SGX Market Strategist, Equity & Fixed Income, Singapore Exchange Ltd (SGX)

Geoff Howie

SGX Market Strategist, Equity & Fixed Income

Asia’s leading multi-asset exchange

Singapore Exchange Ltd (SGX)

Singapore Exchange is Asia’s leading and trusted market infrastructure, facilitating the exchange of capital and ideas to create value for people, businesses and economies. As a multi-asset exchange operating equity, fixed income and derivatives markets to the highest regulatory standards, SGX is a vertically integrated business that provides listing, trading, clearing, settlement, depository and data services.

With about 40% of listed companies and over 80% of listed bonds originating outside of Singapore as well as established linkages across the region and in Europe, SGX is Asia’s most international and connected exchange. Offering a full suite of derivatives products across Asian equity indices, commodities and currencies, SGX is the world’s most liquid international market for the benchmark equity indices of China, India, Japan and ASEAN.

As Asia’s pioneering central counterparty, SGX is globally recognised for its risk management and clearing capabilities, and was one of the first globally to adopt the Principles for Financial Market Infrastructure.

Headquartered in AAA-rated Singapore, SGX has over 800 employees including offices in Beijing, Chicago, Hong Kong, London, New York, Mumbai, San Francisco, Shanghai and Tokyo.

Equity Bottom-Up

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    <div class='content-caption'>Timeline of SREIT proposed and completed M&As since 2018</div>
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<p>For S-Reits, listing on the exchange is the beginning of a journey. Twenty-four S-Reits had announced asset acquisitions valued at over S$15.3 billion and exceeding S$12.7 billion in total purchase consideration in 2021.</p>

<p>Aside from asset acquisitions, S-Reits have also been active in terms of mergers and acquisition (M&amp;A) opportunities. They have seen at least 5 consolidations since 2018 and could be seeing 2 more this year.</p>

<p>The 5 consolidated S-Reits since 2018 are CapitaLand Integrated Commercial Trust (by CapitaLand Mall Trust and CapitaLand Commercial Trust), Frasers Logistics &amp; Commercial Trust (by Frasers Commercial Trust and Frasers Logistics &amp; Industrial Trust), Ascott Residence Trust (by Ascott Residence Trust and Ascendas Hospitality Trust), OUE Commercial REIT (OUE Commercial REIT and OUE Hospitality Trust), and ESR-REIT (by ESR-REIT and Viva Industrial Trust).<br><br>
Most recently announced on Dec 31, 2021 is the proposed merger between Mapletree Commercial Trust (MCT) and Mapletree North Asia Commercial Trust (MNACT) to form Mapletree Pan Asia Commercial Trust (MPACT).<br><br>
The proposed merger is expected to propel the combined entity to be the seventh largest REIT listed in Asia with a market capitalisation of approximately S$10.5 billion.<br><br>
The combined portfolio will consist of 18 commercial assets diversified across Singapore, China, Hong Kong, Japan and South Korea with assets under management (AUM) of approximately S$17.1 billion (per MCT’s AUM as of 30 September 2021 and MNACT’s AUM as of 31 October 2021).<br><br>
The proposed merger is expected to be effected by a trust scheme of arrangement with MCT acquiring all MNACT Units in exchange for new units in MCT or a combination of cash and MCT Units.</p>

<p>Reit managers of MCT and MNACT view the merger as an opportunity to bring together 2 leading commercial Reits with highly complementary qualities and see the combined portfolio in providing higher financial flexibility and debt headroom to accelerate its growth and acquisitions.</p>

<p>The new entity is also expected to benefit from the increased representation in key indices and potentially attract a wider investor base and improved trading liquidity.</p>

<p>Another proposed merger in progress is by ESR-Reit and Ara Logos Logistics Trust (ALOG) to form ESR-LOGOS REIT (E-LOG), with a core focus on new economy real estate.<br><br>
The combined entity, E-LOG, will hold a diversified portfolio of 87 properties consisting of logistics/warehouse, high-specifications industrial properties, business parks and general industrial properties with total assets of approximately S$5.4 billion across Singapore and Australia (as of 30 June 2021).<br><br>
Similarly, via a trust scheme, the proposed merger will see ESR-Reit acquire all units in ALOG in exchange for a combination of cash and new units in ESR-Reit.</p>

<p>Reit managers of ESR-Reit and ALOG have noted that the proposed merger will enhance E-LOG's growth trajectory backed by its sponsor, ESR Group, by providing access to the sponsor's new economy pipeline properties in Asia-Pacific worth over US$50 billion. <br><br><strong><em>REIT Watch is a weekly column on The Business Times, <a href="https://www.businesstimes.com.sg/real-estate/s-reits-bigger-and-bolder-over-the-years">read </a>the original version.</em></strong></p>
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    Timeline of SREIT proposed and completed M&As since 2018


For S-Reits, listing on the exchange is the beginning of a journey. Twenty-four S-Reits had announced asset acquisitions valued at over S$15.3 billion and exceeding S$12.7 billion in total purchase consideration in 2021.

Aside from asset acquisitions, S-Reits have also been active in terms of mergers and acquisition (M&amp;A) opportunities. They have seen at least 5 consolidations since 2018 and could be seeing 2 more this year.

The 5 consolidated S-Reits since 2018 are CapitaLand Integrated Commercial Trust (by CapitaLand Mall Trust and CapitaLand Commercial Trust), Frasers Logistics &amp; Commercial Trust (by Frasers Commercial Trust and Frasers Logistics &amp; Industrial Trust), Ascott Residence Trust (by Ascott Residence Trust and Ascendas Hospitality Trust), OUE Commercial REIT (OUE Commercial REIT and OUE Hospitality Trust), and ESR-REIT (by ESR-REIT and Viva Industrial Trust).  
Most recently announced on Dec 31, 2021 is the proposed merger between Mapletree Commercial Trust (MCT) and Mapletree North Asia Commercial Trust (MNACT) to form Mapletree Pan Asia Commercial Trust (MPACT).  
The proposed merger is expected to propel the combined entity to be the seventh largest REIT listed in Asia with a market capitalisation of approximately S$10.5 billion.  
The combined portfolio will consist of 18 commercial assets diversified across Singapore, China, Hong Kong, Japan and South Korea with assets under management (AUM) of approximately S$17.1 billion (per MCT’s AUM as of 30 September 2021 and MNACT’s AUM as of 31 October 2021).  
The proposed merger is expected to be effected by a trust scheme of arrangement with MCT acquiring all MNACT Units in exchange for new units in MCT or a combination of cash and MCT Units.

Reit managers of MCT and MNACT view the merger as an opportunity to bring together 2 leading commercial Reits with highly complementary qualities and see the combined portfolio in providing higher financial flexibility and debt headroom to accelerate its growth and acquisitions.

The new entity is also expected to benefit from the increased representation in key indices and potentially attract a wider investor base and improved trading liquidity.

Another proposed merger in progress is by ESR-Reit and Ara Logos Logistics Trust (ALOG) to form ESR-LOGOS REIT (E-LOG), with a core focus on new economy real estate.  
The combined entity, E-LOG, will hold a diversified portfolio of 87 properties consisting of logistics/warehouse, high-specifications industrial properties, business parks and general industrial properties with total assets of approximately S$5.4 billion across Singapore and Australia (as of 30 June 2021).  
Similarly, via a trust scheme, the proposed merger will see ESR-Reit acquire all units in ALOG in exchange for a combination of cash and new units in ESR-Reit.

Reit managers of ESR-Reit and ALOG have noted that the proposed merger will enhance E-LOG's growth trajectory backed by its sponsor, ESR Group, by providing access to the sponsor's new economy pipeline properties in Asia-Pacific worth over US$50 billion.   REIT Watch is a weekly column on The Business Times, read the original version.



REIT Watch - S-Reits: Bigger and bolder over the years

Research from SooChow CSSD Capital Markets (Asia), SCCM Asia Research

SCCM Asia Research

Research from SooChow CSSD Capital Markets (Asia)

Headquartered in Singapore, SooChow CSSD Capital Markets (Asia) is an investment bank focusing on emerging growth companies across Asia, providing a full suite of investment banking services, including corporate finance, mergers and acquisitions advisory, equity capital markets, institutional equities sales and trading and equities research.

SooChow CSSD Capital Markets (Asia)

Thematic (Sector/Industry)

<ul><li>Mapletree Logistics Trust (MLT SP) to purchase 17 properties in China, Vietnam and Japan for ~S$1.4bn; DPU accretive by +2.2%</li><li>Ascendas India Trust (AIT SP) completes acquisition of Building Q1 in Aurum Q Parc at Navi Mumbai</li><li>Digital Realty seeks to list data centre-focused Digital Core REIT; FY22-23 dividend yield forecasts of 4.75-5%</li></ul>

Mapletree Logistics Trust (MLT SP) to purchase 17 properties in China, Vietnam and Japan for ~S$1.4bn; DPU accretive by +2.2%Ascendas India Trust (AIT SP) completes acquisition of Building Q1 in Aurum Q Parc at Navi MumbaiDigital Realty seeks to list data centre-focused Digital Core REIT; FY22-23 dividend yield forecasts of 4.75-5%

ASEAN Builder's Scoop (23Nov21) - MLT Acquires CN, VN, JPN Logistics for ~S$1.4bn

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

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<p>Singaporean property play <a href="https://www.smartkarma.com/entities/singhaiyi-group-ltd" target="_blank" data-smartkarma-citation="entities:19307:1" rel="noopener">SingHaiyi (SHG SP)</a> has announced a <a href="https://links.sgx.com/FileOpen/Offer_Announcement.ashx?App=Announcement&amp;FileID=689919" target="_blank" rel="noopener">voluntary conditional cash Offer</a> from Gordan and Celine Tang, who control 75.56% of shares out. </p>
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<p>The Offer Price of S$0.117/share is an 8.3% premium to last close and 0.78x P/NAV. The acceptance condition is 90%, including the Tang's stake, although the Tang's reserve the right to reduce this to 50%. Family members with 2.81% have given an irrecoverable to tender into the Offer taking the accumulated holding to 78.37%. Save for the acceptance condition, the Offer is unconditional in all other respects.</p>
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<p>This appears a relatively listless Offer premium, however, it pitches SingHaiyi around a multi-year high. The Offer has not been declared final.</p>
<p>The entire construct is reminiscent of the Offer from <a href="https://www.smartkarma.com/entities/guoco-group-ltd" target="_blank" data-smartkarma-citation="entities:5290:1" rel="noopener">Guoco Group Ltd (53 HK)</a> for <a href="https://www.smartkarma.com/entities/gl-ltd" target="_blank" data-smartkarma-citation="entities:2540:1" rel="noopener">GL Ltd (GLL SP)</a> - <em><a href="https://skr.ma/SdJKh" target="_blank" rel="noopener">GL Limited (GLL SP): Privatisation Offer Renews Interest In Guoco</a></em> - which was successfully completed after terms were bumped. </p>
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<p>As always, more below the fold.</p>
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Singaporean property play SingHaiyi (SHG SP) has announced a voluntary conditional cash Offer from Gordan and Celine Tang, who control 75.56% of shares out. 


The Offer Price of S$0.117/share is an 8.3% premium to last close and 0.78x P/NAV. The acceptance condition is 90%, including the Tang's stake, although the Tang's reserve the right to reduce this to 50%. Family members with 2.81% have given an irrecoverable to tender into the Offer taking the accumulated holding to 78.37%. Save for the acceptance condition, the Offer is unconditional in all other respects.


This appears a relatively listless Offer premium, however, it pitches SingHaiyi around a multi-year high. The Offer has not been declared final.
The entire construct is reminiscent of the Offer from Guoco Group Ltd (53 HK) for GL Ltd (GLL SP) - GL Limited (GLL SP): Privatisation Offer Renews Interest In Guoco - which was successfully completed after terms were bumped. 


As always, more below the fold.


SingHaiyi Group (SHG SP): Tang's Conditional Offer

<h2>Singapore</h2><h3><a href="https://www.smartkarma.com/entities/capitaland-ltd" target="_blank" data-smartkarma-citation="entities:55" rel="noopener">Capitaland (CAPL SP)</a> 3Q21 Business Updates – A good start with key metrics growing robustly</h3><ul><li>9M21 revenue came in at S$1.6bn with Fee income Related Business (FRB) making up 40% of total revenue and Real-estate investment business making up the remaining 60%. 9M21 FRB rose by 19% YoY to S$656m, with fund management rising by 35% YoY to S$292m, followed by property management rising by 2.6% YoY to S$236m and lodging management rising by 23% to S$128m, respectively     </li></ul>

SingaporeCapitaland (CAPL SP) 3Q21 Business Updates – A good start with key metrics growing robustly9M21 revenue came in at S$1.6bn with Fee income Related Business (FRB) making up 40% of total revenue and Real-estate investment business making up the remaining 60%. 9M21 FRB rose by 19% YoY to S$656m, with fund management rising by 35% YoY to S$292m, followed by property management rising by 2.6% YoY to S$236m and lodging management rising by 23% to S$128m, respectively     

Lendlease Global Commercial REIT / Equity Bottom-Up

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    <div class='content-caption'>Top performer SREIT and property</div>
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<p>In the year to date, Singapore-listed Reits and property trusts averaged total returns of close to 11 per cent. The 10 best-performing trusts were mostly mid-caps, which averaged 32 per cent total returns and own assets across industrial, retail, healthcare, office and hospitality sub-segments.</p>

<p>Among the 10 best performers, seven were recent inclusions into the FTSE EPRA Nareit Global Developed Index following the September review.<br><br>
The five trusts which received the highest amount of net institutional inflows this year were mid-cap REITs (data as of 28 October): ARA LOGOS Logistics Trust (+S$79 million), OUE Commercial REIT (+S$39 million), Starhill Global REIT (+S$36 million), Lendlease Global Commercial REIT (+S$27 million) and ESR-REIT (+S$26 million).<br><br>
In the month of October, the sector averaged 3 per cent in total returns. Retail investors net bought the sector with net inflows of S$158 million while institutional investors net sold S$195 million (data as at Oct 28).<br><br>
Four of the top five performers over the month were trusts with exposure to the retail or hospitality segments - Dasin Retail Trust (21 per cent), CDL Hospitality Trusts (15 per cent), Ascott Residence Trust (11 per cent), Lippo Malls Indonesia Retail Trust (8 per cent) and Keppel REIT (7 per cent). Three of them reported before market opened last Friday.<br><br>
CDLHT reported year-on-year (yoy) growth of 34.8 per cent in net property income for Q3 2021 attributable to the ongoing recovery from negative effects of the pandemic, broader distribution of vaccines as well as easing of travel restrictions which resulted in more accommodation demand.<br><br>
LMIRT declared Q3 2021 distribution per unit (DPU) of 0.09 cents, up 28.6 per cent yoy. The trust's rental revenue and gross revenue for the period grew 16.2 per cent and 7.0 per cent yoy respectively, due to income from the newly acquired Lippo Mall Puri, which contributed S$8.2 million to rental revenue and S$10.3 million to gross revenue for the quarter.</p>

<p>Keppel Reit reported 20.8 per cent yoy growth in distributable income from operations for the nine months of 2021, due mainly to contributions from Victoria Police Centre in Melbourne, Pinnacle Office Park in Sydney and Keppel Bay Tower in Singapore. The Reit noted that despite the pandemic, portfolio leasing activities remained positive with new leases and expansions seen from diverse industry sectors.</p>

<p>Aside from the three trusts above, more than half of the 40 S-Reits have also released financial results or business updates, before market opened last Friday.</p>

<p>Most of the trusts reported financial and operating metrics which were in line with analysts' estimates, with some exceeding expectations.</p>

<p>Among the trusts that have reported, 14 of them declared DPUs for the latest quarter or half year period. These trusts, on average, saw a 20 per cent year-on-year growth in declared DPUs. Some reasons provided for the increase in DPUs across these trusts include new acquisitions which boosted revenues, lower rental rebates which reduced expense and gradual reopening across the globe.<br><br><strong><em>REIT Watch is a weekly column on The Business Times,<a href="https://www.businesstimes.com.sg/companies-markets/retail-and-hospitality-sector-s-reits-outperform-in-october"> read </a>the original version.</em></strong></p>
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    Top performer SREIT and property


In the year to date, Singapore-listed Reits and property trusts averaged total returns of close to 11 per cent. The 10 best-performing trusts were mostly mid-caps, which averaged 32 per cent total returns and own assets across industrial, retail, healthcare, office and hospitality sub-segments.

Among the 10 best performers, seven were recent inclusions into the FTSE EPRA Nareit Global Developed Index following the September review.  
The five trusts which received the highest amount of net institutional inflows this year were mid-cap REITs (data as of 28 October): ARA LOGOS Logistics Trust (+S$79 million), OUE Commercial REIT (+S$39 million), Starhill Global REIT (+S$36 million), Lendlease Global Commercial REIT (+S$27 million) and ESR-REIT (+S$26 million).  
In the month of October, the sector averaged 3 per cent in total returns. Retail investors net bought the sector with net inflows of S$158 million while institutional investors net sold S$195 million (data as at Oct 28).  
Four of the top five performers over the month were trusts with exposure to the retail or hospitality segments - Dasin Retail Trust (21 per cent), CDL Hospitality Trusts (15 per cent), Ascott Residence Trust (11 per cent), Lippo Malls Indonesia Retail Trust (8 per cent) and Keppel REIT (7 per cent). Three of them reported before market opened last Friday.  
CDLHT reported year-on-year (yoy) growth of 34.8 per cent in net property income for Q3 2021 attributable to the ongoing recovery from negative effects of the pandemic, broader distribution of vaccines as well as easing of travel restrictions which resulted in more accommodation demand.  
LMIRT declared Q3 2021 distribution per unit (DPU) of 0.09 cents, up 28.6 per cent yoy. The trust's rental revenue and gross revenue for the period grew 16.2 per cent and 7.0 per cent yoy respectively, due to income from the newly acquired Lippo Mall Puri, which contributed S$8.2 million to rental revenue and S$10.3 million to gross revenue for the quarter.

Keppel Reit reported 20.8 per cent yoy growth in distributable income from operations for the nine months of 2021, due mainly to contributions from Victoria Police Centre in Melbourne, Pinnacle Office Park in Sydney and Keppel Bay Tower in Singapore. The Reit noted that despite the pandemic, portfolio leasing activities remained positive with new leases and expansions seen from diverse industry sectors.

Aside from the three trusts above, more than half of the 40 S-Reits have also released financial results or business updates, before market opened last Friday.

Most of the trusts reported financial and operating metrics which were in line with analysts' estimates, with some exceeding expectations.

Among the trusts that have reported, 14 of them declared DPUs for the latest quarter or half year period. These trusts, on average, saw a 20 per cent year-on-year growth in declared DPUs. Some reasons provided for the increase in DPUs across these trusts include new acquisitions which boosted revenues, lower rental rebates which reduced expense and gradual reopening across the globe.  REIT Watch is a weekly column on The Business Times, read the original version.



REIT Watch - Retail and hospitality sector S-Reits outperform in October

Singapore

OUE Real Estate Investment Trust (“OUE REIT”) is one of the largest diversified Singapore REITs (“S-REITs”) with total assets of S$6.0 billion as at 31 December 2022. With seven properties across the commercial and hospitality segments in Singapore and Shanghai, the property portfolio comprises more than 2.1 million square feet of prime office and retail space, and 1,643 upper upscale hotel rooms.

OUE REIT invests in income-producing real estate used primarily for commercial purposes (including real estate used primarily for office and/or retail purposes) in financial and business hubs, hospitality and/or hospitality-related purposes, as well as real estate-related assets.

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OUE REIT (OUECT SP)

REIT Watch - S-Reits: Bigger and bolder over the years

For S-Reits, listing on the exchange is the beginning of a journey. Twenty-four S-Reits had announced asset acquisitions valued...

Singapore Exchange Ltd (SGX)

ASEAN Builder's Scoop (23Nov21) - MLT Acquires CN, VN, JPN Logistics for ~S$1.4bn

MLT acquires CN, VN, JPN logistics for ~S$1.4bn; AIT completes Navi Mumbai acq; Digital Core REIT offers 4.75-5% yield; FLI resi buoys 3Q21...

SCCM Asia Research

SingHaiyi Group (SHG SP): Tang's Conditional Offer

The Offer has not been declared final. I think there's probably enough here to get the deal over the line. I would not chase this much through...

David Blennerhassett

ASEAN Builder's Scoop (3Nov21)

CLI 3Q21 results a good start; OUECT declining QoQ reversions; MUST green shoots of recovery; HOBEE buys Melbourne site; ALLHC expands Cavite...

SCCM Asia Research

REIT Watch - Retail and hospitality sector S-Reits outperform in October

In the year to date, Singapore-listed Reits and property trusts averaged total returns of close to 11 per cent. The 10...

Singapore Exchange Ltd (SGX)

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