APAC IPOs & Placements

Zhen Zhou, Toh

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 Ascendas REIT / Equity Capital Markets

<a href="https://www.smartkarma.com/entities/ascendas-real-estate-investment-trust" target="_blank" data-smartkarma-citation="entities:39:1" rel="noopener">Ascendas Real Estate Investment Trust (AREIT SP)</a> is raising up to US$916m (S$1,234m) to acquire various properties.Overall, the deal scored well on our framework owing to the good track record and momentum but it was dragged down by its large deal size.Our previous coverage:<ul>
<li><a href="https://www.smartkarma.com/insights/areit-placement-expected-to-be-dpu-accretive-but-the-acquisition-might-take-a-while" target="_blank" rel="noopener">AREIT Placement - Expected to Be DPU Accretive but the Acquisition Might Take a While</a></li>
<li><a href="https://www.smartkarma.com/insights/areit-paying-for-acquisition-with-only-equity-doesn-t-add-up-dpu-to-fall-by-3-4" target="_blank" rel="noopener">AREIT - Paying for Acquisition with Only Equity Doesn’t Add Up, DPU to Fall by 3-4%</a></li>
</ul>

Ascendas Real Estate Investment Trust (AREIT SP) is raising up to US$916m (S$1,234m) to acquire various properties.Overall, the deal scored well on our framework owing to the good track record and momentum but it was dragged down by its large deal size.Our previous coverage:
AREIT Placement - Expected to Be DPU Accretive but the Acquisition Might Take a While
AREIT - Paying for Acquisition with Only Equity Doesn’t Add Up, DPU to Fall by 3-4%


Ascendas REIT Placement - Multiple Acquisitions to Be Made, Starting From US Office Properties

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

Two Key Industries Underpinning Singapore’s Strongest YTD Performers

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<li>
Bucking the regional trend, China’s economy is expected to grow by 1.9% in 2020 on the back of a faster than expected recovery in 2Q20, placing the IMF’s GDP growth forecast for 2021 to 8.2% assuming a smooth transition from public sector support to private sector demand. 
	 </li>
	<li>
Of the 10 largest constituents of the FTSE ST China Index, three – comprising two REITs and a real estate developer – are in the real estate segment. They are CapitaLand Retail China Trust (CRCT), Sasseur REIT and Yanlord Land Group. 
	 </li>
	<li>Business activities for CRCT, Sasseur REIT and Yanlord Land are also gradually resuming in tandem. As a result, the two REITs and Developer are more optimistic about financial performances in the near term, pointing to expectations of stronger retail sales &amp; housing demand in coming quarters.</li>
</ul>
 

China’s GDP growth has bucked the regional trend in 2020 and is expected to resume its more normalised path of 8% growth in 2021. As the IMF highlighted this month, after hitting a trough in February, China’s growth received a boost from infrastructure, real estate investment, and a surge in exports, mainly of medical and protective equipment, as well as work-from-home-related electronics. The regional economic outlook (click <a href="https://www.imf.org/en/Publications/REO/APAC/Issues/2020/10/21/regional-economic-outlook-apd">here</a>) added that this has been followed by a gradual recovery in private non-housing investment and consumption. In the 2020 year to 29 October, China’s Small-cap Stock Indices have also kept pace its Large-cap Indices, which compares to a significant under performance over the past three years

The FTSE ST China Index is based on the underlying constituents of the FTSE ST All-Share Index, which have the majority of their sales revenue derived from or operating assets located in Mainland China. The FTSE ST China Index,  aims to capture the performance of the largest Chinese-listed companies on the SGX Mainboard by full market capitalisation.

Companies eligible for inclusion in the FTSE ST China Index must feature in the FTSE ST All-Share Index, and at each review derive at least 50% of their sales revenue from Mainland China, or have at least 50% of their operating assets or revenue located in Mainland China. Of the 10 largest constituents of the FTSE ST China Index, three – comprising two REITs and a real estate developer – are in the real estate segment. They are CapitaLand Retail China Trust (CRCT), Sasseur REIT and Yanlord Land Group.

For the factsheet on the FTSE ST China Index, click <a href="https://research.ftserussell.com/Analytics/FactSheets/Home/DownloadSingleIssue?openfile=open&amp;issueName=FSTCT&amp;isManual=False&amp;_ga=2.196891500.1772479919.1603072003-1604055795.1602829568&amp;">here</a>.

 

Highlight from CapitaLand Retail China Trust’s recent announcements

Strategy

<ul>
<li>On 30 September 2020, CRCT unveiled plans to <a href="https://links.sgx.com/1.0.0/corporate-announcements/7RR2ENVK7IY2ZI3I/a8fb6f403ef67626016c8e323d2f1584a7ff655c422a182d6a7c868c884ac2c7">expand its investment strategy</a> beyond the retail sector to include assets that are used for office and industrial purposes, focusing on long-term investment in real estate and real estate-related assets in China, Hong Kong and Macau</li>
	<li>This includes assets used primarily for retail, office and industrial purposes, such as business parks, logistics facilities, data centres and integrated developments</li>
	<li>With the expanded investment strategy, CRCT will be better positioned for growth as it will be the dedicated Singapore-listed REIT for CapitaLand Group’s non-lodging China business, with acquisition pipeline access to CapitaLand China’s assets</li>
	<li>In addition, CRCT would gain exposure to a more extensive pool of tenants across the sectors to reduce tenant concentration risk</li>
	<li>It allows CRCT to seize new opportunities in the growing China real estate market and enhance the manager’s ability to provide long-term and sustainable returns to unitholders</li>
	<li>A diversified portfolio of assets in this regard will make the portfolio more resilient and less susceptible to any adverse changes caused by unforeseeable external events and factors</li>
</ul>
Operations

<ul>
<li>With the easing of restrictions, all CRCT malls and trade categories are operational</li>
	<li>As retailers realign their business strategies and expansion plans, leasing demand is expected to be soft near term</li>
	<li>Sees continued recovery momentum in traffic and sales</li>
	<li>To focus on refreshed mall offerings and proactive tenant remixing to capture new consumer preferences</li>
	<li>Create community-based stickiness by organising interactive and exciting thematic activities</li>
	<li>Accelerated digitalisation journey in response to COVID-19</li>
</ul>
<ul>
<li>Over 1,200 retailers have been onboarded onto China’s CapitaStar platform YTD</li>
	<li>Leverage on Capitastar’s sizeable member base of more than 10 million people, to run targeted promotions such as live streaming to engage shoppers and stimulate more spending</li>
</ul>
 

Highlight from Sasseur REIT’s recent announcements

<ul>
<li>There has been concerted effort to promote domestic internal consumption by the authorities in China in a bid to balance volatile external environment, which will benefit outlet sales</li>
	<li>As the situation in China continues to improve, the REIT manager believes the remaining quarters of 2020 will deliver stronger performances and sales will return to pre-pandemic levels</li>
	<li>Growing middle-class population in China creates a large potential customer base for the outlet mall market in China</li>
	<li>China’s outlet industry expected to become the world’s largest outlet market in terms of sales revenue by 2030</li>
	<li>Strong growth potential
	<ul>
<li>Two right of first refusal properties (ROFR) and nine pipeline properties
		<ul>
<li>Assuming Sasseur REIT acquires the full interest in the ROFR properties and pipeline properties, it will almost quadraple the total gross floor area of the initial portfolio</li>
		</ul>
</li>
		<li>Strategically located portfolio in fast-growing cities</li>
		<li>Leading privately-owned outlet mall operator in the Chinese outlet mall industry</li>
		<li>First-mover advantage in the Tier-2 Chinese cities with an increasing addressable market size</li>
		<li>Diversified mix of tenants across various trade sectors</li>
	</ul>
</li>
</ul>
<ul>
<li>Market Leadership
	<ul>
<li>Unique Art-Commerce Business Model : Full alignment of interests of tenants, REIT unitholders, the REIT and entrusted managers, with the potential for sharing upsides</li>
		<li>Proactive Asset Management Strategy : Focus on asset enhancement, organic growth and yield accretive acquisitions</li>
		<li>Resilient Retail Segment : High growth sector offering attractive value-for-money branded products that cater to the rising aspirations and demand of the expanding Chinese middle class</li>
		<li>Strong Partnerships: Longstanding and strong business relationships with leading premium international and local retail brands</li>
	</ul>
</li>
</ul>
 

Highlight from Yanlord Land Group’s recent announcements

<ul>
<li>All of Yanlord’s construction sites in China had resumed works by April 2020, and around 70% of its construction sites are expected to catch up on their original construction schedule, with the balance 30% experiencing delays of one to two months from the original schedule</li>
	<li>In 1H 2020, China’s real estate sector recovered in a stable manner, with total investment in residential development rising 2.6% to RMB4.63 trillion, based on data compiled by the National Bureau of Statistics on 16 July 2020
	<ul>
<li>Buoyed by resilient demand for residential properties, primary commodity housing prices in the top 70 cities rose approximately 4.9% YoY in June 2020</li>
	</ul>
</li>
	<li>As at 30 June 2020, the Group together with its joint ventures and associates recorded an accumulated contracted pre-sale of RMB75.779 billion, representing a total GFA of approximately 2.4 million sqm, which are pending recognition in 2H 2020 and beyond</li>
	<li>In line with the stable recovery of China’s real estate industry, the Group together with its joint ventures and associates will continue to launch new projects for pre-sales in accordance with its development schedule; this would include launching new projects and new batches of existing projects in 2H 2020</li>
	<li>To better mitigate against potential volatility, the Group will continue to maintain its healthy cash position and prudent financial policies to support sustainable growth and development</li>
	<li>Barring any significant deterioration in the global economy and other unforeseen circumstances like policy fine-tuning in specific cities, the Board is confident of the Group’s performance relative to the industry trend for the next reporting period and the following 12 months, based on number of pre-sale units to-date, expected delivery schedules and on-schedule construction works in progress</li>
	<li>In view of the positive rebound on the sector and healthy demand from home upgraders in China, Yanlord, with its high-quality landbank and strong brand recognition, believes it is well poised to tap the continued demand growth for quality residential developments in the country</li>
</ul>
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Bucking the regional trend, China’s economy is expected to grow by 1.9% in 2020 on the back of a faster than expected recovery in 2Q20, placing the IMF’s GDP growth forecast for 2021 to 8.2% assuming a smooth transition from public sector support to private sector demand. 
	 
	
Of the 10 largest constituents of the FTSE ST China Index, three – comprising two REITs and a real estate developer – are in the real estate segment. They are CapitaLand Retail China Trust (CRCT), Sasseur REIT and Yanlord Land Group. 
	 
	Business activities for CRCT, Sasseur REIT and Yanlord Land are also gradually resuming in tandem. As a result, the two REITs and Developer are more optimistic about financial performances in the near term, pointing to expectations of stronger retail sales &amp; housing demand in coming quarters.

 

China’s GDP growth has bucked the regional trend in 2020 and is expected to resume its more normalised path of 8% growth in 2021. As the IMF highlighted this month, after hitting a trough in February, China’s growth received a boost from infrastructure, real estate investment, and a surge in exports, mainly of medical and protective equipment, as well as work-from-home-related electronics. The regional economic outlook (click here) added that this has been followed by a gradual recovery in private non-housing investment and consumption. In the 2020 year to 29 October, China’s Small-cap Stock Indices have also kept pace its Large-cap Indices, which compares to a significant under performance over the past three years

The FTSE ST China Index is based on the underlying constituents of the FTSE ST All-Share Index, which have the majority of their sales revenue derived from or operating assets located in Mainland China. The FTSE ST China Index,  aims to capture the performance of the largest Chinese-listed companies on the SGX Mainboard by full market capitalisation.

Companies eligible for inclusion in the FTSE ST China Index must feature in the FTSE ST All-Share Index, and at each review derive at least 50% of their sales revenue from Mainland China, or have at least 50% of their operating assets or revenue located in Mainland China. Of the 10 largest constituents of the FTSE ST China Index, three – comprising two REITs and a real estate developer – are in the real estate segment. They are CapitaLand Retail China Trust (CRCT), Sasseur REIT and Yanlord Land Group.

For the factsheet on the FTSE ST China Index, click here.

 

Highlight from CapitaLand Retail China Trust’s recent announcements

Strategy


On 30 September 2020, CRCT unveiled plans to expand its investment strategy beyond the retail sector to include assets that are used for office and industrial purposes, focusing on long-term investment in real estate and real estate-related assets in China, Hong Kong and Macau
	This includes assets used primarily for retail, office and industrial purposes, such as business parks, logistics facilities, data centres and integrated developments
	With the expanded investment strategy, CRCT will be better positioned for growth as it will be the dedicated Singapore-listed REIT for CapitaLand Group’s non-lodging China business, with acquisition pipeline access to CapitaLand China’s assets
	In addition, CRCT would gain exposure to a more extensive pool of tenants across the sectors to reduce tenant concentration risk
	It allows CRCT to seize new opportunities in the growing China real estate market and enhance the manager’s ability to provide long-term and sustainable returns to unitholders
	A diversified portfolio of assets in this regard will make the portfolio more resilient and less susceptible to any adverse changes caused by unforeseeable external events and factors

Operations


With the easing of restrictions, all CRCT malls and trade categories are operational
	As retailers realign their business strategies and expansion plans, leasing demand is expected to be soft near term
	Sees continued recovery momentum in traffic and sales
	To focus on refreshed mall offerings and proactive tenant remixing to capture new consumer preferences
	Create community-based stickiness by organising interactive and exciting thematic activities
	Accelerated digitalisation journey in response to COVID-19


Over 1,200 retailers have been onboarded onto China’s CapitaStar platform YTD
	Leverage on Capitastar’s sizeable member base of more than 10 million people, to run targeted promotions such as live streaming to engage shoppers and stimulate more spending

 

Highlight from Sasseur REIT’s recent announcements


There has been concerted effort to promote domestic internal consumption by the authorities in China in a bid to balance volatile external environment, which will benefit outlet sales
	As the situation in China continues to improve, the REIT manager believes the remaining quarters of 2020 will deliver stronger performances and sales will return to pre-pandemic levels
	Growing middle-class population in China creates a large potential customer base for the outlet mall market in China
	China’s outlet industry expected to become the world’s largest outlet market in terms of sales revenue by 2030
	Strong growth potential
	
Two right of first refusal properties (ROFR) and nine pipeline properties
		
Assuming Sasseur REIT acquires the full interest in the ROFR properties and pipeline properties, it will almost quadraple the total gross floor area of the initial portfolio
		

		Strategically located portfolio in fast-growing cities
		Leading privately-owned outlet mall operator in the Chinese outlet mall industry
		First-mover advantage in the Tier-2 Chinese cities with an increasing addressable market size
		Diversified mix of tenants across various trade sectors
	



Market Leadership
	
Unique Art-Commerce Business Model : Full alignment of interests of tenants, REIT unitholders, the REIT and entrusted managers, with the potential for sharing upsides
		Proactive Asset Management Strategy : Focus on asset enhancement, organic growth and yield accretive acquisitions
		Resilient Retail Segment : High growth sector offering attractive value-for-money branded products that cater to the rising aspirations and demand of the expanding Chinese middle class
		Strong Partnerships: Longstanding and strong business relationships with leading premium international and local retail brands
	


 

Highlight from Yanlord Land Group’s recent announcements


All of Yanlord’s construction sites in China had resumed works by April 2020, and around 70% of its construction sites are expected to catch up on their original construction schedule, with the balance 30% experiencing delays of one to two months from the original schedule
	In 1H 2020, China’s real estate sector recovered in a stable manner, with total investment in residential development rising 2.6% to RMB4.63 trillion, based on data compiled by the National Bureau of Statistics on 16 July 2020
	
Buoyed by resilient demand for residential properties, primary commodity housing prices in the top 70 cities rose approximately 4.9% YoY in June 2020
	

	As at 30 June 2020, the Group together with its joint ventures and associates recorded an accumulated contracted pre-sale of RMB75.779 billion, representing a total GFA of approximately 2.4 million sqm, which are pending recognition in 2H 2020 and beyond
	In line with the stable recovery of China’s real estate industry, the Group together with its joint ventures and associates will continue to launch new projects for pre-sales in accordance with its development schedule; this would include launching new projects and new batches of existing projects in 2H 2020
	To better mitigate against potential volatility, the Group will continue to maintain its healthy cash position and prudent financial policies to support sustainable growth and development
	Barring any significant deterioration in the global economy and other unforeseen circumstances like policy fine-tuning in specific cities, the Board is confident of the Group’s performance relative to the industry trend for the next reporting period and the following 12 months, based on number of pre-sale units to-date, expected delivery schedules and on-schedule construction works in progress
	In view of the positive rebound on the sector and healthy demand from home upgraders in China, Yanlord, with its high-quality landbank and strong brand recognition, believes it is well poised to tap the continued demand growth for quality residential developments in the country




Optimism Recently Returned to China Real Estate Players

Yoma Strategic Holdings / Equity Bottom-Up

Singapore Banks Attract Net Insti Inflows in Early 4Q20 

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Prudence is very much a watchword for chartered accountant by training Sanjeev Dasgupta.

The CEO of the trustee-manager of SGX-listed Ascendas India Trust, whose early career spans corporate finance, investment banking, as well as private equity real estate, is big on risk management.

“I learned many lessons from the Global Financial Crisis that hit India’s real estate sector between 2009 and 2012,” he recalled. “For one, managing risk has to be a critical part of a sustainable and responsible growth strategy for any organisation.”

“During boom times, there’s a tendency to be over-aggressive on investing, with less focus on risk mitigation, which means there’s quite a bit of pain once a crisis hits.”

The second lesson came from an ex-colleague’s pithy remark: Nobody makes money when they invest – only when they divest. “During good times, everyone is focused on investing – they, at times, miss the crux of the issue, which is being able to make a meaningful profit when you exit the investment,” he added.

Dasgupta, a Bachelor of Commerce graduate from Mumbai University who also holds a Master in Business Administration from London Business School, joined a-iTrust in January 2014. Prior to this role, he held the position of President, Real Estate, at ICICI Venture Funds Management between 2009 and 2013, and was the Managing Director of Future Capital Real Estate from 2005 to 2009.

For Dasgupta, the differences between the worlds of private equity and listed REITs are stark.

“The key differentiator for REITs is their corporate governance framework, which investors draw a lot of comfort from. DPUs also keep REIT management teams disciplined, as they need to prioritise risk management to ensure distributions to unitholders are not compromised,” he noted, referring to distributions per unit, a closely watched industry metric.

“In comparison, private equity structures, arguably, have much more freedom and flexibility, but much greater risk.”

Ascendas India Trust (a-iTrust) was listed on SGX in August 2007 as Asia’s first Indian property trust. Its principal objective is to own income-producing real estate used primarily as business space in India. a-iTrust may also develop and acquire land or uncompleted developments primarily to be used as business space, with the objective of holding the properties upon completion.

a-iTrust’s portfolio – which has a healthy committed occupancy rate of 98% – comprises seven world-class IT business parks and one logistics park in India. Assets under management (AUM) stood at S$2.1 billion as at 30 June 2020.

a-iTrust, structured as a business trust, offers stable income distributions similar to a real estate investment trust. It is managed by Ascendas Property Fund Trustee Pte Ltd, a wholly owned subsidiary of SGX-listed CapitaLand Ltd.

CapitaLand became the Sponsor of the trust in June 2019 after its acquisition of Ascendas Pte Ltd and Singbridge Pte Ltd. CapitaLand is one of Asia’s largest diversified real estate groups, with AUM of more than S$130 billion. The Group has a significant global footprint in the real estate investment management business, managing seven listed REITs and business trusts as well as over 20 private funds.

DPU-Accretive

For a-iTrust, one primary growth driver has been its ability to execute value-add growth strategies. One example is its use of forward purchase deals to acquire assets in India at lower prices, instead of buying overpriced income-producing assets.

“The Ascendas Group has a 25-year operating history on the ground in India, with strong leasing, project execution and property management expertise. This gives us the confidence to deal with potential risks if the environment becomes challenging,” Dasgupta added.

More acquisitions are also on the cards for a-iTrust. “The assets must, first and foremost, be DPU-accretive,” he noted. “We’ve set a certain hurdle rate for our investments in India, and they have to be at or above that rate.”

The geographic focus remains on the country’s six metro cities, which are relatively large in size and have a lot of untapped potential. Staying within the IT corridors in those six cities is also a must, he added.

The logistics sector remains a key focus area for a-iTrust, which acquired its first logistics asset two years ago. “India doesn’t have a large base of Grade A warehouse assets, so there’s a need to create that pipeline for ourselves,” Dasgupta pointed out. “At the Sponsor level, we have created a platform with a local partner, which gives us the requisite expertise to grow faster in this asset class.”

“Following COVID-19, logistics has also become the one of the most coveted asset classes among investors globally, due to the acceleration of e-commerce growth.”

Another sector that a-iTrust is evaluating is data centres. “We’re looking at how we can participate in the growth of this asset class, which will, in part, be driven by the government’s data localisation regulations that require financial services and healthcare data to be kept onshore,” Dasgupta said.

According to the Ericsson Mobility Report 2020, Indians used about 12GB of data per month on average in 2019, the highest consumption globally, and this figure is expected to double to over the next five years. “So this is one sector that merits close attention, and we’re optimistic about its outlook,” he added.

Currently, IT business parks comprise 93% of a-iTrust’s portfolio, with logistics accounting for the remaining 7%. “IT business parks are still growing, and the IT services sector is expanding at a reasonable pace, even during COVID, due to the acceleration of digital transformation,” Dasgupta said.

“Over time, we expect logistics and data centres – which are at a nascent growth stage – to account for a larger proportion of the overall portfolio, and India will continue to be an exciting market on all three fronts.”

Mitigating Risks

Notwithstanding the robust outlook, a-iTrust continues to grapple with foreign currency risks, although these are mitigated by its hedging strategy, said Dasgupta.

“The fact that the rupee is a long-term depreciating currency – relative to the US dollar and Singapore dollar – is a big challenge.”

“We try to achieve a growth that is meaningfully higher than the annual currency depreciation rate of 2.5%-3.0%,” he added. “Over the last six years, we’ve been able to deliver 9%-10% dividend growth in Sing dollar terms to investors, which translates to 12%-13% rupee growth. This has helped us to mitigate the FX risks.”

a-iTrust’s financial position remains robust – it has a low gearing ratio of 29%, with cash and undrawn committed facilities totalling S$198 million. Of its total borrowings, 82% are effectively on a fixed-interest rate basis and 65% are hedged into rupees.

Meanwhile, the next biggest – and most obvious – challenge for the trust remains COVID-19, with India’s infection rate still climbing.

Following the economic consequences of the outbreak, the country’s gross domestic product is forecast to contract 5.9% in 2020 and recover to 3.9% next year, according to a UN Conference on Trade and Development (UNCTAD) report published in last month.

“We continue to monitor our physical occupancy levels closely,” Dasgupta said. “We also see this as an opportunity to differentiate our properties by bringing in know-how and infrastructure from Singapore, like thermal scanners and air purification technology, to keep our park population safe. The fact that we’re doing more than other landlords is very much appreciated by our tenants.”

Nonetheless, Dasgupta remains optimistic about a-iTrust’s portfolio occupancy rates. “The cost of real estate for IT parks in India is not high, whereas companies have to reimburse staff for bandwidth and utility costs for work-from-home protocols, so actually, the cost-benefit analysis in terms of rental savings doesn’t really work for India, unlike in other developed markets,” he added.

Looking ahead, Dasgupta has made it his personal target to develop a-iTrust into a much larger platform, delivering both profitable as well as sustainable growth.

“Given the size and scale of the Indian market, and despite healthy expansion rates over the last six years, there’s still a lot of room to grow,” he added.

Apart from managing the trust’s operations, Dasgupta, 53, also prioritises family time with his college-going son, and daughter, a recent university graduate. His wife, a social entrepreneur, has been actively involved in supporting Singapore’s COVID-19 containment efforts amongst migrant workers.

Belonging to a family of foodies, he bonds with his wife and children over kitchen activities. This usually involves him playing role of food critic, while they whip up delectable South Indian, Thai and Italian dishes.

“You can be the most successful CEO in any organisation, but the toughest job in the world is still being a parent,” he said with a chuckle. “As parents, we want to provide love and support for our kids, and ensure they grow up with the right values.”

“That’s always a work in progress.”

 

Ascendas India Trust

Ascendas India Trust (a-iTrust) listed on SGX in August 2007 as the first Indian property trust in Asia. Its principal objective is to own income-producing real estate used primarily as business space in India. a-iTrust may also develop and acquire land or  uncompleted developments primarily to be used as business space, with the objective of holding the properties upon completion. As at 30 June 2020, a-iTrust’s assets under management stand at S$2.1billion.

a-iTrust’s portfolio comprises seven world-class IT business parks and one logistics park in India – International Tech Park Bangalore, International Tech Park Chennai and CyberValein Chennai, International Tech Park Hyderabad, CyberPearl, and aVancein Hyderabad, aVancein Pune and Arshiya warehouses near Mumbai.

a-iTrust is managed by Ascendas Property Fund Trustee Pte Ltd, a wholly  owned  subsidiary of SGX-listed CapitaLand Ltd, one of Asia’s largest diversified real estate groups, which owns and manages a global portfolio worth S$131.9 billion as at 31 December 2019.

The company website is: <a href="http://www.a-itrust.com">www.a-itrust.com</a>. 
Click <a href="https://www.sgx.com/securities/equities/CY6U">here </a>for the company's StockFacts page. 
For the six months ended 30 June 2020 financial results, click <a href="https://ir.a-itrust.com/newsroom/1._1H_FY2020_Press_Release_final.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="http://edm.sgx.com/a/hBd-CspB86%24MfB90noBAABR54ZH/link10">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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    a-iTrust-CEO


Prudence is very much a watchword for chartered accountant by training Sanjeev Dasgupta.

The CEO of the trustee-manager of SGX-listed Ascendas India Trust, whose early career spans corporate finance, investment banking, as well as private equity real estate, is big on risk management.

“I learned many lessons from the Global Financial Crisis that hit India’s real estate sector between 2009 and 2012,” he recalled. “For one, managing risk has to be a critical part of a sustainable and responsible growth strategy for any organisation.”

“During boom times, there’s a tendency to be over-aggressive on investing, with less focus on risk mitigation, which means there’s quite a bit of pain once a crisis hits.”

The second lesson came from an ex-colleague’s pithy remark: Nobody makes money when they invest – only when they divest. “During good times, everyone is focused on investing – they, at times, miss the crux of the issue, which is being able to make a meaningful profit when you exit the investment,” he added.

Dasgupta, a Bachelor of Commerce graduate from Mumbai University who also holds a Master in Business Administration from London Business School, joined a-iTrust in January 2014. Prior to this role, he held the position of President, Real Estate, at ICICI Venture Funds Management between 2009 and 2013, and was the Managing Director of Future Capital Real Estate from 2005 to 2009.

For Dasgupta, the differences between the worlds of private equity and listed REITs are stark.

“The key differentiator for REITs is their corporate governance framework, which investors draw a lot of comfort from. DPUs also keep REIT management teams disciplined, as they need to prioritise risk management to ensure distributions to unitholders are not compromised,” he noted, referring to distributions per unit, a closely watched industry metric.

“In comparison, private equity structures, arguably, have much more freedom and flexibility, but much greater risk.”

Ascendas India Trust (a-iTrust) was listed on SGX in August 2007 as Asia’s first Indian property trust. Its principal objective is to own income-producing real estate used primarily as business space in India. a-iTrust may also develop and acquire land or uncompleted developments primarily to be used as business space, with the objective of holding the properties upon completion.

a-iTrust’s portfolio – which has a healthy committed occupancy rate of 98% – comprises seven world-class IT business parks and one logistics park in India. Assets under management (AUM) stood at S$2.1 billion as at 30 June 2020.

a-iTrust, structured as a business trust, offers stable income distributions similar to a real estate investment trust. It is managed by Ascendas Property Fund Trustee Pte Ltd, a wholly owned subsidiary of SGX-listed CapitaLand Ltd.

CapitaLand became the Sponsor of the trust in June 2019 after its acquisition of Ascendas Pte Ltd and Singbridge Pte Ltd. CapitaLand is one of Asia’s largest diversified real estate groups, with AUM of more than S$130 billion. The Group has a significant global footprint in the real estate investment management business, managing seven listed REITs and business trusts as well as over 20 private funds.

DPU-Accretive

For a-iTrust, one primary growth driver has been its ability to execute value-add growth strategies. One example is its use of forward purchase deals to acquire assets in India at lower prices, instead of buying overpriced income-producing assets.

“The Ascendas Group has a 25-year operating history on the ground in India, with strong leasing, project execution and property management expertise. This gives us the confidence to deal with potential risks if the environment becomes challenging,” Dasgupta added.

More acquisitions are also on the cards for a-iTrust. “The assets must, first and foremost, be DPU-accretive,” he noted. “We’ve set a certain hurdle rate for our investments in India, and they have to be at or above that rate.”

The geographic focus remains on the country’s six metro cities, which are relatively large in size and have a lot of untapped potential. Staying within the IT corridors in those six cities is also a must, he added.

The logistics sector remains a key focus area for a-iTrust, which acquired its first logistics asset two years ago. “India doesn’t have a large base of Grade A warehouse assets, so there’s a need to create that pipeline for ourselves,” Dasgupta pointed out. “At the Sponsor level, we have created a platform with a local partner, which gives us the requisite expertise to grow faster in this asset class.”

“Following COVID-19, logistics has also become the one of the most coveted asset classes among investors globally, due to the acceleration of e-commerce growth.”

Another sector that a-iTrust is evaluating is data centres. “We’re looking at how we can participate in the growth of this asset class, which will, in part, be driven by the government’s data localisation regulations that require financial services and healthcare data to be kept onshore,” Dasgupta said.

According to the Ericsson Mobility Report 2020, Indians used about 12GB of data per month on average in 2019, the highest consumption globally, and this figure is expected to double to over the next five years. “So this is one sector that merits close attention, and we’re optimistic about its outlook,” he added.

Currently, IT business parks comprise 93% of a-iTrust’s portfolio, with logistics accounting for the remaining 7%. “IT business parks are still growing, and the IT services sector is expanding at a reasonable pace, even during COVID, due to the acceleration of digital transformation,” Dasgupta said.

“Over time, we expect logistics and data centres – which are at a nascent growth stage – to account for a larger proportion of the overall portfolio, and India will continue to be an exciting market on all three fronts.”

Mitigating Risks

Notwithstanding the robust outlook, a-iTrust continues to grapple with foreign currency risks, although these are mitigated by its hedging strategy, said Dasgupta.

“The fact that the rupee is a long-term depreciating currency – relative to the US dollar and Singapore dollar – is a big challenge.”

“We try to achieve a growth that is meaningfully higher than the annual currency depreciation rate of 2.5%-3.0%,” he added. “Over the last six years, we’ve been able to deliver 9%-10% dividend growth in Sing dollar terms to investors, which translates to 12%-13% rupee growth. This has helped us to mitigate the FX risks.”

a-iTrust’s financial position remains robust – it has a low gearing ratio of 29%, with cash and undrawn committed facilities totalling S$198 million. Of its total borrowings, 82% are effectively on a fixed-interest rate basis and 65% are hedged into rupees.

Meanwhile, the next biggest – and most obvious – challenge for the trust remains COVID-19, with India’s infection rate still climbing.

Following the economic consequences of the outbreak, the country’s gross domestic product is forecast to contract 5.9% in 2020 and recover to 3.9% next year, according to a UN Conference on Trade and Development (UNCTAD) report published in last month.

“We continue to monitor our physical occupancy levels closely,” Dasgupta said. “We also see this as an opportunity to differentiate our properties by bringing in know-how and infrastructure from Singapore, like thermal scanners and air purification technology, to keep our park population safe. The fact that we’re doing more than other landlords is very much appreciated by our tenants.”

Nonetheless, Dasgupta remains optimistic about a-iTrust’s portfolio occupancy rates. “The cost of real estate for IT parks in India is not high, whereas companies have to reimburse staff for bandwidth and utility costs for work-from-home protocols, so actually, the cost-benefit analysis in terms of rental savings doesn’t really work for India, unlike in other developed markets,” he added.

Looking ahead, Dasgupta has made it his personal target to develop a-iTrust into a much larger platform, delivering both profitable as well as sustainable growth.

“Given the size and scale of the Indian market, and despite healthy expansion rates over the last six years, there’s still a lot of room to grow,” he added.

Apart from managing the trust’s operations, Dasgupta, 53, also prioritises family time with his college-going son, and daughter, a recent university graduate. His wife, a social entrepreneur, has been actively involved in supporting Singapore’s COVID-19 containment efforts amongst migrant workers.

Belonging to a family of foodies, he bonds with his wife and children over kitchen activities. This usually involves him playing role of food critic, while they whip up delectable South Indian, Thai and Italian dishes.

“You can be the most successful CEO in any organisation, but the toughest job in the world is still being a parent,” he said with a chuckle. “As parents, we want to provide love and support for our kids, and ensure they grow up with the right values.”

“That’s always a work in progress.”

 

Ascendas India Trust

Ascendas India Trust (a-iTrust) listed on SGX in August 2007 as the first Indian property trust in Asia. Its principal objective is to own income-producing real estate used primarily as business space in India. a-iTrust may also develop and acquire land or  uncompleted developments primarily to be used as business space, with the objective of holding the properties upon completion. As at 30 June 2020, a-iTrust’s assets under management stand at S$2.1billion.

a-iTrust’s portfolio comprises seven world-class IT business parks and one logistics park in India – International Tech Park Bangalore, International Tech Park Chennai and CyberValein Chennai, International Tech Park Hyderabad, CyberPearl, and aVancein Hyderabad, aVancein Pune and Arshiya warehouses near Mumbai.

a-iTrust is managed by Ascendas Property Fund Trustee Pte Ltd, a wholly  owned  subsidiary of SGX-listed CapitaLand Ltd, one of Asia’s largest diversified real estate groups, which owns and manages a global portfolio worth S$131.9 billion as at 31 December 2019.

The company website is: www.a-itrust.com.  
Click here for the company's StockFacts page.  
For the six months ended 30 June 2020 financial 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.



Ascendas India Trust Targets Logistics, Data Centre Growth

Singapore

CapitaLand Limited is a real estate company focused on investment holding. The Company and its subsidiaries are principally engaged in investment holding, real estate development, investment in real estate financial products and real estate assets, investment advisory and management services, as well as the management of serviced residences.

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