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

CapitaLand Ascendas REIT / Equity Bottom-Up

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S-REITs have announced asset acquisitions exceeding S$9 billion in total purchase consideration over the past 10 months of 2021.

In the month of October, most acquisitions were in logistics and grocery-anchored retail assets and include several maiden acquisitions or forays into new market segments. 
Acquisitions in the month of October totalled S$765 million in purchase consideration and were by CapitaLand China Trust, Ascendas REIT, Mapletree Logistics Trust, and United Hampshire US REIT. 
CapitaLand China Trust (CLCT) made its first foray into China's logistics sector with the acquisition of 4 logistics properties in Shanghai, Kunshan, Wuhan and Chengdu worth 1.7 billion yuan (S$350.7 million).

This increases CLCT's exposure to new economy asset classes following its maiden purchase of a portfolio of 5 business park properties as part of its portfolio reconstitution strategy announced in 2020 to cover multi-assets used primarily for retail, office and industrial use.

The 4 properties have a committed portfolio occupancy of 96.3 per cent and a weighted average lease to expiry of 2.1 years as at Aug 31, 2021. Post-acquisition, CLCT's proportion of new economy assets by asset value will increase from 15.3 per cent to 21.4 per cent. 
CLCT has a 5-year acquisition growth roadmap and plans to achieve a balanced portfolio mix by 2026 comprising 40 per cent in commercial developments, 30 per cent in retail properties and 30 per cent in new economy assets such as business parks, logistics and data centres.

Ascendas Reit in October acquired 11 last mile logistics properties in Kansas City, in the United States for S$207.8 million, marking its first venture into the US logistics market.

Ascendas Reit notes that the Kansas City's logistics sector is well-supported by its central location within the US and its myriad businesses and sectors including transportation and distribution, e-commerce, manufacturing, animal health, technology and the financial industry.

The properties are 92.6 per cent occupied by 27 customers from diverse industries including third-party logistics, wholesale distribution, manufacturing and healthcare and no single customer makes up over 10 per cent of the portfolio's total rental income, lowering portfolio concentration risk.

Mapletree Logistics Trust (MLT) announced the proposed acquisition of the Yeoju Logistics Centre in South Korea for 135 billion won (S$153.8 million), expanding MLT's presence in the Seoul Metropolitan Area to a total of 19 assets.

The property is fully leased to one of South Korea's largest online fashion platforms and a domestic third-party logistics service provider.

It is located in northern Yeoju, which is a newly established logistics hub situated near two major expressways providing enhanced accessibility to and from Seoul.

The acquisition raises MLT's e-commerce revenue exposure in South Korea to 31 per cent, from its previous 24 per cent.

United Hampshire US Reit (UHReit) made its maiden acquisition since listing, acquiring two dominant grocery-anchored retail assets for US$78.25 million (approximately S$105.7 million) in Pennsylvania and Virginia, and extending UHReit's focus on the Eastern seaboard.

The Pennsylvania property is 94.1 per cent occupied while the Virginia property has a 99.1 per cent occupancy rate.

Both properties are anchored by tenants including Publix, one of the largest US grocery chains, and ShopRite, which is a leading supermarket brand in the region, among other home improvement and variety stores.

UHReit notes that both assets fit well with their investment criteria given the locations with limited competition, densely populated communities and backed by cycle agnostic tenants providing essential services. REIT Watch is a weekly column on The Business Times,<a href="https://www.businesstimes.com.sg/companies-markets/s-reits-make-maiden-forays-into-new-segments"> read </a>the original version.
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    SREIT asset


S-REITs have announced asset acquisitions exceeding S$9 billion in total purchase consideration over the past 10 months of 2021.

In the month of October, most acquisitions were in logistics and grocery-anchored retail assets and include several maiden acquisitions or forays into new market segments.  
Acquisitions in the month of October totalled S$765 million in purchase consideration and were by CapitaLand China Trust, Ascendas REIT, Mapletree Logistics Trust, and United Hampshire US REIT.  
CapitaLand China Trust (CLCT) made its first foray into China's logistics sector with the acquisition of 4 logistics properties in Shanghai, Kunshan, Wuhan and Chengdu worth 1.7 billion yuan (S$350.7 million).

This increases CLCT's exposure to new economy asset classes following its maiden purchase of a portfolio of 5 business park properties as part of its portfolio reconstitution strategy announced in 2020 to cover multi-assets used primarily for retail, office and industrial use.

The 4 properties have a committed portfolio occupancy of 96.3 per cent and a weighted average lease to expiry of 2.1 years as at Aug 31, 2021. Post-acquisition, CLCT's proportion of new economy assets by asset value will increase from 15.3 per cent to 21.4 per cent.  
CLCT has a 5-year acquisition growth roadmap and plans to achieve a balanced portfolio mix by 2026 comprising 40 per cent in commercial developments, 30 per cent in retail properties and 30 per cent in new economy assets such as business parks, logistics and data centres.

Ascendas Reit in October acquired 11 last mile logistics properties in Kansas City, in the United States for S$207.8 million, marking its first venture into the US logistics market.

Ascendas Reit notes that the Kansas City's logistics sector is well-supported by its central location within the US and its myriad businesses and sectors including transportation and distribution, e-commerce, manufacturing, animal health, technology and the financial industry.

The properties are 92.6 per cent occupied by 27 customers from diverse industries including third-party logistics, wholesale distribution, manufacturing and healthcare and no single customer makes up over 10 per cent of the portfolio's total rental income, lowering portfolio concentration risk.

Mapletree Logistics Trust (MLT) announced the proposed acquisition of the Yeoju Logistics Centre in South Korea for 135 billion won (S$153.8 million), expanding MLT's presence in the Seoul Metropolitan Area to a total of 19 assets.

The property is fully leased to one of South Korea's largest online fashion platforms and a domestic third-party logistics service provider.

It is located in northern Yeoju, which is a newly established logistics hub situated near two major expressways providing enhanced accessibility to and from Seoul.

The acquisition raises MLT's e-commerce revenue exposure in South Korea to 31 per cent, from its previous 24 per cent.

United Hampshire US Reit (UHReit) made its maiden acquisition since listing, acquiring two dominant grocery-anchored retail assets for US$78.25 million (approximately S$105.7 million) in Pennsylvania and Virginia, and extending UHReit's focus on the Eastern seaboard.

The Pennsylvania property is 94.1 per cent occupied while the Virginia property has a 99.1 per cent occupancy rate.

Both properties are anchored by tenants including Publix, one of the largest US grocery chains, and ShopRite, which is a leading supermarket brand in the region, among other home improvement and variety stores.

UHReit notes that both assets fit well with their investment criteria given the locations with limited competition, densely populated communities and backed by cycle agnostic tenants providing essential services.  REIT Watch is a weekly column on The Business Times, read the original version.



REIT Watch - S-Reits make maiden forays into new segments

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>AREIT redeveloping Science Park Drive; 10M21 new home sales take-up rate at 181%; KEP final offer for SPH; SDPR new launches sold out; Phils Sep21 remittances rebounded</li><li>New private home sales rose 9% MoM in Oct21; Robust take-up rate (above 100%) for the past 9mo</li><li>Keppel Corp (KEP SP) says its final offer for Singapore Press Holdings (SPH SP) is compelling - KEP stated that its final offer is a compelling one and a win-win proposition which would be put to both KEP’s and SPH’s shareholders for their respective decisions.</li></ul>

AREIT redeveloping Science Park Drive; 10M21 new home sales take-up rate at 181%; KEP final offer for SPH; SDPR new launches sold out; Phils Sep21 remittances reboundedNew private home sales rose 9% MoM in Oct21; Robust take-up rate (above 100%) for the past 9moKeppel Corp (KEP SP) says its final offer for Singapore Press Holdings (SPH SP) is compelling - KEP stated that its final offer is a compelling one and a win-win proposition which would be put to both KEP’s and SPH’s shareholders for their respective decisions.

ASEAN Builder's Scoop (16Nov21) - AREIT Redeveloping Science Park Drive

<h2>Singapore</h2>
<h3>Cuscaden Peak minimum chain offer price for each <a href="https://www.smartkarma.com/entities/sph-reit" target="_blank" data-smartkarma-citation="entities:5994" rel="noopener">SPH REIT (SPHREIT SP)</a> unit stands at S$96.4c</h3>
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<li>The minimum chain offer price, which consortium Cuscaden Peak will have to offer for each SPHREIT if its acquisition bid for Singapore Press Holdings (SPH SP) succeeds is S$96.4c, fully in cash. The consortium had made a surprise rival bid to privatise SPH, following an earlier offer from Keppel Corp (KEP SP). Such an acquisition would take place by way of a scheme of arrangement. Subject to the finalisation of the terms of such a scheme, the completion of Cuscaden's proposed cash acquisition would result in an obligation for it to undertake a chain offer for all SPHREIT units as well, in accordance with the Singapore Code on Take-overs and Mergers</li>
<li>The minimum chain offer price shall be the simple average of the daily volume-weighted average traded prices of SPHREIT units, on either the latest 20 trading days, or whatever number of trading days there were within 30 calendar days before the announcement of the possible offer. The chain offer will not be made unless and until the possible scheme becomes effective in accordance with its terms, or – if Cuscaden undertakes the proposed acquisition in another method – is declared effective or unconditional, and/or is completed. Cuscaden's offer for SPH is S$2.10 per share in cash. Cuscaden comprises Hotel Properties, businessman Ong Beng Seng and two Temasek-linked entities – CLA Real Estate Holdings and Mapletree. Its proposal still needs to be accepted by the board of SPH.</li>
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Singapore
Cuscaden Peak minimum chain offer price for each SPH REIT (SPHREIT SP) unit stands at S$96.4c

The minimum chain offer price, which consortium Cuscaden Peak will have to offer for each SPHREIT if its acquisition bid for Singapore Press Holdings (SPH SP) succeeds is S$96.4c, fully in cash. The consortium had made a surprise rival bid to privatise SPH, following an earlier offer from Keppel Corp (KEP SP). Such an acquisition would take place by way of a scheme of arrangement. Subject to the finalisation of the terms of such a scheme, the completion of Cuscaden's proposed cash acquisition would result in an obligation for it to undertake a chain offer for all SPHREIT units as well, in accordance with the Singapore Code on Take-overs and Mergers
The minimum chain offer price shall be the simple average of the daily volume-weighted average traded prices of SPHREIT units, on either the latest 20 trading days, or whatever number of trading days there were within 30 calendar days before the announcement of the possible offer. The chain offer will not be made unless and until the possible scheme becomes effective in accordance with its terms, or – if Cuscaden undertakes the proposed acquisition in another method – is declared effective or unconditional, and/or is completed. Cuscaden's offer for SPH is S$2.10 per share in cash. Cuscaden comprises Hotel Properties, businessman Ong Beng Seng and two Temasek-linked entities – CLA Real Estate Holdings and Mapletree. Its proposal still needs to be accepted by the board of SPH.


ASEAN Builder's Scoop (2Nov21) - Cuscaden Peak Chain Offer for SPHREIT

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 <div class='content-caption'>SREIT that have kicked off the reporting season</div>
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Five S-REITs have kicked off this quarter’s reporting season with the release of financial results for the quarter or business updates, before the market opened last Friday. The five are SPH REIT, AIMS APAC REIT, Ascendas REIT, Sabana REIT, Suntec REIT. 
These five S-Reits have reported increased distributions per unit (DPU) and improved operating metrics amid a cautiously optimistic outlook for the year end.

SPH Reit kicks off with improved full-year results led by gradual market recovery in both of its markets in Singapore and Australia. It noted that tenant sales in its Australia portfolio have recovered to pre-Covid levels despite a seven-day lockdown in July. 
It announced fiscal 2021 DPU at 5.4 cents, increasing 98 per cent year on year and 3.6 per cent away from its previous fiscal year 2019 DPU (pre-Covid).

AIMS Apac Reit announced 4.75 cents in DPU to be distributed for first half FY2022, an 18.8 per cent increase from a year ago, buoyed by higher net property income which rose 19.4 per cent to S$47.7 million year on year.

The Reit recently announced its proposed acquisition of Woolworths Headquarters in New South Wales, Australia, which will be its largest asset across its entire portfolio. 
Ascendas Reit in its business update observed improved portfolio occupancy rates of 91.7 per cent and positive rental reversions, with the completion of Grab's headquarters at one-north, Singapore.

It noted improved occupancy levels across its Singapore and Australia properties while lower to flat levels in its United States and United Kingdom/Europe properties.

Last Friday, Ascendas Reit announced the proposed acquisition of 11 last mile logistics properties in Kansas City, US for S$207.8 million, marking its first entry into the US logistics market and complementing the Reit's existing portfolio.

The Kansas portfolio is 92.6 per cent occupied by 27 customers from industries including third-party logistics, wholesale distribution, manufacturing and healthcare.

The 11 properties were reported to have strong retention rates, with current tenants in place for an average of 12.5 years.

Sabana Reit's business updates reported improved portfolio occupancy rates of 85.3 per cent, its highest level since early 2018 when the Reit's refreshed strategy was first announced.

The Reit also updated that it has renewed leases with positive rental reversion of 7.8 per cent, which is the sixth time it has achieved positive reversion over the past seven quarters.

The removal of its syariah compliance was completed on Oct 21.

Suntec Reit inked 22 per cent higher distributable income from operations and announced 2.232 cents in third quarter 2021 DPU to unitholders which is 20.8 per cent higher year on year.

The Reit expects the return of Singapore's workforce to increase over time and positive rent reversion for its office portfolio for full year 2021.

In its local retail portfolio, it observed improved footfall during the first two weeks of Covid 'Stabilisation Phase' in October compared to earlier periods and expects mall occupancy to be on track to remain around 95 per cent by end 2021. REIT Watch is a weekly column on The Business Times,<a href="https://www.businesstimes.com.sg/companies-markets/improved-operating-metrics-and-dpus-as-s-reits-kick-off-reporting"> read </a>the original version.
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    SREIT that have kicked off the reporting season


Five S-REITs have kicked off this quarter’s reporting season with the release of financial results for the quarter or business updates, before the market opened last Friday. The five are SPH REIT, AIMS APAC REIT, Ascendas REIT, Sabana REIT, Suntec REIT.  
These five S-Reits have reported increased distributions per unit (DPU) and improved operating metrics amid a cautiously optimistic outlook for the year end.

SPH Reit kicks off with improved full-year results led by gradual market recovery in both of its markets in Singapore and Australia. It noted that tenant sales in its Australia portfolio have recovered to pre-Covid levels despite a seven-day lockdown in July.  
It announced fiscal 2021 DPU at 5.4 cents, increasing 98 per cent year on year and 3.6 per cent away from its previous fiscal year 2019 DPU (pre-Covid).

AIMS Apac Reit announced 4.75 cents in DPU to be distributed for first half FY2022, an 18.8 per cent increase from a year ago, buoyed by higher net property income which rose 19.4 per cent to S$47.7 million year on year.

The Reit recently announced its proposed acquisition of Woolworths Headquarters in New South Wales, Australia, which will be its largest asset across its entire portfolio.  
Ascendas Reit in its business update observed improved portfolio occupancy rates of 91.7 per cent and positive rental reversions, with the completion of Grab's headquarters at one-north, Singapore.

It noted improved occupancy levels across its Singapore and Australia properties while lower to flat levels in its United States and United Kingdom/Europe properties.

Last Friday, Ascendas Reit announced the proposed acquisition of 11 last mile logistics properties in Kansas City, US for S$207.8 million, marking its first entry into the US logistics market and complementing the Reit's existing portfolio.

The Kansas portfolio is 92.6 per cent occupied by 27 customers from industries including third-party logistics, wholesale distribution, manufacturing and healthcare.

The 11 properties were reported to have strong retention rates, with current tenants in place for an average of 12.5 years.

Sabana Reit's business updates reported improved portfolio occupancy rates of 85.3 per cent, its highest level since early 2018 when the Reit's refreshed strategy was first announced.

The Reit also updated that it has renewed leases with positive rental reversion of 7.8 per cent, which is the sixth time it has achieved positive reversion over the past seven quarters.

The removal of its syariah compliance was completed on Oct 21.

Suntec Reit inked 22 per cent higher distributable income from operations and announced 2.232 cents in third quarter 2021 DPU to unitholders which is 20.8 per cent higher year on year.

The Reit expects the return of Singapore's workforce to increase over time and positive rent reversion for its office portfolio for full year 2021.

In its local retail portfolio, it observed improved footfall during the first two weeks of Covid 'Stabilisation Phase' in October compared to earlier periods and expects mall occupancy to be on track to remain around 95 per cent by end 2021.  REIT Watch is a weekly column on The Business Times, read the original version.



REIT Watch - Improved operating metrics and DPUs as S-Reits kick off reporting

<h2>Singapore</h2>SREITs results in a glance (see detailed spreadsheet and calendar attached)<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/236/273/original/image_54776601321634694560432.png?1634694565" class="editor-image img-responsive" data-smartkarma-image-id="236273"></figure><ul><li><h3></h3><a href="https://www.smartkarma.com/entities/ascendas-real-estate-investment-trust" target="_blank" data-smartkarma-citation="entities:39" rel="noopener">Ascendas Real Estate Investment Trust (AREIT SP)</a> 3Q21 Business Updates; Robust reversions while on virtuous cycle of inorganic growth (BUY; TP S$3.55/unit)</li><li>3Q21 revenue, NPI and DPU were undisclosed. AREIT has completed the development of the Grab Headquarters, with a total development cost of S$184.6m. Divestment of two Australian logistics properties has also been completed at a price of S$104.5m (AUD101.6m)</li></ul>

SingaporeSREITs results in a glance (see detailed spreadsheet and calendar attached)Ascendas Real Estate Investment Trust (AREIT SP) 3Q21 Business Updates; Robust reversions while on virtuous cycle of inorganic growth (BUY; TP S$3.55/unit)3Q21 revenue, NPI and DPU were undisclosed. AREIT has completed the development of the Grab Headquarters, with a total development cost of S$184.6m. Divestment of two Australian logistics properties has also been completed at a price of S$104.5m (AUD101.6m)

Singapore

CapitaLand Ascendas REIT is an industrial real estate investment trust. The Trust invests in business and science park properties, integrated development, amenities, and retail (IDAR) properties, high-specifications industrial properties and data centers, light industrial and flatted factories, and logistics and distribution centers.

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CapitaLand Ascendas REIT (CLAR SP)

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