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)

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Equity Bottom-Up

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<p>In a previous publication of Reit Watch, we noted that the average occupancy rate of the sector (excluding hospitality Reits) decreased from approximately 96 per cent as at March 31, 2020 to 95 per cent as at March 31, 2021.</p>

<p>The pandemic had varying degrees of impact on individual retail and office S-Reits, which were sub-sectors that saw the biggest dips in average occupancy rates of 2.1 and 1.9 percentage points (ppt) respectively.</p>

<p>However, there were three retail and office S-REITs that maintained or saw a boost in occupancy rates (based on reported data and barring methodology differences): IREIT Global (+1.2 ppt), Elite Commercial REIT (unchanged) and Frasers Centrepoint Trust (unchanged).</p>

<p>IReit Global (IReit), the first S-Reit with a Europe-focused mandate to be listed, has a portfolio of five office assets in Germany and four office assets in Spain, valued at approximately 719.6 million euros.<br><br>
IReit was the only office S-Reit that saw a year-on-year increase in occupancy rate in Q12021. The Reit had a portfolio occupancy rate of 95.9 per cent as at March 31, 2021, up from 94.7 per cent at at Mar 31, 2020.<br><br>
It noted that the pandemic had limited impact on its portfolio in Q12021, with no requests for rental rebates or deferrals from tenants and that all tenants continued to pay rents for Q12021.</p>

<p>In April 2021, IReit announced plans to add retail assets to its portfolio.</p>

<p>The acquisition consists of 27 retail properties located across France, based on a sale &amp; leaseback arrangement with Decathlon for approximately 110.5 million euros.</p>

<p>The acquisition will create an enlarged portfolio of 35 properties across Europe, valued at 833.5 million euros, and boosting the portfolio occupancy further to 97.0 per cent.</p>

<p>Elite Commercial Reit (Elite), an office S-Reit with assets in the UK, maintained full occupancy over the year. It attributed its portfolio resilience and stable cashflows to the unique nature of its tenants.</p>

<p>The Reit derives over 99 per cent of gross rental income from the UK government, of which 92.6 per cent is contributed by the Department for Work and Pensions.</p>

<p>Following its maiden acquisition of 58 properties across the UK in March 2021, Elite further extended its exposure to UK sovereign credit and welcomed a new substantial unitholder - the European Institution Partner Reinsurance Company (PartnerRE).</p>

<p>Frasers Centrepoint Trust (FCT), the only S-Reit with 100 per cent retail assets in Singapore, was the sole retail S-Reit which did not report a deline in portfolio occupancy from a year ago.</p>

<p>The Reit's retail portfolio occupancy rate stood at 96.1 per cent as of Mar 31, 2021. <br><br><strong><em>REIT Watch is a weekly column on The Business Times, <a href="https://www.businesstimes.com.sg/companies-markets/defying-gravity-retail-and-office-s-reits-with-higher-occupancy">read</a> the original version.</em></strong></p>
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    Steady Performance


In a previous publication of Reit Watch, we noted that the average occupancy rate of the sector (excluding hospitality Reits) decreased from approximately 96 per cent as at March 31, 2020 to 95 per cent as at March 31, 2021.

The pandemic had varying degrees of impact on individual retail and office S-Reits, which were sub-sectors that saw the biggest dips in average occupancy rates of 2.1 and 1.9 percentage points (ppt) respectively.

However, there were three retail and office S-REITs that maintained or saw a boost in occupancy rates (based on reported data and barring methodology differences): IREIT Global (+1.2 ppt), Elite Commercial REIT (unchanged) and Frasers Centrepoint Trust (unchanged).

IReit Global (IReit), the first S-Reit with a Europe-focused mandate to be listed, has a portfolio of five office assets in Germany and four office assets in Spain, valued at approximately 719.6 million euros.  
IReit was the only office S-Reit that saw a year-on-year increase in occupancy rate in Q12021. The Reit had a portfolio occupancy rate of 95.9 per cent as at March 31, 2021, up from 94.7 per cent at at Mar 31, 2020.  
It noted that the pandemic had limited impact on its portfolio in Q12021, with no requests for rental rebates or deferrals from tenants and that all tenants continued to pay rents for Q12021.

In April 2021, IReit announced plans to add retail assets to its portfolio.

The acquisition consists of 27 retail properties located across France, based on a sale &amp; leaseback arrangement with Decathlon for approximately 110.5 million euros.

The acquisition will create an enlarged portfolio of 35 properties across Europe, valued at 833.5 million euros, and boosting the portfolio occupancy further to 97.0 per cent.

Elite Commercial Reit (Elite), an office S-Reit with assets in the UK, maintained full occupancy over the year. It attributed its portfolio resilience and stable cashflows to the unique nature of its tenants.

The Reit derives over 99 per cent of gross rental income from the UK government, of which 92.6 per cent is contributed by the Department for Work and Pensions.

Following its maiden acquisition of 58 properties across the UK in March 2021, Elite further extended its exposure to UK sovereign credit and welcomed a new substantial unitholder - the European Institution Partner Reinsurance Company (PartnerRE).

Frasers Centrepoint Trust (FCT), the only S-Reit with 100 per cent retail assets in Singapore, was the sole retail S-Reit which did not report a deline in portfolio occupancy from a year ago.

The Reit's retail portfolio occupancy rate stood at 96.1 per cent as of Mar 31, 2021.   REIT Watch is a weekly column on The Business Times, read the original version.



REIT Watch - Defying gravity: Retail and office S-Reits with higher occupancy

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><a href="https://www.smartkarma.com/entities/lendlease-global-commercial-reit" target="_blank" data-smartkarma-citation="entities:28292" rel="noopener">Lendlease Global Commercial REIT (LREIT SP)</a> to increase stake in JEM mall; DPU accretive to be funded by debt and perps</h3><ul><li>LREIT has entered into sale and purchase agreements to increase its stake in Jem. Upon completion of the proposed acquisition, LREIT will hold an effective indirect interest of up to 31.8% interest in JEM. The proposed acquisition includes 1) an acquisition of a 53.0% interest in Lendlease Jem Partners Fund Limited (LLJP) from third party vendors for S$159.1m; and 2) an acquisition of a 5.0% interest in Lendlease Asian Retail Investment Fund 3 Limited (ARIF3) from Lendlease International Pty Limited for S$45.0m. LREIT may also acquire up to 19.8% interest in ARIF3 from other third-party investors for S$178.2m. LLJP/ARIF3 holds a 25%/75% indirect interest, respectively, in JEM mall</li><li>As of 31Mar21, JEM was independently valued at S$2,085m and S$2,061m by JLL and CBRE, respectively. It sits on a 99yr lease land site with total NLA of 892,148sqft and 99.7% occupied. The proposed transaction values JEM at S$2,077m (S$2,238psf on NLA – 4.5% retail cap rate, 3.5% office cap rate) – NPI yield of 3.9%</li><li>Following the acquisition, the enlarged portfolio size of S$1.8bn will have a diversified asset base and an increased exposure to more resilient suburban retail and decentralised office segments. The single largest asset by aggregate value of the enlarged portfolio would also decrease from 67.6% to 55.1% (WALE of 6.5 years by GRI)</li><li>On a 1H21 pro-forma basis, the acquisitions are expected to be DPU accretive to unitholders, with an accretive change of +3.0% (assuming 19.8% of ARIF3 is acquired) and +1.3% if only 5% of ARIF3 is acquired. On the other hand, NAV per unit (31Dec20 pro-forma) will slightly decline to S$0.84 and gearing will improve to 34.1% after the acquisition of 19.8% stake in ARIF3. NAV per unit will remain flat at S$0.85 if only 5% of ARIF3 is acquired and gearing will improve to 32.4%</li><li>LREIT will leverage its strong balance sheet to fund this acquisition through debt or a combination of debt and proceeds from the issuance of perpetual securities. The acquisition, which is conditional upon LREIT unitholders’ approval, is expected to complete by 30Sep21. <section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/211/591/original/image003.png?1623030785" class="editor-image img-responsive" data-smartkarma-image-id="211591"></figure></section></li></ul>

SingaporeLendlease Global Commercial REIT (LREIT SP) to increase stake in JEM mall; DPU accretive to be funded by debt and perpsLREIT has entered into sale and purchase agreements to increase its stake in Jem. Upon completion of the proposed acquisition, LREIT will hold an effective indirect interest of up to 31.8% interest in JEM. The proposed acquisition includes 1) an acquisition of a 53.0% interest in Lendlease Jem Partners Fund Limited (LLJP) from third party vendors for S$159.1m; and 2) an acquisition of a 5.0% interest in Lendlease Asian Retail Investment Fund 3 Limited (ARIF3) from Lendlease International Pty Limited for S$45.0m. LREIT may also acquire up to 19.8% interest in ARIF3 from other third-party investors for S$178.2m. LLJP/ARIF3 holds a 25%/75% indirect interest, respectively, in JEM mallAs of 31Mar21, JEM was independently valued at S$2,085m and S$2,061m by JLL and CBRE, respectively. It sits on a 99yr lease land site with total NLA of 892,148sqft and 99.7% occupied. The proposed transaction values JEM at S$2,077m (S$2,238psf on NLA – 4.5% retail cap rate, 3.5% office cap rate) – NPI yield of 3.9%Following the acquisition, the enlarged portfolio size of S$1.8bn will have a diversified asset base and an increased exposure to more resilient suburban retail and decentralised office segments. The single largest asset by aggregate value of the enlarged portfolio would also decrease from 67.6% to 55.1% (WALE of 6.5 years by GRI)On a 1H21 pro-forma basis, the acquisitions are expected to be DPU accretive to unitholders, with an accretive change of +3.0% (assuming 19.8% of ARIF3 is acquired) and +1.3% if only 5% of ARIF3 is acquired. On the other hand, NAV per unit (31Dec20 pro-forma) will slightly decline to S$0.84 and gearing will improve to 34.1% after the acquisition of 19.8% stake in ARIF3. NAV per unit will remain flat at S$0.85 if only 5% of ARIF3 is acquired and gearing will improve to 32.4%LREIT will leverage its strong balance sheet to fund this acquisition through debt or a combination of debt and proceeds from the issuance of perpetual securities. The acquisition, which is conditional upon LREIT unitholders’ approval, is expected to complete by 30Sep21. 

ASEAN Builder's Scoop (7Jun21) - LREIT Increases Stake in JEM Mall

<p><em><strong>Non- SGX Report: These equity research reports are not written by the SGX</strong>.&nbsp;SGX supports the distribution of the research reports by external contributors. Please refer to the Disclaimer in the attached report.</em></p>
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<h2>Elite Commercial REIT</h2>
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<h3>Seeking potential listing on TISE</h3>
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<li><span style="font-size: var(--content-font-size);">ECR has proposed the potential listing of its wholly-owned subsidiary Elite UK Commercial Holdings Limited on The International Stock Exchange (TISE).</span></li>
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<li>Successful TISE listing lowers income tax rate from 19% to 15% and eliminates capital gains tax in the UK, enhancing ECR’s distributable income, in our view.</li>
<li>Reiterate Add with a higher DDM-based TP of £0.83.</li>
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<p><strong>Proposed listing of Elite UK Commercial Holdings Limited</strong><br>Elite Commercial REIT (ECR) announced on 4 Jun 2021 that the REIT is currently in the process of applying for Elite UK Commercial Holdings Limited (ECHL), a wholly-owned subsidiary of ECR to be listed on The International Stock Exchange (TISE). ECHL will be listed on the TISE as a listed UK REIT and ECR will continue to hold 100% of the shares in ECHL. The proposed listing of ECHL is expected to be completed by 3QFY21F, according to the manager.</p>
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<p><strong>Successful TISE listing will offer ECR favourable tax treatment</strong><br>Key reasons for the proposed listing of ECHL are: 1) ECR will be able to be placed on the same level with other UK REITs in terms of tax treatment; 2) ECR expects its principal tax rate will be reduced from 19% to 15% post listing of ECHL pursuant to the Double Taxation Treaty between UK and Singapore; and 3) any latent capital gains as well as its corresponding deferred tax liabilities arising from its properties will be eliminated. We expect the potential reduction of income tax by 4% pts and elimination of capital gains tax <span style="font-size: var(--content-font-size);">from the listing of ECHL to enhance cash flows and increase ECR’s distributable income. We understand from the management that this is a technical listing and transaction costs would be minimal.</span></p>
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<p><strong>Strong balance sheet and 100% occupancy</strong><br>ECR continues to maintain a healthy debt maturity profile with a bridge loan of £9m due in FY22F and will not face major refinancing risks until FY23F, in our view. The REIT had an aggregate leverage of 42.1% and an interest coverage ratio of 7.4x as at end- 1QFY21. The REIT also has a 100% occupancy rate and received in advance 99.9% of its 2QFY21 rent as at end-1QFY21, according to the manager.</p>
<p><strong>Reiterate Add, with higher DDM-based TP of £0.83</strong><br>We raise our FY21F-23F DPU by 1.2%-4.5% as we bake in our lower income tax rate assumptions of 15% (previously 19%) for 4QFY21F and FY22-23F. As the listing is expected to be completed in 3QFY21F, ECR will be subjected to the prevailing UK corporation tax rate prior to ECHL’s admission into TISE. We retain our Add call with a higher DDM-based TP of £0.83. We like ECR’s stable income profile, with built-in growth through its inflation-linked rental structure and inorganic growth potential. Potential re- rating catalysts could come from rental uplifts for the majority of its portfolio in FY23F,</p>
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Non- SGX Report: These equity research reports are not written by the SGX.&nbsp;SGX supports the distribution of the research reports by external contributors. Please refer to the Disclaimer in the attached report.




Elite Commercial REIT




Seeking potential listing on TISE

ECR has proposed the potential listing of its wholly-owned subsidiary Elite UK Commercial Holdings Limited on The International Stock Exchange (TISE).










Successful TISE listing lowers income tax rate from 19% to 15% and eliminates capital gains tax in the UK, enhancing ECR’s distributable income, in our view.
Reiterate Add with a higher DDM-based TP of £0.83.


Proposed listing of Elite UK Commercial Holdings Limited Elite Commercial REIT (ECR) announced on 4 Jun 2021 that the REIT is currently in the process of applying for Elite UK Commercial Holdings Limited (ECHL), a wholly-owned subsidiary of ECR to be listed on The International Stock Exchange (TISE). ECHL will be listed on the TISE as a listed UK REIT and ECR will continue to hold 100% of the shares in ECHL. The proposed listing of ECHL is expected to be completed by 3QFY21F, according to the manager.

Successful TISE listing will offer ECR favourable tax treatment Key reasons for the proposed listing of ECHL are: 1) ECR will be able to be placed on the same level with other UK REITs in terms of tax treatment; 2) ECR expects its principal tax rate will be reduced from 19% to 15% post listing of ECHL pursuant to the Double Taxation Treaty between UK and Singapore; and 3) any latent capital gains as well as its corresponding deferred tax liabilities arising from its properties will be eliminated. We expect the potential reduction of income tax by 4% pts and elimination of capital gains tax from the listing of ECHL to enhance cash flows and increase ECR’s distributable income. We understand from the management that this is a technical listing and transaction costs would be minimal.




Strong balance sheet and 100% occupancy ECR continues to maintain a healthy debt maturity profile with a bridge loan of £9m due in FY22F and will not face major refinancing risks until FY23F, in our view. The REIT had an aggregate leverage of 42.1% and an interest coverage ratio of 7.4x as at end- 1QFY21. The REIT also has a 100% occupancy rate and received in advance 99.9% of its 2QFY21 rent as at end-1QFY21, according to the manager.
Reiterate Add, with higher DDM-based TP of £0.83 We raise our FY21F-23F DPU by 1.2%-4.5% as we bake in our lower income tax rate assumptions of 15% (previously 19%) for 4QFY21F and FY22-23F. As the listing is expected to be completed in 3QFY21F, ECR will be subjected to the prevailing UK corporation tax rate prior to ECHL’s admission into TISE. We retain our Add call with a higher DDM-based TP of £0.83. We like ECR’s stable income profile, with built-in growth through its inflation-linked rental structure and inorganic growth potential. Potential re- rating catalysts could come from rental uplifts for the majority of its portfolio in FY23F,







(Non-SGX Report) Elite Commercial REIT: Seeking Potential Listing on TISE

<p><em><strong>Non- SGX Report: These equity research reports are not written by the SGX</strong>.&nbsp;SGX supports the distribution of the research reports by external contributors. Please refer to the Disclaimer in the attached report.</em></p>
<h2>Elite Commercial REIT</h2>
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<h3>Portfolio income stability enhanced</h3>
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<li>1QFY21 revenue and DPU in line with our forecasts. Properties from its maiden acquisition have begun contributing to portfolio cash flow.</li>
<li>We expect the 58 new properties to generate additional source of recurring cash flows to the portfolio from FY21F, boosting ECR’s stable income profile.</li>
<li>Reiterate Add, with unchanged DDM-based TP of £0.79.</li>
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<p><strong>1QFY21 results in line with our expectations</strong><br>Elite Commercial REIT (ECR) reported 1QFY21 revenue of £6.6m (+87.6% yoy) which represented 17% of our FY21F estimate and was 15.1% higher than its Initial Public Offering (IPO) forecast, helped by initial contributions of c.£0.9m from its maiden acquisition portfolio. Stripping out the acquisition portfolio, revenue would be £5.7m in 1QFY21, in line with our expectations, forming 25% of full-year estimates. DPU came in at 1.22 pence (+64.9% yoy) [includes advance distribution of 0.9 pence declared on 26 Feb 21], forming 25% of our full-year estimate and 1.8% higher than its IPO forecasts</p>
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Non- SGX Report: These equity research reports are not written by the SGX.&nbsp;SGX supports the distribution of the research reports by external contributors. Please refer to the Disclaimer in the attached report.
Elite Commercial REIT

Portfolio income stability enhanced





1QFY21 revenue and DPU in line with our forecasts. Properties from its maiden acquisition have begun contributing to portfolio cash flow.
We expect the 58 new properties to generate additional source of recurring cash flows to the portfolio from FY21F, boosting ECR’s stable income profile.
Reiterate Add, with unchanged DDM-based TP of £0.79.





1QFY21 results in line with our expectations Elite Commercial REIT (ECR) reported 1QFY21 revenue of £6.6m (+87.6% yoy) which represented 17% of our FY21F estimate and was 15.1% higher than its Initial Public Offering (IPO) forecast, helped by initial contributions of c.£0.9m from its maiden acquisition portfolio. Stripping out the acquisition portfolio, revenue would be £5.7m in 1QFY21, in line with our expectations, forming 25% of full-year estimates. DPU came in at 1.22 pence (+64.9% yoy) [includes advance distribution of 0.9 pence declared on 26 Feb 21], forming 25% of our full-year estimate and 1.8% higher than its IPO forecasts










(Non-SGX Report) Elite Commercial REIT: Portfolio Income Stability Enhanced

Keppel Pacific Oak US REIT / Equity Bottom-Up

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<p>ELEVEN smaller cap Reits in the iEdge S-Reit Index with market capitalisation under S$1 billion have all generated positive returns in Q1 2021. The 11 Reits posted 14.0 per cent total returns in the year-to-date (YTD) through to April 8, outperforming the index's 2.4 per cent total returns.</p>

<p>The top five best performing smaller cap Reits of the index in the YTD through to April 8 are: ARA Logos Logistics Trust (25.6 per cent), Sabana Shari'ah Compliant Reit (23.9 per cent), ARA US Hospitality Trust (22.2 per cent), First Reit and Lippo Malls Indonesia Retail Trust (both 16.9 per cent).</p>

<p>These five were also among the six best performing Reits in the overall iEdge S-Reit index, with Starhill Global Reit (market cap of S$1.3 billion) coming in fourth at 16.9 per cent total returns.</p>

<p>In terms of price-to-book ratios, the 11 smaller cap Reits trade at an average 0.86 times, while the index trades closer to 1.05 times.<br><br>
ARA Logos Logistics Trust (ALOG) has a portfolio of 27 logistics warehouses in Singapore and Australia valued at S$1.28 billion. In its recently published annual report, the Reit attributes its growth in 2020 to its new sponsor, Logos, which owns logistics spaces across the Asia-Pacific. ALOG's portfolio remained resilient and delivered a 3.4 per cent and 4.8 per cent growth in FY2020 gross revenue and net property income, respectively. The Reit also inked new leases and achieved positive rental reversion of 4.8 per cent in the financial year and has a gearing ratio of 39.0 per cent.<br><br>
Sabana Reit's portfolio has 18 Singapore properties across high-tech industrial, warehouse and logistics, chemical warehouse and logistics, and general industrial sectors with a total value of S$0.9 billion. In its FY2020 results, the Reit reported 2.29 cents for its H2 2020 distribution per unit (DPU), a 47.7 per cent increase year-on-year, bringing its full year DPU to 2.76 cents. Amid a challenging 2020, the Reit achieved positive rental reversion of 0.9 per cent and maintains a gearing ratio of 33.5 per cent. On March 10, the Reit announced that its NTP+ Mall at New Tech Park has received temporary occupancy permit and is set to open in Q2 2021.</p>

<p>ARA US Hospitality Trust (ARA H-Trust) is a stapled security with a portfolio of 41 upscale select-service hotels across 22 states in the United States operating under the Marriott and Hyatt brands. The trust notes in its latest annual report that despite having recorded a net property loss of US$5.0 million and nil distributable income in FY2020, all 41 hotels have since reopened in July 2020 and the trust has generated positive cash flows from operations for FY2020. ARA H-Trust remains confident in the long-term fundamentals of the US hospitality market. Its properties are oriented towards domestic transient leisure and business travellers and is less reliant on group and international demand.</p>

<p>SPH Reit, first to kick off the current reporting season for S-Reits, announced an improvement across its portfolio of retail malls. Gross revenue increased 4.9 per cent year-on-year and Q2 FY2021 DPU was issued at 1.24 cents, a 3.3 per cent increase quarter-on-quarter. SPH Reit noted that tenant sales at its Singapore malls have shown signs of recovery, following the phased lifting of safe distancing measures.</p>

<p>Frasers Logistics &amp; Commercial Trust (FLCT) has announced that it will join the Straits Times Index (STI) on April 13. FLCT will replace Jardine Strategic on the STI following Jardine Matheson's announcement on March 8 to simplify the parent company structure and acquire Jardine Strategic.<br><br><strong><em>REIT Watch is a weekly column on The Business Times, <a href="https://www.businesstimes.com.sg/companies-markets/s-reits-under-s1b-lead-sector-in-q1-2021">read</a> the original version.</em></strong></p>
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ELEVEN smaller cap Reits in the iEdge S-Reit Index with market capitalisation under S$1 billion have all generated positive returns in Q1 2021. The 11 Reits posted 14.0 per cent total returns in the year-to-date (YTD) through to April 8, outperforming the index's 2.4 per cent total returns.

The top five best performing smaller cap Reits of the index in the YTD through to April 8 are: ARA Logos Logistics Trust (25.6 per cent), Sabana Shari'ah Compliant Reit (23.9 per cent), ARA US Hospitality Trust (22.2 per cent), First Reit and Lippo Malls Indonesia Retail Trust (both 16.9 per cent).

These five were also among the six best performing Reits in the overall iEdge S-Reit index, with Starhill Global Reit (market cap of S$1.3 billion) coming in fourth at 16.9 per cent total returns.

In terms of price-to-book ratios, the 11 smaller cap Reits trade at an average 0.86 times, while the index trades closer to 1.05 times.  
ARA Logos Logistics Trust (ALOG) has a portfolio of 27 logistics warehouses in Singapore and Australia valued at S$1.28 billion. In its recently published annual report, the Reit attributes its growth in 2020 to its new sponsor, Logos, which owns logistics spaces across the Asia-Pacific. ALOG's portfolio remained resilient and delivered a 3.4 per cent and 4.8 per cent growth in FY2020 gross revenue and net property income, respectively. The Reit also inked new leases and achieved positive rental reversion of 4.8 per cent in the financial year and has a gearing ratio of 39.0 per cent.  
Sabana Reit's portfolio has 18 Singapore properties across high-tech industrial, warehouse and logistics, chemical warehouse and logistics, and general industrial sectors with a total value of S$0.9 billion. In its FY2020 results, the Reit reported 2.29 cents for its H2 2020 distribution per unit (DPU), a 47.7 per cent increase year-on-year, bringing its full year DPU to 2.76 cents. Amid a challenging 2020, the Reit achieved positive rental reversion of 0.9 per cent and maintains a gearing ratio of 33.5 per cent. On March 10, the Reit announced that its NTP+ Mall at New Tech Park has received temporary occupancy permit and is set to open in Q2 2021.

ARA US Hospitality Trust (ARA H-Trust) is a stapled security with a portfolio of 41 upscale select-service hotels across 22 states in the United States operating under the Marriott and Hyatt brands. The trust notes in its latest annual report that despite having recorded a net property loss of US$5.0 million and nil distributable income in FY2020, all 41 hotels have since reopened in July 2020 and the trust has generated positive cash flows from operations for FY2020. ARA H-Trust remains confident in the long-term fundamentals of the US hospitality market. Its properties are oriented towards domestic transient leisure and business travellers and is less reliant on group and international demand.

SPH Reit, first to kick off the current reporting season for S-Reits, announced an improvement across its portfolio of retail malls. Gross revenue increased 4.9 per cent year-on-year and Q2 FY2021 DPU was issued at 1.24 cents, a 3.3 per cent increase quarter-on-quarter. SPH Reit noted that tenant sales at its Singapore malls have shown signs of recovery, following the phased lifting of safe distancing measures.

Frasers Logistics &amp; Commercial Trust (FLCT) has announced that it will join the Straits Times Index (STI) on April 13. FLCT will replace Jardine Strategic on the STI following Jardine Matheson's announcement on March 8 to simplify the parent company structure and acquire Jardine Strategic.  REIT Watch is a weekly column on The Business Times, read the original version.



REIT Watch - S-Reits under S$1b lead sector in Q1 2021

Singapore

Elite Commercial REIT (“Elite REIT”) is a Singapore real estate investment trust established with the investment strategy of principally investing, directly or indirectly, in commercial real-estate related assets in the United Kingdom (“UK”). Elite REIT is the only UK REIT listed in Pound sterling on the Singapore Exchange.

Elite REIT’s portfolio (“Portfolio”) comprises predominantly freehold properties strategically located mainly in town centres, and near amenities and transportation nodes. The Portfolio offers a stable government-backed income stream with over 99% of the gross rental income derived from the UK Government, backed by AA-rated sovereign credit strength. The leases are on triple net basis(1) and Elite REIT is one of the largest provider of critical social infrastructure to the Department for Work & Pensions (“DWP”) and other UK Government departments. The DWP is the UK’s largest public service department that is responsible for welfare, pensions and child maintenance, serving over 20 million claimants. The Portfolio is part of the crucial social infrastructure through which the DWP provides services to local communities.

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1.	Known as a full repairing and insuring lease, the responsibility for the repair of the external and internal parts as well as the structure of the property is placed with the tenant for occupied assets.

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Elite UK REIT (ELITE SP)

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