Mainboard-listed Croesus Retail Trust said it has increased its currency hedging efforts as the Japanese yen weakens against the Singapore dollar, hitting earnings from retail properties in Japan.
The business trust also hopes that rising property prices in Japan could help mitigate the foreign exchange risk, Channel NewsAsia reports. The seven retail properties in Japan are Aeon Town Moriya, Aeon Town Suzuka, Croesus Shinsaibashi, Luz Omori, Mallage Shobu, NIS Wave I and One’s Mall. Its hedging efforts are aimed at covering its distributable income.
“The asset and liability has a natural hedge because they are all in yen, the only unhedged portion is the net asset value, so if the yen weakens, the net asset value on the Singapore dollar basis will also weaken,” said Mr Jeremy Yong, co-founder and managing director of the Croesus Group.
“However there are mitigating factors, and the biggest mitigating factor is that our property values are going up. So whatever negative currency impact that we see should be offset by the positive capital gains or the revaluations of the assets.”
As well, Croesus Retail Trust has its eye on potential acquisitions in Japan because the weak yen makes them more attractive. Last year, the trust expanded its asset size by about 60 per cent to 85 billion Japanese yen – or just under S$1 billion. It has been listed on SGX since May 2013.
Source : Channel NewsAsia – 14 Jan 2015