Straits shows that it owned one remaining townhouse, valued at S$7.58 million ($5.73 million), within the Gallop Green complex at 13 Woollerton Park as of year-end 2021.

Completed in 2002, Gallop Green comprises 13 landed townhouses and 40 apartment units across 143,000 square feet (13,285 square metres) of freehold land near Farrer Road. The townhouse linked to Straits’ note is not considered a Good Class Bungalow, an SDAX spokesperson informed Mingtiandi.

The minimum investment size in the tokenised asset is one token, worth S$1,000 on the exchange, according to the spokesperson, while the maximum investment size is limited only by the availability of tokens. The note’s maturity date is 31 December 2026.

If the townhouse’s market value goes beyond S$7.5 million, Straits has the option to sell the asset prior to maturity. The SDAX representative added that the 10 percent special interest will be distributed at the “sole and absolute discretion” of the issuer.

Straits can issue up to S$7 million in the form of Digital Notes to be listed on the exchange, which also allows bondholders to trade their digital securities on the secondary market should they wish to exit the investment prior to maturity.

Straits has previously introduced the fractionlised ownership of the Gallop Green property in May through its Straits Trading Shareholders’ Club, which was only open to investors holding at least 100 Straits shares. The club approached allowed qualifying shareholders to co-invest anywhere from S$200,000 to S$500,000 in real estate securities including the townhouse in Gallop Green and a Good Class Bungalow located at Cable Road in Chatsworth Park.

SGX-listed Straits maintains a 14.3 percent stake in SDAX as well as significant interests in real estate heavyweights, including a 4.8 percent stake in Hong Kong-listed industrial giant ESR and a 1.9 interest in SGX-listed Suntec REIT. ESR is also a major investor in SDAX.

Overseas Focus

With only three residential assets left in its home turf, which account for just 14 percent of its S$3.9 billion portfolio, the Singapore-based conglomerate is busy expanding its footprint overseas.

Straits last month closed its acquisition of seven office buildings, two industrial buildings and six plots of development land at Gloucester Business Park in the UK for £122 million (now $149 million), slightly less than the earlier agreed price of £130 million when it was first reported last June.

This was followed by its investment in four UK retail parks in April 2022 through a Savills Investment Management vehicle backed by the family office of ARA Asset Management founder John Lim. The UK Value Boxes fund paid £75 million for the two retail parks in England and one each in Wales and Scotland.

Down Under, Straits Real Estate paid A$150 million ($106.8 million) for the nine-storey office building at 1010 La Trobe Street and its five-floor neighbour, 192 Harbour Esplanade in Melbourne almost one year ago.