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

SCCM Asia Research

Research from SooChow CSSD Capital Markets (Asia)

Thematic (Sector/Industry)

<h2>Singapore</h2>
<h3>SREITs results in a glance (see detailed spreadsheet and calendar attached)</h3>
<table class="table table-striped">
<tbody>
<tr>
<td style="width: 136.6pt;">
 
</td>
<td style="width: 136.55pt;">
DASIN
</td>
<td style="width: 136.55pt;">
SASSR
</td>
<td style="width: 136.55pt;">
BHGREIT
</td>
<td style="width: 136.55pt;">
CLCT
</td>
</tr>
<tr>
<td style="width: 136.6pt;">
Period
</td>
<td style="width: 136.55pt;">
1Q21
</td>
<td style="width: 136.55pt;">
1Q21
</td>
<td style="width: 136.55pt;">
1Q21
</td>
<td style="width: 136.55pt;">
1Q21
</td>
</tr>
<tr>
<td style="width: 136.6pt;">
Gross Revenue (S$ m)
</td>
<td style="width: 136.55pt;">
Not Disclosed in SGD terms; RMB127.3m (+87.4% YoY); or RMB101.6m if w/o Shunde Metro Mall and Tanbei Metro Mall (+51.0% YoY)
</td>
<td style="width: 136.55pt;">
EMA Rental Income: 34.1 (+23.4% YoY)
</td>
<td style="width: 136.55pt;">
Not Disclosed
</td>
<td style="width: 136.55pt;">
Not Disclosed
</td>
</tr>
<tr>
<td style="width: 136.6pt;">
NPI (S$ m)
</td>
<td style="width: 136.55pt;">
Not Disclosed
</td>
<td style="width: 136.55pt;">
EMA Rental Income (Excluding straight-line adjustments): 32.3 (+27.8% YoY)
</td>
<td style="width: 136.55pt;">
Not Disclosed
</td>
<td style="width: 136.55pt;">
264.2 (RMB)
</td>
</tr>
<tr>
<td style="width: 136.6pt;">
DPU (S$ c)
</td>
<td style="width: 136.55pt;">
Not Disclosed
</td>
<td style="width: 136.55pt;">
1.759 (+31.9% YoY)
</td>
<td style="width: 136.55pt;">
Not Disclosed
</td>
<td style="width: 136.55pt;">
Not Disclosed
</td>
</tr>
<tr>
<td style="width: 136.6pt;">
NAV per Unit (S$)
</td>
<td style="width: 136.55pt;">
1.41 (Based on 4Q20)
</td>
<td style="width: 136.55pt;">
0.922
</td>
<td style="width: 136.55pt;">
Not Disclosed
</td>
<td style="width: 136.55pt;">
Not Disclosed
</td>
</tr>
<tr>
<td style="width: 136.6pt;">
P/B (x)
</td>
<td style="width: 136.55pt;">
0.510
</td>
<td style="width: 136.55pt;">
1.00
</td>
<td style="width: 136.55pt;">
0.64 (Based on 4Q20 NAV)
</td>
<td style="width: 136.55pt;">
0.94 (Based on 4Q20 NAV)
</td>
</tr>
<tr>
<td style="width: 136.6pt;">
Occupancy (%)
</td>
<td style="width: 136.55pt;">
96.1
</td>
<td style="width: 136.55pt;">
93.5
</td>
<td style="width: 136.55pt;">
92.1
</td>
<td style="width: 136.55pt;">
Retail: 94.4 Business Parks: 92.1
</td>
</tr>
<tr>
<td style="width: 136.6pt;">
Reversion (%)
</td>
<td style="width: 136.55pt;">
NA
</td>
<td style="width: 136.55pt;">
Not Disclosed
</td>
<td style="width: 136.55pt;">
Not Disclosed
</td>
<td style="width: 136.55pt;">
Not Disclosed
</td>
</tr>
<tr>
<td style="width: 136.6pt;">
Gearing (%)
</td>
<td style="width: 136.55pt;">
37.2
</td>
<td style="width: 136.55pt;">
27.6
</td>
<td style="width: 136.55pt;">
35.6
</td>
<td style="width: 136.55pt;">
35.1
</td>
</tr>
<tr>
<td style="width: 136.6pt;">
Cost of Debt (%)
</td>
<td style="width: 136.55pt;">
NA
</td>
<td style="width: 136.55pt;">
3.3
</td>
<td style="width: 136.55pt;">
3.8
</td>
<td style="width: 136.55pt;">
2.51
</td>
</tr>
<tr>
<td style="width: 136.6pt;">
1 Yr Fwd Yield (%)
</td>
<td style="width: 136.55pt;">
6.99
</td>
<td style="width: 136.55pt;">
7.46
</td>
<td style="width: 136.55pt;">
NA
</td>
<td style="width: 136.55pt;">
6.21
</td>
</tr>
<tr>
<td style="width: 136.6pt;">
Debt Hedged (%)
</td>
<td style="width: 136.55pt;">
NA
</td>
<td style="width: 136.55pt;">
Not Disclosed
</td>
<td style="width: 136.55pt;">
60% of offshore loans
</td>
<td style="width: 136.55pt;">
~70
</td>
</tr>
<tr>
<td style="width: 136.6pt;">
Target Price
</td>
<td style="width: 136.55pt;">
S$0.81
</td>
<td style="width: 136.55pt;">
NA
</td>
<td style="width: 136.55pt;">
NA
</td>
<td style="width: 136.55pt;">
NA
</td>
</tr>
<tr>
<td style="width: 136.6pt;">
Rating
</td>
<td style="width: 136.55pt;">
BUY
</td>
<td style="width: 136.55pt;">
NA
</td>
<td style="width: 136.55pt;">
NA
</td>
<td style="width: 136.55pt;">
NA
</td>
</tr>
</tbody>
</table>
<h3>
<a href="https://www.smartkarma.com/entities/dasin-retail-trust" target="_blank" data-smartkarma-citation="entities:23743" rel="noopener">Dasin Retail Trust (DASIN SP)</a> 1Q21 Business Updates – Revenue recovered to 94% of pre-Covid level; ARA’s strategic stake underscores GBA’s potential</h3>
<ul>
<li>1Q21 revenue (in RMB terms; on same-mall basis) increased 51.0% YoY to ~RMB101.6m. Total revenues of the four malls (IPO portfolio), namely Shiqi Metro Mall, Xiaolan Metro Mall, Ocean Metro Mall and Dasin E-Colour, has recovered to 94% of 1Q19 (pre-pandemic)’s level. Including Shunde Metro Mall and Tanbei Metro Mall (8Jul20), 1Q21 revenue (in RMB terms) increased 87.4% YoY to ~RMB127.3m</li>
<li>Overall portfolio committed occupancy stabilized at 96.1% (vs. 96.5% in 4Q20 and 96.1% in 3Q20). ~9,085sqm (12.7% of total Ocean Metro Mall NLA) of “furniture and finishing” space at the mall has been reconfigured in 4Q20 into a children’s education area, which brought a positive rental reversion of ~46%. Portfolio WALE stood at 5.9 years by NLA and 3.6 years by GRI. ~31.1% of GRI will be due for renewal in FY21E</li>
<li>Portfolio gearing stands at 37.2% (vs. 37.8% in 4Q20 and 38.5% in 3Q20). DASIN is currently negotiating with banks for extension of loans amounting to S$235.2m, which are due on 18Jul21</li>
<li>Mr. Zhang Zhencheng, Chairman and controlling shareholder of the Trustee-Manager, as well as Aqua Wealth Holdings Limited (a controlling unitholder of the Trust), had entered into a sale and purchase agreement with ARA DSRT (Holdings) and ARA Real Estate Investors 22 in pursuance of a strategic partnership with ARA Asset Management. ARA will acquire 50% of interest in the Trustee-Manager from Mr. Zhang Zhencheng, as well as ~5.0% of interest in DASIN from Aqua Wealth Holdings Limited in two separate tranches. The sale of 50% stake in Trustee-Manager and first tranche of DASIN’s units (2.5% stake) is expected to complete by May21</li>
<li>DASIN currently trades at 7.0% FY21E yield and 0.51x P/B.</li>
</ul>
Comments: 1Q21 Revenue forms 23.6% of our full-year FY21E revenue (based on avg. 1Q21 RMB/SGD of 4.8727). We are encouraged by Dasin E-Colour’s strong revenue recovery (to near pre-Covid level) despite a challenging occupancy profile of 86.5% (vs. portfolio average of 96.1% and 1Q20’s 91.9%), thus translating to a robust passing rent at ~RMB125.6psm pm with +107% YoY reversions. Meanwhile, its 2 mature assets, namely Shiqi Metro Mall and Xiaolan Metro Mall (contributed to ~45.6% of 1Q21 revenue), appear to be on track for a sustained recovery – upticks in both occupancy rates and passing rents. The two newly acquired Shunde Metro Mall and Tanbei Metro Mall should provide inorganic boost to with its full-year contributions (vs. 6 mths contributions in FY20). Notwithstanding a challenging leasing market (portfolio occupancy remains below pre-Covid level of 97-98%), DASIN’s lease structure with high fixed components (fixed rent and fixed rent with built-in escalation) at 82.8%% of Mar21 GRI, offer income stability somewhat. We have a BUY rating with TP of S$0.81/Unit for DASIN.
<section class="figure">
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/207/030/original/image021.png?1621332221" class="editor-image img-responsive" data-smartkarma-image-id="207030"></figure>
</section>

Singapore
SREITs results in a glance (see detailed spreadsheet and calendar attached)




 


DASIN


SASSR


BHGREIT


CLCT




Period


1Q21


1Q21


1Q21


1Q21




Gross Revenue (S$ m)


Not Disclosed in SGD terms; RMB127.3m (+87.4% YoY); or RMB101.6m if w/o Shunde Metro Mall and Tanbei Metro Mall (+51.0% YoY)


EMA Rental Income: 34.1 (+23.4% YoY)


Not Disclosed


Not Disclosed




NPI (S$ m)


Not Disclosed


EMA Rental Income (Excluding straight-line adjustments): 32.3 (+27.8% YoY)


Not Disclosed


264.2 (RMB)




DPU (S$ c)


Not Disclosed


1.759 (+31.9% YoY)


Not Disclosed


Not Disclosed




NAV per Unit (S$)


1.41 (Based on 4Q20)


0.922


Not Disclosed


Not Disclosed




P/B (x)


0.510


1.00


0.64 (Based on 4Q20 NAV)


0.94 (Based on 4Q20 NAV)




Occupancy (%)


96.1


93.5


92.1


Retail: 94.4 Business Parks: 92.1




Reversion (%)


NA


Not Disclosed


Not Disclosed


Not Disclosed




Gearing (%)


37.2


27.6


35.6


35.1




Cost of Debt (%)


NA


3.3


3.8


2.51




1 Yr Fwd Yield (%)


6.99


7.46


NA


6.21




Debt Hedged (%)


NA


Not Disclosed


60% of offshore loans


~70




Target Price


S$0.81


NA


NA


NA




Rating


BUY


NA


NA


NA





Dasin Retail Trust (DASIN SP) 1Q21 Business Updates – Revenue recovered to 94% of pre-Covid level; ARA’s strategic stake underscores GBA’s potential

1Q21 revenue (in RMB terms; on same-mall basis) increased 51.0% YoY to ~RMB101.6m. Total revenues of the four malls (IPO portfolio), namely Shiqi Metro Mall, Xiaolan Metro Mall, Ocean Metro Mall and Dasin E-Colour, has recovered to 94% of 1Q19 (pre-pandemic)’s level. Including Shunde Metro Mall and Tanbei Metro Mall (8Jul20), 1Q21 revenue (in RMB terms) increased 87.4% YoY to ~RMB127.3m
Overall portfolio committed occupancy stabilized at 96.1% (vs. 96.5% in 4Q20 and 96.1% in 3Q20). ~9,085sqm (12.7% of total Ocean Metro Mall NLA) of “furniture and finishing” space at the mall has been reconfigured in 4Q20 into a children’s education area, which brought a positive rental reversion of ~46%. Portfolio WALE stood at 5.9 years by NLA and 3.6 years by GRI. ~31.1% of GRI will be due for renewal in FY21E
Portfolio gearing stands at 37.2% (vs. 37.8% in 4Q20 and 38.5% in 3Q20). DASIN is currently negotiating with banks for extension of loans amounting to S$235.2m, which are due on 18Jul21
Mr. Zhang Zhencheng, Chairman and controlling shareholder of the Trustee-Manager, as well as Aqua Wealth Holdings Limited (a controlling unitholder of the Trust), had entered into a sale and purchase agreement with ARA DSRT (Holdings) and ARA Real Estate Investors 22 in pursuance of a strategic partnership with ARA Asset Management. ARA will acquire 50% of interest in the Trustee-Manager from Mr. Zhang Zhencheng, as well as ~5.0% of interest in DASIN from Aqua Wealth Holdings Limited in two separate tranches. The sale of 50% stake in Trustee-Manager and first tranche of DASIN’s units (2.5% stake) is expected to complete by May21
DASIN currently trades at 7.0% FY21E yield and 0.51x P/B.

Comments: 1Q21 Revenue forms 23.6% of our full-year FY21E revenue (based on avg. 1Q21 RMB/SGD of 4.8727). We are encouraged by Dasin E-Colour’s strong revenue recovery (to near pre-Covid level) despite a challenging occupancy profile of 86.5% (vs. portfolio average of 96.1% and 1Q20’s 91.9%), thus translating to a robust passing rent at ~RMB125.6psm pm with +107% YoY reversions. Meanwhile, its 2 mature assets, namely Shiqi Metro Mall and Xiaolan Metro Mall (contributed to ~45.6% of 1Q21 revenue), appear to be on track for a sustained recovery – upticks in both occupancy rates and passing rents. The two newly acquired Shunde Metro Mall and Tanbei Metro Mall should provide inorganic boost to with its full-year contributions (vs. 6 mths contributions in FY20). Notwithstanding a challenging leasing market (portfolio occupancy remains below pre-Covid level of 97-98%), DASIN’s lease structure with high fixed components (fixed rent and fixed rent with built-in escalation) at 82.8%% of Mar21 GRI, offer income stability somewhat. We have a BUY rating with TP of S$0.81/Unit for DASIN.




ASEAN Builder's Scoop (18May21) - DASIN strategic investment from ARA

<h2>Singapore</h2><h3><a href="https://www.smartkarma.com/entities/mapletree-commercial-trust" target="_blank" data-smartkarma-citation="entities:106" rel="noopener">Mapletree Commercial Trust (MCT SP)</a> to provide more tenant support amid stricter Covid-19 measures</h3>MCT said it is committed to providing the necessary rental and operating assistance to its retail tenants as Singapore tightens its Covid-19 measures till 13Jun. Since the start of the pandemic, MCT has implemented support packages comprising more than S$70m of rental rebates to help eligible retail tenants offset, on average, more than four months of fixed rent. This includes the passing on of property tax rebates, cash grants from the government and other mandated grants to qualifying tenants. MCT's properties have implemented health and safety protocols.Comments: Rental rebates are likely returning as F&amp;B tenants grapple with no-dining-in restrictions for ~1mo. We understand few tenants at Paragon have already requested for assistance but SPHREIT is still reviewing. We will keep track for every landlord’s decision and report accordingly.

SingaporeMapletree Commercial Trust (MCT SP) to provide more tenant support amid stricter Covid-19 measuresMCT said it is committed to providing the necessary rental and operating assistance to its retail tenants as Singapore tightens its Covid-19 measures till 13Jun. Since the start of the pandemic, MCT has implemented support packages comprising more than S$70m of rental rebates to help eligible retail tenants offset, on average, more than four months of fixed rent. This includes the passing on of property tax rebates, cash grants from the government and other mandated grants to qualifying tenants. MCT's properties have implemented health and safety protocols.Comments: Rental rebates are likely returning as F&amp;B tenants grapple with no-dining-in restrictions for ~1mo. We understand few tenants at Paragon have already requested for assistance but SPHREIT is still reviewing. We will keep track for every landlord’s decision and report accordingly.

ASEAN Builder's Scoop (17May21) - MCT to provide more tenant supports

Insight Provider, CrossASEAN Research

Nicolas Van Broekhoven

Insight Provider

CrossASEAN Research

At CrossASEAN Research we strive to produce unbiased and differentiated on the ground insights on companies across South East Asia. Our Research is produced for the most part after face to face meetings and conversations with company management to dig deep into the long term vision and strategy of the companies we cover. We seek to deliver investable and actionable themes on sectors and markets across SE Asia, often in collaboration with other Insight Providers across the region, pooling the vast experience of the analysts within the Smartkarma Ecosystem. We also offer bespoke work and tailor made trips for our clients. 

Insights across South East Asia

Equity Bottom-Up

<a href="https://www.smartkarma.com/entities/straits-trading-co-ltd" target="_blank" data-smartkarma-citation="entities:15745:1" rel="noopener">Straits Trading (STRTR SP)</a> was written up as a privatization candidate almost two months ago. <a href="https://www.smartkarma.com/insights/straits-trading-ripe-for-privatisation" target="_blank" data-smartkarma-citation="insights:44300" rel="noopener">Straits Trading - Ripe For Privatisation</a> by <a href="https://www.smartkarma.com/profiles/david-blennerhassett" target="_blank" data-smartkarma-citation="accounts:840" rel="noopener">David Blennerhassett</a>.We agree with David that Straits Trading is interesting but doubt a privatization is on the table. Straits Trading has been publicly traded since 1979 and the SGX listing is actually useful for the family behind TeCity (controlling shareholder is itself a family office). <div class="content-highlight">The crown jewel of Straits Trading is its 22% stake in <a href="https://www.smartkarma.com/entities/ara-asset-management" target="_blank" data-smartkarma-citation="entities:13301:1" rel="noopener">ARA Asset Management (ARA SP)</a>. ARA was delisted from the SGX by founder John Lim, Warburg Pincus, and Straits Trading in February 2017. We believe ARA gets relisted on the SGX between 2Q21 and 2Q22.</div>Assuming 120-150 billion SGD Assets Under Management at the time of IPO ARA could be valued between 6-7.5 billion SGD. This market cap would lead to entry into the STI Index relatively quickly.Assuming the above Straits Trading's 22% stake in ARA is potentially worth 1.32-1.65 billion SGD. Compare this to the current market cap of Straits Trading at 754 million SGD. Admittedly, there are some "if" and "but" that applies as we don't know the leverage of ARA at the time of IPO, the cost of its debt, and if markets will again apply an EV/AUM ratio of 5% (similar to its delisting in 2017). Still, risk/reward seems heavily skewed to the upside.Conclusion: if investment bank "ABC" approached you to invest in SGX's hottest 2021 IPO at a +/- 50% discount to its likely list price (with additional assets thrown in for free!) would you take the call?  + Free upside comes from its tin, real estate, and hospitality assets. While you wait the stock pays you a 3% dividend yield.

Straits Trading (STRTR SP) was written up as a privatization candidate almost two months ago. Straits Trading - Ripe For Privatisation by David Blennerhassett.We agree with David that Straits Trading is interesting but doubt a privatization is on the table. Straits Trading has been publicly traded since 1979 and the SGX listing is actually useful for the family behind TeCity (controlling shareholder is itself a family office). The crown jewel of Straits Trading is its 22% stake in ARA Asset Management (ARA SP). ARA was delisted from the SGX by founder John Lim, Warburg Pincus, and Straits Trading in February 2017. We believe ARA gets relisted on the SGX between 2Q21 and 2Q22.Assuming 120-150 billion SGD Assets Under Management at the time of IPO ARA could be valued between 6-7.5 billion SGD. This market cap would lead to entry into the STI Index relatively quickly.Assuming the above Straits Trading's 22% stake in ARA is potentially worth 1.32-1.65 billion SGD. Compare this to the current market cap of Straits Trading at 754 million SGD. Admittedly, there are some "if" and "but" that applies as we don't know the leverage of ARA at the time of IPO, the cost of its debt, and if markets will again apply an EV/AUM ratio of 5% (similar to its delisting in 2017). Still, risk/reward seems heavily skewed to the upside.Conclusion: if investment bank "ABC" approached you to invest in SGX's hottest 2021 IPO at a +/- 50% discount to its likely list price (with additional assets thrown in for free!) would you take the call?  + Free upside comes from its tin, real estate, and hospitality assets. While you wait the stock pays you a 3% dividend yield.

Straits Trading: Discounted Way into 2021 SGX's Hottest IPO

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.

<figure>
 <img src='https://api2.sgx.com/sites/default/files/2020-11/ARA-LOGOS-CEO.jpg' alt='ARA-LOGOS-CEO' />
 </figure>
 <div class='content-caption'>ARA-LOGOS-CEO</div>
<!DOCTYPE html PUBLIC "-//W3C//DTD HTML 4.0 Transitional//EN" "http://www.w3.org/TR/REC-html40/loose.dtd">
<html><body>
Why would you stay mediocre when you can be extraordinary?

This is the motto that spurs real estate veteran Karen Lee to pursue excellence and reach for the stars.

“A former boss gave me this advice – in business, don’t be mediocre,” recalled Lee, the CEO of the manager of SGX-listed ARA LOGOS Logistics Trust. “The mediocre will accept the market, or the status quo, as given, but the great will do better than the market.”

Another wise observation from her 82-year-old father still resonates with her: “Anything is possible if you set your mind to it – if you never try, you will never know.”

For Lee, these exhortations remain touchstones till today. “This is what drives me, and what I share with my team to inspire them to achieve their targets,” she added.

Lee has more than two decades of experience in the real estate industry, including industrial real estate development, asset and investment management, business development, leasing, marketing and property management.

She was appointed the Chief Executive Officer of ARA LOGOS Logistics Trust Management Ltd, the manager of ARA LOGOS Logistics Trust, in August this year. Before this appointment, she was the Head of Asset and Investment Management for LOGOS’s Southeast Asian business. Prior to joining LOGOS, between 2008 and 2018, Lee held a senior management role in Ascendas REIT.

Her career journey in real estate began in 1999 with Jurong Town Corporation (JTC), Singapore’s largest industrial landlord, after she graduated with a Bachelor of Science in Economics with Honours, and Master of Science in Real Estate, from the National University of Singapore.

“It was those years in JTC that helped me understand the industry landscape, and solidified my real estate calling,” she said.

“Many people think real estate is all about brick-and-mortar structures, but it’s actually much more than that – it extends beyond the physical into the unseen, and includes the businesses of tenants, which span different industries with all their colour, as well as relationships with tenants, who are our customers.”

Leveraging Strengths

Listed on SGX Mainboard since 2010, ARA LOGOS Logistics Trust (ALOG), previously known as Cache Logistics Trust, is a real estate investment trust that invests in income-producing real estate used for logistics purposes and real estate-related assets in the Asia Pacific. Its portfolio comprises 27 high-quality logistics warehouse properties located in established logistics clusters across Singapore and Australia.

In March 2020, ARA Asset Management, a leading Asia-Pacific real assets fund manager, completed its acquisition of a majority stake in LOGOS, a logistics real estate specialist across Asia Pacific. Post-acquisition, LOGOS operates as ARA’s exclusive logistics real estate platform and ALOG’s Sponsor. In April 2020, Cache Logistics Trust was rebranded as ARA LOGOS Logistics Trust.

LOGOS has over 6.7 million square metres of property owned and under development, and a completed value of S$14 billion across 24 ventures. As a vertically integrated business, LOGOS manages every aspect of logistics real estate, from sourcing land or facilities, to undertaking development and asset management, on behalf of some of the world’s leading global real estate investors.

“ALOG can now leverage the combined complementary strengths of ARA and LOGOS, realising key benefits such as an enlarged network in key and new high-growth markets, enhanced complementary capabilities and resources, as well as increased attractiveness to a larger pool of institutional investors,” Lee noted.

In October, underscoring the beneficial relationship between ALOG and its Sponsor, the trust unveiled its maiden acquisition under LOGOS’s sponsorship.

The proposed acquisition, which has a total purchase price of more than S$400 million, comprises five logistics properties located in Brisbane, and two fund investments that own a combined portfolio of five logistics assets in New South Wales and Victoria.

Following these acquisitions and fund investments, ALOG's deposited property value will increase by 28.2% to S$1.7 billion on a pro forma basis as at 30 June 2020, from about S$1.3 billion. The portfolio value attributable to Australia is also expected to rise to 47.6% from 32.5%.

“This is a transformational acquisition for ALOG as it expands our footprint across key economic hubs in the East Coast of Australia, and paves the way for our next chapter of growth under LOGOS’s sponsorship,” Lee noted.

And asset acquisitions will continue to drive the trust’s expansion over the next few years, she added.

“ALOG has an Asia-Pacific mandate – we will continue to leverage on our Sponsor’s robust pipeline – totalling S$14 billion – across key markets in Asia Pacific, as well as its expertise, and adopt a disciplined, proactive approach when sourcing for opportunities to grow the trust.”

Resilient Fundamentals

ALOG’s balance sheet also remains resilient. As at 30 September 2020, the trust had a well-balanced debt maturity profile, with aggregate leverage ratio of 40.5%, an interest coverage ratio of 3.7 times, and a weighted average debt maturity of 3.3 years. There are no refinancing requirements until December 2021.

“We continue to proactively manage our portfolio and capital structure to safeguard the long-term sustainability of our unitholders’ interests,” Lee added.

The trust also has deep, established tenant relationships that support its strong retention rate – ALOG’s portfolio occupancy rate remains high at 97%, despite prevailing soft market conditions, and its weighted average lease expiry (WALE) by net lettable area stands at 2.6 years.

Lee is focused on further improving the trust’s WALE, a closely watched industry metric. “Our priority is to reduce ALOG’s trading yield or equity cost, so we can acquire assets at more accretive levels,” she said.

“We’re working hard to boost the specs of our real estate assets – such as customising the specs to meet the needs of our tenants, for example, converting ambient warehouse to air-conditioned ones. This enables us to add value, which spurs tenants to extend their leases and become more sticky.”

The logistics industry’s robust fundamentals also add to ALOG’s bright prospects. The trust’s diversified and high-quality tenant base spans various industry and trade sectors, underpinning the trust’s cashflows and stable operational performance.

“We’re continuing to see stable leasing appetite from existing and prospective tenants for warehouse and prime logistics space across our portfolio, particularly from large-scale end-users, following a flight to quality and the shift to better locations,” Lee said. “This has been underpinned by higher demand from e-commerce, food logistics and third-party logistics players.”

Key growth drivers for the sector include the rise of online transactions and shifts in supply chain management. “We observed that businesses are looking to de-risk, either by diversifying their sources of raw materials or by stockpiling, following the impact of COVID-19 lockdowns. These trends can be seen across Australia and Singapore,” she added.

At the end of the day, this 47-year-old mother of two derives immense satisfaction from the knowledge that she is contributing to the improvement and growth of ALOG’s business.

“For the management of any REIT, there’s always that element of accountability and responsibility, to ensure we deliver on our promises, not only to our unitholders, but also to our tenants,” she added.

Building cohesion and grooming talent in her team are also key focus areas. “I’m likewise accountable to my team mates, and we’re on this transformational journey, not as individuals, but together as a team,” she said with a smile.

This is why trust, integrity and respect are among the key principles that she upholds, and tries to instill in her daughter, 15, and son, 11.

“These are core values in life – the ones that form the basis of your code of ethics, and the foundation of all your relationships – whether professional or personal.” 
 

ARA LOGOS Logistics Trust

Listed on Singapore Exchange on 12 April 2010, ARA LOGOS Logistics Trust (ALOG) is a real estate investment trust that invests in quality income-producing industrial real estate used for logistics purposes, as well as real estate-related assets in the Asia Pacific. As at 30 September 2020, ALOG’s portfolio comprises 27 high-quality logistics warehouse properties strategically located in established logistics clusters in Singapore and Australia. The portfolio has a total gross floor area of approximately 9.0 million square feet valued at approximately S$1.26 billion. 
ALOG is managed by ARA LOGOS Logistics Trust Management Ltd, a wholly owned subsidiary of LOGOS. ARA Asset Management Ltd is a majority shareholder of LOGOS, which operates as ARA’s global logistics real estate platform. LOGOS is a leading logistics property group in Asia Pacific, with over 6.7 million sqm of property owned and under development, and a completed value of S$14 billion across 24 ventures.

The company website is: www.aralogos-reit.com. 
Click <a href="https://www.sgx.com/securities/equities/K2LU">here </a>for the company's StockFacts page. 
For the three months ended 30 September 2020 results, click <a href="https://links.sgx.com/1.0.0/corporate-announcements/ONPAM0T5WM09J5WP/636402_ALOG%20-%203Q%20FY20%20Business%20Updates%20-%20Press%20Release.PDF">here</a>. 
 

About kopi-C: the Company brew

Text: Jennifer Tan-Stanisic Photo: Company file kopi-C is a regular column on the SGX Research website that features C-level executives of leading companies listed on Singapore Exchange. These interviews are profiles of senior management aimed at helping investors better understand the individuals who run these corporations. 
For previous editions of kopi-C: the Company brew, please click <a href="https://www.sgx.com/research-education/market-dialogues">here</a>.   
For more information, or if you would like your senior executives to be featured on SGX Market Dialogues, please send suggestions to <a href="///C:/Users/tanje/Desktop/Working%20Files/kopi-C/jennifer.t@sgx.com">jennifer.t@sgx.com</a>.
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    ARA-LOGOS-CEO


Why would you stay mediocre when you can be extraordinary?

This is the motto that spurs real estate veteran Karen Lee to pursue excellence and reach for the stars.

“A former boss gave me this advice – in business, don’t be mediocre,” recalled Lee, the CEO of the manager of SGX-listed ARA LOGOS Logistics Trust. “The mediocre will accept the market, or the status quo, as given, but the great will do better than the market.”

Another wise observation from her 82-year-old father still resonates with her: “Anything is possible if you set your mind to it – if you never try, you will never know.”

For Lee, these exhortations remain touchstones till today. “This is what drives me, and what I share with my team to inspire them to achieve their targets,” she added.

Lee has more than two decades of experience in the real estate industry, including industrial real estate development, asset and investment management, business development, leasing, marketing and property management.

She was appointed the Chief Executive Officer of ARA LOGOS Logistics Trust Management Ltd, the manager of ARA LOGOS Logistics Trust, in August this year. Before this appointment, she was the Head of Asset and Investment Management for LOGOS’s Southeast Asian business. Prior to joining LOGOS, between 2008 and 2018, Lee held a senior management role in Ascendas REIT.

Her career journey in real estate began in 1999 with Jurong Town Corporation (JTC), Singapore’s largest industrial landlord, after she graduated with a Bachelor of Science in Economics with Honours, and Master of Science in Real Estate, from the National University of Singapore.

“It was those years in JTC that helped me understand the industry landscape, and solidified my real estate calling,” she said.

“Many people think real estate is all about brick-and-mortar structures, but it’s actually much more than that – it extends beyond the physical into the unseen, and includes the businesses of tenants, which span different industries with all their colour, as well as relationships with tenants, who are our customers.”

Leveraging Strengths

Listed on SGX Mainboard since 2010, ARA LOGOS Logistics Trust (ALOG), previously known as Cache Logistics Trust, is a real estate investment trust that invests in income-producing real estate used for logistics purposes and real estate-related assets in the Asia Pacific. Its portfolio comprises 27 high-quality logistics warehouse properties located in established logistics clusters across Singapore and Australia.

In March 2020, ARA Asset Management, a leading Asia-Pacific real assets fund manager, completed its acquisition of a majority stake in LOGOS, a logistics real estate specialist across Asia Pacific. Post-acquisition, LOGOS operates as ARA’s exclusive logistics real estate platform and ALOG’s Sponsor. In April 2020, Cache Logistics Trust was rebranded as ARA LOGOS Logistics Trust.

LOGOS has over 6.7 million square metres of property owned and under development, and a completed value of S$14 billion across 24 ventures. As a vertically integrated business, LOGOS manages every aspect of logistics real estate, from sourcing land or facilities, to undertaking development and asset management, on behalf of some of the world’s leading global real estate investors.

“ALOG can now leverage the combined complementary strengths of ARA and LOGOS, realising key benefits such as an enlarged network in key and new high-growth markets, enhanced complementary capabilities and resources, as well as increased attractiveness to a larger pool of institutional investors,” Lee noted.

In October, underscoring the beneficial relationship between ALOG and its Sponsor, the trust unveiled its maiden acquisition under LOGOS’s sponsorship.

The proposed acquisition, which has a total purchase price of more than S$400 million, comprises five logistics properties located in Brisbane, and two fund investments that own a combined portfolio of five logistics assets in New South Wales and Victoria.

Following these acquisitions and fund investments, ALOG's deposited property value will increase by 28.2% to S$1.7 billion on a pro forma basis as at 30 June 2020, from about S$1.3 billion. The portfolio value attributable to Australia is also expected to rise to 47.6% from 32.5%.

“This is a transformational acquisition for ALOG as it expands our footprint across key economic hubs in the East Coast of Australia, and paves the way for our next chapter of growth under LOGOS’s sponsorship,” Lee noted.

And asset acquisitions will continue to drive the trust’s expansion over the next few years, she added.

“ALOG has an Asia-Pacific mandate – we will continue to leverage on our Sponsor’s robust pipeline – totalling S$14 billion – across key markets in Asia Pacific, as well as its expertise, and adopt a disciplined, proactive approach when sourcing for opportunities to grow the trust.”

Resilient Fundamentals

ALOG’s balance sheet also remains resilient. As at 30 September 2020, the trust had a well-balanced debt maturity profile, with aggregate leverage ratio of 40.5%, an interest coverage ratio of 3.7 times, and a weighted average debt maturity of 3.3 years. There are no refinancing requirements until December 2021.

“We continue to proactively manage our portfolio and capital structure to safeguard the long-term sustainability of our unitholders’ interests,” Lee added.

The trust also has deep, established tenant relationships that support its strong retention rate – ALOG’s portfolio occupancy rate remains high at 97%, despite prevailing soft market conditions, and its weighted average lease expiry (WALE) by net lettable area stands at 2.6 years.

Lee is focused on further improving the trust’s WALE, a closely watched industry metric. “Our priority is to reduce ALOG’s trading yield or equity cost, so we can acquire assets at more accretive levels,” she said.

“We’re working hard to boost the specs of our real estate assets – such as customising the specs to meet the needs of our tenants, for example, converting ambient warehouse to air-conditioned ones. This enables us to add value, which spurs tenants to extend their leases and become more sticky.”

The logistics industry’s robust fundamentals also add to ALOG’s bright prospects. The trust’s diversified and high-quality tenant base spans various industry and trade sectors, underpinning the trust’s cashflows and stable operational performance.

“We’re continuing to see stable leasing appetite from existing and prospective tenants for warehouse and prime logistics space across our portfolio, particularly from large-scale end-users, following a flight to quality and the shift to better locations,” Lee said. “This has been underpinned by higher demand from e-commerce, food logistics and third-party logistics players.”

Key growth drivers for the sector include the rise of online transactions and shifts in supply chain management. “We observed that businesses are looking to de-risk, either by diversifying their sources of raw materials or by stockpiling, following the impact of COVID-19 lockdowns. These trends can be seen across Australia and Singapore,” she added.

At the end of the day, this 47-year-old mother of two derives immense satisfaction from the knowledge that she is contributing to the improvement and growth of ALOG’s business.

“For the management of any REIT, there’s always that element of accountability and responsibility, to ensure we deliver on our promises, not only to our unitholders, but also to our tenants,” she added.

Building cohesion and grooming talent in her team are also key focus areas. “I’m likewise accountable to my team mates, and we’re on this transformational journey, not as individuals, but together as a team,” she said with a smile.

This is why trust, integrity and respect are among the key principles that she upholds, and tries to instill in her daughter, 15, and son, 11.

“These are core values in life – the ones that form the basis of your code of ethics, and the foundation of all your relationships – whether professional or personal.” 
 

ARA LOGOS Logistics Trust

Listed on Singapore Exchange on 12 April 2010, ARA LOGOS Logistics Trust (ALOG) is a real estate investment trust that invests in quality income-producing industrial real estate used for logistics purposes, as well as real estate-related assets in the Asia Pacific. As at 30 September 2020, ALOG’s portfolio comprises 27 high-quality logistics warehouse properties strategically located in established logistics clusters in Singapore and Australia. The portfolio has a total gross floor area of approximately 9.0 million square feet valued at approximately S$1.26 billion.  
ALOG is managed by ARA LOGOS Logistics Trust Management Ltd, a wholly owned subsidiary of LOGOS. ARA Asset Management Ltd is a majority shareholder of LOGOS, which operates as ARA’s global logistics real estate platform. LOGOS is a leading logistics property group in Asia Pacific, with over 6.7 million sqm of property owned and under development, and a completed value of S$14 billion across 24 ventures.

The company website is: www.aralogos-reit.com.  
Click here for the company's StockFacts page.  
For the three months ended 30 September 2020 results, click here. 
 

About kopi-C: the Company brew

Text: Jennifer Tan-Stanisic Photo: Company file  kopi-C is a regular column on the SGX Research website that features C-level executives of leading companies listed on Singapore Exchange. These interviews are profiles of senior management aimed at helping investors better understand the individuals who run these corporations.  
For previous editions of kopi-C: the Company brew, please click here.    
For more information, or if you would like your senior executives to be featured on SGX Market Dialogues, please send suggestions to jennifer.t@sgx.com.



ARA LOGOS Logistics Trust Embarks on New Growth Chapter

Smartkarma Research Team, Smartkarma

Smartkarma Research

Smartkarma Research Team

Smartkarma

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

Research Reinvented

Event-Driven

In this Smartkarma Webinar, <a href="https://www.smartkarma.com/profiles/david-blennerhassett" target="_blank" data-smartkarma-citation="accounts:840" rel="noopener">David Blennerhassett</a> will discuss the hostile situation between <a href="https://www.smartkarma.com/entities/cromwell-property-group" target="_blank" data-smartkarma-citation="entities:2780:1" rel="noopener">Cromwell Property (CMW AU)</a> and ARA Asset Management, further described in <a href="https://www.smartkarma.com/insights/cromwell-ara-a-festering-relationship" target="_blank" data-smartkarma-citation="insights:40614" rel="noopener">Cromwell/ARA: A Festering Relationship</a>.<div><h3>The webinar will be hosted on Wednesday, 15/July/2020, 5.00pm SGT/HKT.</h3></div><hr><div><div><div class="content-highlight"><h2><a href="https://share.hsforms.com/1H9pFZOB-RF2J00kbvMmxcw2c5gj?zoom_webinar_id=83779111093" target="_blank" rel="noopener">Register for the Webinar here</a></h2></div></div></div><hr><div>David is a highly experienced analyst with more than 20 years covering Asia Pacific equities, the past 13 years immersed in event strategies encompassing M&amp;A risk arbitrage, directional long/short, stub trades and restructuring.</div>

In this Smartkarma Webinar, David Blennerhassett will discuss the hostile situation between Cromwell Property (CMW AU) and ARA Asset Management, further described in Cromwell/ARA: A Festering Relationship.The webinar will be hosted on Wednesday, 15/July/2020, 5.00pm SGT/HKT.Register for the Webinar hereDavid is a highly experienced analyst with more than 20 years covering Asia Pacific equities, the past 13 years immersed in event strategies encompassing M&amp;A risk arbitrage, directional long/short, stub trades and restructuring.

Smartkarma Webinar | Cromwell/​ARA: A Festering Relationship

Singapore

ARA Asset Management Limited is a real estate fund management company that focuses on the management of public-listed real estate investment trusts, REITs. The Company manages REITs, private real estate funds, specialist equity funds and offers corporate finance advisory services.

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