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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The Straits Times Index (STI) gained more than 5 per cent in the 2022 year to date (YTD) till Feb 24, while the iEdge S-Reit Index declined close to 4 per cent during the same period amid expectations of rate hikes.

During last week's Thursday (Feb 24) session after Russia's announcement of a military operation in Ukraine, the STI and iEdge S-Reit Index dipped more than 3 per cent and close to 2 per cent respectively. Despite the decline, the STI maintained its position as one of the best performing indices globally in 2022.

Similarly, the iEdge S-Reit Index is also one of the most resilient Reit benchmarks this year, outperforming the FTSE EPRA Nareit Developed Index which declined more than 8 per cent in the 2022 YTD till Feb 24. 
S-REITs with positive total returns during this period include Suntec REIT (8.9 per cent), Sabana Industrial REIT (5.9 per cent), CapitaLand Integrated Commercial Trust (3.6 per cent), Far East Hospitality Trust (1.7 per cent), Keppel REIT (1.7 per cent), Ascott Residence Trust (1.7 per cent), First REIT (0.5 per cent) and ARA US Hospitality Trust (0.4 per cent), while Sasseur REIT and Daiwa House Logistics Trust returned flat for the period. 
Retail investors continued to drive fund flow activities in the S-Reits and property trusts sector, accumulating net retail inflows of S$350 million in the 2022 YTD till Feb 24, while institutional investors have seen net outflows of S$250 million for the sector.

However, during Thursday's session, the S-Reits sector garnered more than S$30 million of net inflows from institutional investors. 
S-REITs which saw the most net institutional inflows during this session include – CapitaLand Integrated Commercial Trust (+S$14 million), Ascendas REIT (+S$6 million), Suntec REIT (+S$5 million), Mapletree Industrial Trust (+S$4 million) and Mapletree North Asia Commercial Trust (+S$3 million). 
The S-Reits' earnings season is largely complete, with optimistic outlook and improving distribution per unit (DPU) a common theme.

CapitaLand Integrated Commercial Trust posted distributable income of S$675 million for the full year FY21, an increase of more than 80 per cent from FY20's distributable income of S$369 million. The trust remains optimistic about its outlook for 2022, noting that its portfolio valuation as at end-2021 improved 3.5 per cent year on year, signifying an improving outlook for Singapore's retail and office market.

Suntec Reit reported its full year FY21 results last month and announced a DPU of 8.666 cents, which was 17 per cent higher than its FY20 DPU. The increase in DPU was a result of higher distribution income, driven by contributions from the 2 newly acquired assets in London and higher income from Suntec City Mall.

The Reit noted that the recovery of retail business at Suntec City Mall has been encouraging with December 2021 tenant sales exceeding that of December 2019.

ARA US Hospitality Trust, which reported its full year FY21 results last week, posted distributable income of US$2.0 million. This follows from reporting no distributable income in FY20.

The trust saw continued strong recovery in the US hospitality industry in H2 2021, riding on the success of a widespread vaccination programme and the reopening of the markets across the country.  REIT Watch is a weekly column on The Business Times,<a href="https://www.businesstimes.com.sg/companies-markets/green-shoots-for-retail-and-hospitality-s-reits-amid-new-pandemic-phase"> </a><a href="https://www.businesstimes.com.sg/companies-markets/s-reits-remain-optimistic-about-2022-growth-0">read</a><a href="https://www.businesstimes.com.sg/companies-markets/green-shoots-for-retail-and-hospitality-s-reits-amid-new-pandemic-phase"> </a>the original version.

 
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    SREITs


The Straits Times Index (STI) gained more than 5 per cent in the 2022 year to date (YTD) till Feb 24, while the iEdge S-Reit Index declined close to 4 per cent during the same period amid expectations of rate hikes.

During last week's Thursday (Feb 24) session after Russia's announcement of a military operation in Ukraine, the STI and iEdge S-Reit Index dipped more than 3 per cent and close to 2 per cent respectively. Despite the decline, the STI maintained its position as one of the best performing indices globally in 2022.

Similarly, the iEdge S-Reit Index is also one of the most resilient Reit benchmarks this year, outperforming the FTSE EPRA Nareit Developed Index which declined more than 8 per cent in the 2022 YTD till Feb 24.  
S-REITs with positive total returns during this period include Suntec REIT (8.9 per cent), Sabana Industrial REIT (5.9 per cent), CapitaLand Integrated Commercial Trust (3.6 per cent), Far East Hospitality Trust (1.7 per cent), Keppel REIT (1.7 per cent), Ascott Residence Trust (1.7 per cent), First REIT (0.5 per cent) and ARA US Hospitality Trust (0.4 per cent), while Sasseur REIT and Daiwa House Logistics Trust returned flat for the period.  
Retail investors continued to drive fund flow activities in the S-Reits and property trusts sector, accumulating net retail inflows of S$350 million in the 2022 YTD till Feb 24, while institutional investors have seen net outflows of S$250 million for the sector.

However, during Thursday's session, the S-Reits sector garnered more than S$30 million of net inflows from institutional investors.  
S-REITs which saw the most net institutional inflows during this session include – CapitaLand Integrated Commercial Trust (+S$14 million), Ascendas REIT (+S$6 million), Suntec REIT (+S$5 million), Mapletree Industrial Trust (+S$4 million) and Mapletree North Asia Commercial Trust (+S$3 million).  
The S-Reits' earnings season is largely complete, with optimistic outlook and improving distribution per unit (DPU) a common theme.

CapitaLand Integrated Commercial Trust posted distributable income of S$675 million for the full year FY21, an increase of more than 80 per cent from FY20's distributable income of S$369 million. The trust remains optimistic about its outlook for 2022, noting that its portfolio valuation as at end-2021 improved 3.5 per cent year on year, signifying an improving outlook for Singapore's retail and office market.

Suntec Reit reported its full year FY21 results last month and announced a DPU of 8.666 cents, which was 17 per cent higher than its FY20 DPU. The increase in DPU was a result of higher distribution income, driven by contributions from the 2 newly acquired assets in London and higher income from Suntec City Mall.

The Reit noted that the recovery of retail business at Suntec City Mall has been encouraging with December 2021 tenant sales exceeding that of December 2019.

ARA US Hospitality Trust, which reported its full year FY21 results last week, posted distributable income of US$2.0 million. This follows from reporting no distributable income in FY20.

The trust saw continued strong recovery in the US hospitality industry in H2 2021, riding on the success of a widespread vaccination programme and the reopening of the markets across the country.   REIT Watch is a weekly column on The Business Times, read the original version.

 



REIT Watch - S-Reits remain optimistic about 2022 growth

IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

IPOs and Catalysts/Events

Uncompromised, Independent, Conflict-Free Research

Global Equity Research Ltd

Global Equity Research was started in 2017 by a group of experienced research professionals. It was founded on a passionate belief in the importance and the need for uncompromised, independent, conflict-free research. We aim to provide differentiated and actionable primary and bottom up fundamental research.

Event-Driven

<ul>
<li>Under the revised scheme consideration, each <a href="https://www.smartkarma.com/entities/ara-logos-logistics-trust" target="_blank" data-smartkarma-citation="entities:937:1" rel="noopener">ARA LOGOS (ALLT SP)</a> unitholder will receive S$0.097 in cash and 1.7729 new <a href="https://www.smartkarma.com/entities/esr-reit" target="_blank" data-smartkarma-citation="entities:10934:1" rel="noopener">ESR-REIT (EREIT SP)</a> units at an issue price of S$0.4924.</li>
<li>The IFA considers the revised scheme consideration to be fair. We think that IFA’s valuation approach is broadly sound with some areas for improvement. </li>
<li>We think that the revised offer is reasonable. For a 28 April payment date, the gross and annualised spread is 2.9% and 18.2%, respectively. </li>
</ul>


Under the revised scheme consideration, each ARA LOGOS (ALLT SP) unitholder will receive S$0.097 in cash and 1.7729 new ESR-REIT (EREIT SP) units at an issue price of S$0.4924.
The IFA considers the revised scheme consideration to be fair. We think that IFA’s valuation approach is broadly sound with some areas for improvement. 
We think that the revised offer is reasonable. For a 28 April payment date, the gross and annualised spread is 2.9% and 18.2%, respectively. 


ARA LOGOS/ESR-REIT Scheme Meeting on 21 March, IFA Opinion

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><a href="https://www.smartkarma.com/entities/manulife-us-reit" target="_blank" data-smartkarma-citation="entities:567" rel="noopener">Manulife US REIT (MUST) (MUST SP)</a> 2H21 DPU +1.5% YoY; 4Q21 -7.1% reversions a concern, further M&amp;As may hinge on fundraising efforts</li><li><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> 2H21 DPU +2.4% YoY; Improved occupancy while reversions remain relatively robust</li><li><a href="https://www.smartkarma.com/entities/yanlord-land-group-ltd" target="_blank" data-smartkarma-citation="entities:14152" rel="noopener">Yanlord Land (YLLG SP)</a> Jan22 contracted pre-sales rose 87.7% YoY</li></ul>

Manulife US REIT (MUST) (MUST SP) 2H21 DPU +1.5% YoY; 4Q21 -7.1% reversions a concern, further M&amp;As may hinge on fundraising effortsAscendas Real Estate Investment Trust (AREIT SP) 2H21 DPU +2.4% YoY; Improved occupancy while reversions remain relatively robustYanlord Land (YLLG SP) Jan22 contracted pre-sales rose 87.7% YoY

ASEAN Builder's Scoop (9Feb22) - MUST Weak 4Q21 Reversions a Concern

Capitaland Integrated Commercial Trust / Equity Bottom-Up

STI Rebounded 14% in 2021 as Economy Expanded 7%

Head of Research, IPOs & Placements, Aequitas Research

Sumeet Singh

Head of Research, IPOs & Placements

IPOs and Placements coverage across Asia Pacific

Aequitas Research

We cover all listing across the Asia Pacific along with follow-up placements. As of Dec 2020, our team had covered 539 IPOs with a hit rate of 73.5% and 685 placements with a hit rate of 66.8%.

We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic coverage across new listings and placements. Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis as well.

Equity Capital Markets

Capitaland Integrated Commercial Trust / Equity Capital Markets

<ul>
<li>CapitaLand Integrated Commercial Trust (CICT) aims to raise around US$150m to partly fund the recently announced acquisition of two Australian assets.</li>
<li>Although, at the time of the acquisition the company had stated that it aims to finance the acquisition using debt and divestment proceeds.</li>
<li>In this note, we will talk about the deal dynamics and run the deal through our ECM framework.</li>
</ul>


CapitaLand Integrated Commercial Trust (CICT) aims to raise around US$150m to partly fund the recently announced acquisition of two Australian assets.
Although, at the time of the acquisition the company had stated that it aims to finance the acquisition using debt and divestment proceeds.
In this note, we will talk about the deal dynamics and run the deal through our ECM framework.


CICT Placement - Surprise About Turn on Acquisition Funding

Singapore

Mapletree Industrial Trust is a Singapore-focused real estate investment trust with a large and diversified portfolio of industrial properties. The Trust invests in a diverse portfolio of industrial properties with the primary objective of achieving an attractive level of return from rental income and for long-term capital growth.

Mapletree Pan Asia Commercial Trust is a Singapore-focused real estate investment trust. The Trust invests on a long-term basis, directly or indirectly, in a diversified portfolio of income-producing real estate used primarily for office and/or retail purposes, whether wholly or partially, as well as real estate-related assets.

Mapletree Pan Asia Commercial Trust (MCT SP)

Mapletree Logistics Trust is an Asia-focused logistics real estate investment trust. The Company invests in a diversified portfolio of income-producing real estate which is used for logistics purposes.

Suntec Real Estate Investment Trust is a commercial real estate investment trust. The Trust invests in income-producing real estate that is primarily used for retail and/or office purposes.

Frasers Centrepoint Trust is a retail real estate investment trust focused on growing unitholder value through asset management, financial management and strategic investments.  The trust invests in retail properties in Singapore and overseas.

FLT offers investors an opportunity to invest in logistics and industrial real estate assets strategically located within major logistics and industrial markets of Australia, Germany and the Netherlands.

Frasers Logistics & Commercial Trust (FLT SP)

Keppel DC REIT is Asia's first pure-play data centre REIT listed on the Singapore Exchange. Keppel DC REIT's investment strategy is to principally invest, directly or indirectly, in a diversified portfolio of income-producing real estate assets which are used primarily for data centre purposes, as well as real estate related assets.

Keppel REIT operates as a commercial real estate investment trust. The Trust owns and invests in a portfolio of income-producing office buildings and related real estate assets. Keppel REIT offers its services in Asia and Australia.

SPH REIT is a Singapore-based REIT established principally to invest, directly or indirectly, in a portfolio of income-producing real estate which is used primarily for retail purposes in Asia-Pacific, as well as real estate-related assets.

ESR-LOGOS Real Estate Investment Trust (“ESR-LOGOS REIT”) is a leading New Economy and future-ready Asia Pacific S-REIT. Listed on the Singapore Exchange Securities Trading Limited since 25 July 2006, ESR-LOGOS REIT invests in quality income-producing industrial properties in key gateway markets.

As at 28 April 2022, ESR-LOGOS REIT holds interests in a diversified portfolio of logistics properties, high-specifications industrial properties, business parks and general industrial properties with total assets of approximately S$5.5 billion. Its portfolio comprises 84 properties located across the developed markets of Singapore (63 assets) and Australia (21 assets), with a total gross floor area of approximately 2.4 million sqm, as well as investments in three property funds in Australia. ESR-LOGOS REIT is also a constituent of the FTSE EPRA Nareit Global Real Estate Index. 

ESR-LOGOS REIT is managed by ESR-LOGOS Funds Management (S) Limited (the “Manager”) and sponsored by the ESR Group (“ESR”). The Manager is owned by ESR (67.3%), Shanghai Summit Pte. Ltd. (25.0%), and Mitsui & Co., Ltd (7.7%), respectively.

For further information on ESR-LOGOS REIT, please visit www.esr-logosreit.com.sg.

Kenedix Retail REIT Corporation is a real estate investment trust (REIT) which mainly invests in real estate and securitized real estate products. The Company invests mainly in commercial properties which are shopping centers, and super markets in Tokyo metropolitan, Osaka, Nagoya and Fukuoka area.

Vicinity Centres retails asset and property management services. The Company offers a retail property investment and services organization involved in the ownership, management, and development of retail properties. The Company operates shopping centers across Australia.

Stockland is a diversified Australian property group. The Group develops and manages Retail centers, Residential Communities and Retirement Living assets with a focus on regional centers and outer metropolitan. Stockland also owns a portfolio of Office and Industrial assets.

Link REIT is a real estate investment trust in Hong Kong. The Trust owns and operates shopping centers, parking space facilities and real estate retail space.

Ryman Hospitality Properties, Inc. is a real estate investment trust specializing in group-oriented, destination hotel assets in urban and resort markets.

Nippon Building Fund Inc. is a real estate investment trust (REIT) which mainly invests in real estate and securitized real estate products. Properties are mainly Business offices and are located in Tokyo Major 5 wards and Kanto area.

CubeSmart is a self-administered and self-managed real estate company that owns, operates, acquires, and develops self-storage facilities in the United States.

Agree Realty Corporation is a real estate investment trust that owns, manages and develops primarily neighborhood community shopping centers or single tenant properties, located in twelve states and leased under net leases to major retail tenants.

First Industrial Realty Trust, Inc. is a self-administered and fully integrated real estate investment trust which owns, manages, acquires and develops bulk warehouses and light industrial properties. The Company's interests in its properties are held through various partnerships controlled by the company.

National Retail Properties Inc. is a real estate investment trust. The Company acquires, develops, and manages retail properties. National Retail Properties serves customers in the State of Florida.

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)

REIT Watch - S-Reits remain optimistic about 2022 growth

The Straits Times Index (STI) gained more than 5 per cent in the 2022 year to date (YTD) till Feb 24, while the iEdge S-Reit...

Singapore Exchange Ltd (SGX)

ARA LOGOS/ESR-REIT Scheme Meeting on 21 March, IFA Opinion

ARA Logos and ESR-REIT merger scheme meeting is set for 21 March. The IFA considers the revised scheme consideration to be fair. For a 28 April...

Arun George

ASEAN Builder's Scoop (9Feb22) - MUST Weak 4Q21 Reversions a Concern

MUST weak 4Q21 reversions a concern; AREIT improved occupancy and steady reversions; SG may levy prop-related wealth tax; ASII/HKL/Logos Indo...

SCCM Asia Research

STI Rebounded 14% in 2021 as Economy Expanded 7%

The STI generated a 13.6% total return in 2021, outpacing broader APAC gains of 1.7%, as estimates based on the first 11 months of the year...

Singapore Exchange Ltd (SGX)

CICT Placement - Surprise About Turn on Acquisition Funding

CapitaLand Integrated Commercial Trust (CICT) aims to raise around US$150m to partly fund the recently announced acquisition of two Australian assets.

Sumeet Singh

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