Pan-Asia Index Flows & Special Situations, Quiddity Advisors

Janaghan Jeyakumar, CFA

Pan-Asia Index Flows & Special Situations

Quiddity Advisors

Pan-Asia Catalysts/Events

Equity Capital Markets

Kenedix Residential Investment / Equity Capital Markets

<p>Yesterday after the close, <a href="https://www.smartkarma.com/entities/kenedix-residential-investme" target="_blank" data-smartkarma-citation="entities:17149:1" rel="noopener">Kenedix Residential Next Investment Corp (3278 JP)</a> ("<strong>KDR</strong>") announced (<a href="https://www.kdr-reit.com/Portals/0/resources/ir/%E6%96%B0%E6%8A%95%E8%B3%87%E5%8F%A3%E7%99%BA%E8%A1%8C%E5%8F%8A%E3%81%B3%E6%8A%95%E8%B3%87%E5%8F%A3%E5%A3%B2%E5%87%BA%E3%81%97%E3%81%AB%E9%96%A2%E3%81%99%E3%82%8B%E3%81%8A%E7%9F%A5%E3%82%89%E3%81%9B.pdf" target="_blank" rel="noopener">J-only</a>) a follow-on equity offering to fund part of their <a href="https://www.kdr-reit.com/Portals/0/resources/english/ir/Notice%20Concerning%20Acquisition%20of%20Properties%20and%20Conclusion%20of%20Lease%20Contracts%20with%20New%20Tenants.pdf" target="_blank" rel="noopener">recent property acquisition</a> which consisted of four residential properties and two healthcare facilities. </p><div><p>The primary offer quantity is 42,500 units and there is also an over-allotment quantity of 2,125 units. The size of this offering could be around ¥7.7bn (~US$73mn).</p></div><div>
<p>The Offer Price will be determined between 18th and 24th February (typically it has been the first day of this window for most JREIT offerings) and the day following the offer price determination day (pricing date) will be the application date. </p>
<p><em>More below the fold.</em></p>
</div>

Yesterday after the close, Kenedix Residential Next Investment Corp (3278 JP) ("KDR") announced (J-only) a follow-on equity offering to fund part of their recent property acquisition which consisted of four residential properties and two healthcare facilities. The primary offer quantity is 42,500 units and there is also an over-allotment quantity of 2,125 units. The size of this offering could be around ¥7.7bn (~US$73mn).
The Offer Price will be determined between 18th and 24th February (typically it has been the first day of this window for most JREIT offerings) and the day following the offer price determination day (pricing date) will be the application date. 
More below the fold.


JREIT Offering: Kenedix Residential Next Investment Corp (3278 JP) - Take It (Vs Comps)

Event-Driven

<p>In 2020, we have so far witnessed 15 follow-on JREIT offerings cumulatively raising JPY463bn (~US$4.5bn). This has been something of a weak year, understandable because of the covid-19 crisis which hit equity market and JREIT prices in March, and keeping them soft for months afterwards.</p>
<p>Historically, January and February are the busiest months, for a variety of reasons.</p>
<p>From 2015-2020, on average, there have been ~7 offerings from the top 40 JREITs announced within the first two months of the calendar year accounting for roughly a third of the total number of offerings in each year during that period. </p>
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<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/179/233/original/Number%20of%20Historical%20Offerings%20by%20Calendar%20Month.png?1608207336" class="editor-image img-responsive" data-smartkarma-image-id="179233"></figure>
</section>
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Source: Quiddity, Capital IQ (Data)</div>
In this insight, we take a look at the prospective candidates who are most likely to launch follow-on equity offerings near-term, and we look at the performance characteristics of J-REIT follow-on offerings and the likelihood of profit from participating in the event.</section>

In 2020, we have so far witnessed 15 follow-on JREIT offerings cumulatively raising JPY463bn (~US$4.5bn). This has been something of a weak year, understandable because of the covid-19 crisis which hit equity market and JREIT prices in March, and keeping them soft for months afterwards.
Historically, January and February are the busiest months, for a variety of reasons.
From 2015-2020, on average, there have been ~7 offerings from the top 40 JREITs announced within the first two months of the calendar year accounting for roughly a third of the total number of offerings in each year during that period. 









Source: Quiddity, Capital IQ (Data)
In this insight, we take a look at the prospective candidates who are most likely to launch follow-on equity offerings near-term, and we look at the performance characteristics of J-REIT follow-on offerings and the likelihood of profit from participating in the event.

J-REIT Offering Primer: Get Ready for Offering Season 2021

Technical Analyst, Vermilion Research

Joe Jasper

Technical Analyst

Technical and Quantitative Research

Vermilion Research

Vermilion’s objective is to deliver timely, actionable, and unique technical research to professional investors through the application of our various technical indicators.

Our research strategists seek to highlight securities which we believe are at major inflection points, based on our various technical and quantitative indicators, and offer asymmetric risk/return profiles. Our unique research methodology, centered on relative strength, enables our strategists to deliver superior investment recommendations.

Our process begins by organizing the universe of actively traded stocks into discrete sectors, then into industry groups. We then apply our technical and quantitative tools to identify developing price trends. Once attractive trends are identified within a selected sector or group, we screen for individual stocks which we believe offer the best risk/reward profile. We provide a historical perspective that often reveals, through our long-term charts, how price patterns often repeat themselves over time.

Technical Analysis

<p>Our outlook for global equity markets remains cautious and we expect additional weakness and consolidation, notwithstanding shorter-term countertrend rallies. In today’s report we provide a technical appraisal of major markets and highlight still attractive opportunities within: RETS, utilities and Health care.</p>

Our outlook for global equity markets remains cautious and we expect additional weakness and consolidation, notwithstanding shorter-term countertrend rallies. In today’s report we provide a technical appraisal of major markets and highlight still attractive opportunities within: RETS, utilities and Health care.

Global Markets Outlook: Maintain Defensive Posture

Head of Research, IPOs & Placements, Aequitas Research

Sumeet Singh

Head of Research, IPOs & Placements

Smartkarma

Smartkarma unites the fragmented investment industry, connecting institutional investors, independent research providers, and corporates within a single network.

Research Reinvented

<p><a href="https://www.smartkarma.com/entities/17149" target="_blank" data-smartkarma-citation="entities:17149:1">Kenedix Residential Investme (3278 JP)</a> plans to raise US$119m to part fund its acquisition of 9 properties.  The company had earlier flagged the properties as being in the acquisition pipeline, to be acquired before Feb 2019. Thus, the deal shouldn't come as a surprise. Moreover, as per the company's revised forecast, the deal will be highly accretive to DPU. It scores well on our framework even though prior deals, pre-merger, haven't done as well.</p><hr><div class="content-highlight"><h2>Placement specifics</h2></div><ul>
<li>Company Name: Kenedix…</li>
</ul>

Kenedix Residential Investme (3278 JP) plans to raise US$119m to part fund its acquisition of 9 properties.  The company had earlier flagged the properties as being in the acquisition pipeline, to be acquired before Feb 2019. Thus, the deal shouldn't come as a surprise. Moreover, as per the company's revised forecast, the deal will be highly accretive to DPU. It scores well on our framework even though prior deals, pre-merger, haven't done as well.Placement specifics
Company Name: Kenedix…


Kenedix Residential Next Inv Placement - Well Flagged, Accretive Deal

Japan/Asia Long-Short, LightStream Research

Mio Kato

Japan/Asia Long-Short

Long-Short Analysis on Japan, Asia and the World

LightStream Research

LightStream conducts quantitatively rigorous and data-driven analysis with a focus on Japan and Asia.

We consistently cover the Tech, Consumer and Industrial sectors, and provide ECM and Events coverage more broadly.

We supplement traditional qualitative insights from company relationships with a robust quantitative foundation that examines as much historical data as is available.
We further refine the accuracy of our insights and calls through the use of alternative data to flesh out current trends, and through a valuation framework that emphasises non-superficial peer group selection and a proper attempt to understand the metrics and changes that have driven security valuations in the past.

<p><a href="https://www.smartkarma.com/entities/17149" target="_blank" data-smartkarma-citation="entities:17149:1">Kenedix Residential NEXT (3278 JP)</a> has announced the issuance of 82,100 new units and a 4,105 unit overallotment (10.5% dilution and 0.5% dilution respectively) to purchase stakes across 4 residential and 5 elderly care properties by raising approximately JPY13bn.</p><table class="table table-striped"><tbody>
<tr>
<td>Details</td>
</tr>
<tr>
<td>New Investment Units</td>
<td style="text-align: right;">82,100</td>
</tr>
<tr>
<td>Overallotment</td>
<td style="text-align: right;">4,105</td>
</tr>
<tr>
<td>Existing Units</td>
<td style="text-align: right;">782,928</td>
</tr>
<tr>
<td>Units After Offering and Overallotment</td>
<td style="text-align: right;">869,133</td>
</tr>
<tr>


</tr>
<tr>
<td>Pricing Date (X)</td>
<td style="text-align: right;">24-26 Jul</td>
</tr>
<tr>
<td>Subscription Date</td>
<td style="text-align: right;">X+1 to X+2</td>
</tr>
<tr>
<td>Payment Date</td>
<td style="text-align: right;">1-2 Aug</td>
</tr>
<tr>
<td>Delivery</td>
</tr>
</tbody></table>…

Kenedix Residential NEXT (3278 JP) has announced the issuance of 82,100 new units and a 4,105 unit overallotment (10.5% dilution and 0.5% dilution respectively) to purchase stakes across 4 residential and 5 elderly care properties by raising approximately JPY13bn.

Details


New Investment Units
82,100


Overallotment
4,105


Existing Units
782,928


Units After Offering and Overallotment
869,133






Pricing Date (X)
24-26 Jul


Subscription Date
X+1 to X+2


Payment Date
1-2 Aug


Delivery

…

Kenedix Residential NEXT: Elderly Care Facilities to Become 19% of Portfolio

Japan

Kenedix Residential Investment Corporation is a real estate investment trust. The company invests in residential properties such as apartment buildings.

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Kenedix Residential Investment (3278 JP)

JREIT Offering: Kenedix Residential Next Investment Corp (3278 JP) - Take It (Vs Comps)

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Janaghan Jeyakumar, CFA

J-REIT Offering Primer: Get Ready for Offering Season 2021

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Janaghan Jeyakumar, CFA

Global Markets Outlook: Maintain Defensive Posture

Our outlook for global equity markets remains cautious and we expect additional weakness and consolidation, notwithstanding shorter-term...

Vermilion Research

Kenedix Residential Next Inv Placement - Well Flagged, Accretive Deal

Kenedix Residential Investme (3278 JP) plans to raise US$119m to part fund its acquisition of 9 properties. The company had earlier flagged the...

Sumeet Singh

Kenedix Residential NEXT: Elderly Care Facilities to Become 19% of Portfolio

Kenedix Residential NEXT (3278 JP) has announced the issuance of 82,100 new units and a 4,105 unit overallotment (10.5% dilution and 0.5% dilution...

Mio Kato

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