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/aims-amp-capital-industrial" target="_blank" data-smartkarma-citation="entities:933" rel="noopener">AIMS APAC REIT (AAREIT SP)</a> 3Q22 DPU +14.6% YoY; Resilient performance further boosted by Woolworths acquisition</li><li><a href="https://www.smartkarma.com/entities/esr-reit" target="_blank" data-smartkarma-citation="entities:10934" rel="noopener">ESR-REIT (EREIT SP)</a> 2H21 DPU -0.6% YoY; Reversions turning positive with steady occupancies</li><li><a href="https://www.smartkarma.com/entities/mapletree-commercial-trust" target="_blank" data-smartkarma-citation="entities:106" rel="noopener">Mapletree Commercial Trust (MCT SP)</a> 3Q22 Business Updates – Vivocity recovery momentum sustained</li></ul>

AIMS APAC REIT (AAREIT SP) 3Q22 DPU +14.6% YoY; Resilient performance further boosted by Woolworths acquisitionESR-REIT (EREIT SP) 2H21 DPU -0.6% YoY; Reversions turning positive with steady occupanciesMapletree Commercial Trust (MCT SP) 3Q22 Business Updates – Vivocity recovery momentum sustained

ASEAN Builder's Scoop (27Jan22) - AAREIT Resilient Performance

<ul><li><a href="https://www.smartkarma.com/entities/starhill-global-reit" target="_blank" data-smartkarma-citation="entities:10791" rel="noopener">Starhill Global REIT (SGREIT SP)</a> 1H22 DPU +2,3% YoY; Rebounded from the bottom though tourist arrivals remain key driver</li><li><a href="https://www.smartkarma.com/entities/frasers-centrepoint-trust" target="_blank" data-smartkarma-citation="entities:2870" rel="noopener">Frasers Centrepoint Trust (FCT SP)</a> 1Q22 Business Updates –  Resilient performance with tenant sales besting pre-Covid levels albeit due to seasonality</li><li><a href="https://www.smartkarma.com/entities/keppel-reit" target="_blank" data-smartkarma-citation="entities:192" rel="noopener">Keppel REIT (KREIT SP)</a> 2H21 DPU -1.7% YoY; Occupancy fell despite rentals picking up pace</li></ul>

Starhill Global REIT (SGREIT SP) 1H22 DPU +2,3% YoY; Rebounded from the bottom though tourist arrivals remain key driverFrasers Centrepoint Trust (FCT SP) 1Q22 Business Updates –  Resilient performance with tenant sales besting pre-Covid levels albeit due to seasonalityKeppel REIT (KREIT SP) 2H21 DPU -1.7% YoY; Occupancy fell despite rentals picking up pace

ASEAN Builder's Scoop (26Jan22) - SGREIT Rebounded from Bottom

<ul><li><a href="https://www.smartkarma.com/entities/esr-reit" target="_blank" data-smartkarma-citation="entities:10934" rel="noopener">ESR-REIT (EREIT SP)</a> raises offer price for ARA Logos (ALLT SP); EGM and scheme meeting deferred</li><li>Keppel Data Centre fund II reaches US$1.1bn commitments with AIIB as latest investor</li><li>Suburban malls rents fared better than prime retail rents in 2021</li></ul>

ESR-REIT (EREIT SP) raises offer price for ARA Logos (ALLT SP); EGM and scheme meeting deferredKeppel Data Centre fund II reaches US$1.1bn commitments with AIIB as latest investorSuburban malls rents fared better than prime retail rents in 2021

ASEAN Builder's Scoop (24Jan22) - EREIT Closing in on ALLT Merger with Revised Pricing

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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 <img src='https://api2.sgx.com/sites/default/files/2022-01/Capture_8.PNG' alt='Timeline of SREIT proposed and completed M&As since 2018' />
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 <div class='content-caption'>Timeline of SREIT proposed and completed M&As since 2018</div>
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For S-Reits, listing on the exchange is the beginning of a journey. Twenty-four S-Reits had announced asset acquisitions valued at over S$15.3 billion and exceeding S$12.7 billion in total purchase consideration in 2021.

Aside from asset acquisitions, S-Reits have also been active in terms of mergers and acquisition (M&amp;A) opportunities. They have seen at least 5 consolidations since 2018 and could be seeing 2 more this year.

The 5 consolidated S-Reits since 2018 are CapitaLand Integrated Commercial Trust (by CapitaLand Mall Trust and CapitaLand Commercial Trust), Frasers Logistics &amp; Commercial Trust (by Frasers Commercial Trust and Frasers Logistics &amp; Industrial Trust), Ascott Residence Trust (by Ascott Residence Trust and Ascendas Hospitality Trust), OUE Commercial REIT (OUE Commercial REIT and OUE Hospitality Trust), and ESR-REIT (by ESR-REIT and Viva Industrial Trust). 
Most recently announced on Dec 31, 2021 is the proposed merger between Mapletree Commercial Trust (MCT) and Mapletree North Asia Commercial Trust (MNACT) to form Mapletree Pan Asia Commercial Trust (MPACT). 
The proposed merger is expected to propel the combined entity to be the seventh largest REIT listed in Asia with a market capitalisation of approximately S$10.5 billion. 
The combined portfolio will consist of 18 commercial assets diversified across Singapore, China, Hong Kong, Japan and South Korea with assets under management (AUM) of approximately S$17.1 billion (per MCT’s AUM as of 30 September 2021 and MNACT’s AUM as of 31 October 2021). 
The proposed merger is expected to be effected by a trust scheme of arrangement with MCT acquiring all MNACT Units in exchange for new units in MCT or a combination of cash and MCT Units.

Reit managers of MCT and MNACT view the merger as an opportunity to bring together 2 leading commercial Reits with highly complementary qualities and see the combined portfolio in providing higher financial flexibility and debt headroom to accelerate its growth and acquisitions.

The new entity is also expected to benefit from the increased representation in key indices and potentially attract a wider investor base and improved trading liquidity.

Another proposed merger in progress is by ESR-Reit and Ara Logos Logistics Trust (ALOG) to form ESR-LOGOS REIT (E-LOG), with a core focus on new economy real estate. 
The combined entity, E-LOG, will hold a diversified portfolio of 87 properties consisting of logistics/warehouse, high-specifications industrial properties, business parks and general industrial properties with total assets of approximately S$5.4 billion across Singapore and Australia (as of 30 June 2021). 
Similarly, via a trust scheme, the proposed merger will see ESR-Reit acquire all units in ALOG in exchange for a combination of cash and new units in ESR-Reit.

Reit managers of ESR-Reit and ALOG have noted that the proposed merger will enhance E-LOG's growth trajectory backed by its sponsor, ESR Group, by providing access to the sponsor's new economy pipeline properties in Asia-Pacific worth over US$50 billion.  REIT Watch is a weekly column on The Business Times, <a href="https://www.businesstimes.com.sg/real-estate/s-reits-bigger-and-bolder-over-the-years">read </a>the original version.
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    Timeline of SREIT proposed and completed M&As since 2018


For S-Reits, listing on the exchange is the beginning of a journey. Twenty-four S-Reits had announced asset acquisitions valued at over S$15.3 billion and exceeding S$12.7 billion in total purchase consideration in 2021.

Aside from asset acquisitions, S-Reits have also been active in terms of mergers and acquisition (M&amp;A) opportunities. They have seen at least 5 consolidations since 2018 and could be seeing 2 more this year.

The 5 consolidated S-Reits since 2018 are CapitaLand Integrated Commercial Trust (by CapitaLand Mall Trust and CapitaLand Commercial Trust), Frasers Logistics &amp; Commercial Trust (by Frasers Commercial Trust and Frasers Logistics &amp; Industrial Trust), Ascott Residence Trust (by Ascott Residence Trust and Ascendas Hospitality Trust), OUE Commercial REIT (OUE Commercial REIT and OUE Hospitality Trust), and ESR-REIT (by ESR-REIT and Viva Industrial Trust).  
Most recently announced on Dec 31, 2021 is the proposed merger between Mapletree Commercial Trust (MCT) and Mapletree North Asia Commercial Trust (MNACT) to form Mapletree Pan Asia Commercial Trust (MPACT).  
The proposed merger is expected to propel the combined entity to be the seventh largest REIT listed in Asia with a market capitalisation of approximately S$10.5 billion.  
The combined portfolio will consist of 18 commercial assets diversified across Singapore, China, Hong Kong, Japan and South Korea with assets under management (AUM) of approximately S$17.1 billion (per MCT’s AUM as of 30 September 2021 and MNACT’s AUM as of 31 October 2021).  
The proposed merger is expected to be effected by a trust scheme of arrangement with MCT acquiring all MNACT Units in exchange for new units in MCT or a combination of cash and MCT Units.

Reit managers of MCT and MNACT view the merger as an opportunity to bring together 2 leading commercial Reits with highly complementary qualities and see the combined portfolio in providing higher financial flexibility and debt headroom to accelerate its growth and acquisitions.

The new entity is also expected to benefit from the increased representation in key indices and potentially attract a wider investor base and improved trading liquidity.

Another proposed merger in progress is by ESR-Reit and Ara Logos Logistics Trust (ALOG) to form ESR-LOGOS REIT (E-LOG), with a core focus on new economy real estate.  
The combined entity, E-LOG, will hold a diversified portfolio of 87 properties consisting of logistics/warehouse, high-specifications industrial properties, business parks and general industrial properties with total assets of approximately S$5.4 billion across Singapore and Australia (as of 30 June 2021).  
Similarly, via a trust scheme, the proposed merger will see ESR-Reit acquire all units in ALOG in exchange for a combination of cash and new units in ESR-Reit.

Reit managers of ESR-Reit and ALOG have noted that the proposed merger will enhance E-LOG's growth trajectory backed by its sponsor, ESR Group, by providing access to the sponsor's new economy pipeline properties in Asia-Pacific worth over US$50 billion.   REIT Watch is a weekly column on The Business Times, read the original version.



REIT Watch - S-Reits: Bigger and bolder over the years

<ul><li><a href="https://www.smartkarma.com/entities/esr-reit" target="_blank" data-smartkarma-citation="entities:10934" rel="noopener">ESR-REIT (EREIT SP)</a> to divest industrial building at 28 Senoko Drive for S$12mTanglin</li><li>Shopping Centre en bloc sale could benefit <a href="https://www.smartkarma.com/entities/city-developments-ltd" target="_blank" data-smartkarma-citation="entities:57" rel="noopener">City Developments (CIT SP)</a> </li><li>Co-living providers expect higher demand in 2022 as inquiries rose; Robust occupancies may continue</li></ul>

ESR-REIT (EREIT SP) to divest industrial building at 28 Senoko Drive for S$12mTanglinShopping Centre en bloc sale could benefit City Developments (CIT SP) Co-living providers expect higher demand in 2022 as inquiries rose; Robust occupancies may continue

ASEAN Builder's Scoop (11Jan22) - EREIT to Divest 28 Senoko Drive

Singapore

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.

Parkway Life Real Estate Investment Trust (Parkway Life REIT) invests primarily in income producing real estate and real estate related assets in the Asia Pacific region. The trust's real estate is used primarily for healthcare and healthcare-related purposes.

OUE Commercial Real Estate Investment Trust (“OUE C-REIT”) is one of the largest diversified Singapore REITs (“S-REITs”) with total assets of S$6.0 billion as at 31 December 2022. With seven properties across the commercial and hospitality segments in Singapore and Shanghai, the property portfolio comprises more than 2.1 million square feet of prime office and retail space, and 1,643 upper upscale hotel rooms.

OUE C-REIT invests in income-producing real estate used primarily for commercial purposes (including real estate used primarily for office and/or retail purposes) in financial and business hubs, hospitality and/or hospitality-related purposes, as well as real estate-related assets.

Fortune REIT is a real estate investment trust that invests in a portfolio of retail shopping malls located in Hong Kong.

CDL Hospitality Trusts is a stapled group compromising H-REIT and HBT. H-REIT is a real estate investment trust that invest in a portfolio of income-producing properties and HBT is a business trust.

Starhill Global REIT is a real estate investment trust.  The trust invests in retail and office buildings in Singapore and overseas.

Far East Hospitality Trust is a hospitality stapled group comprising Far East H-REIT and Far East H-BT. Far East H-REIT is a Singapore-based real estate investment trust, which invests in hospitality assets and Far East H-BT, a Singapore-based business trust which will be dormant as of the Listing Date.

Cromwell Real Estate Investment Trust is a real estate investment trust with a commercial portfolio of offices and light industrial /  logistics assets across Europe.

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.

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.

MORI HILLS REIT INVESTMENT CORPORATION is a real estate investment trust (REIT). The Company invests in real estate properties such as commercial and office buildings.

Mori Hills REIT Investment Corporation (3234 JP)

Retail Opportunity Investments Corp. is a fully integrated and self-managed real estate investment trust ("REIT").  The Company specializes in the acquisition, ownership and management of necessity-based community, and neighborhood shopping centers in the western and eastern regions of the United States anchored by national and regional supermarkets and drugstores.

Retail Opportunity Investments Corp. (ROIC US)

American Assets Trust Inc. is a full service, vertically integrated and self-administered real estate investment trust, or REIT. The Company owns, operates, acquires and develops retail and office properties in markets primarily in Southern California, Northern California and Hawaii.

Comforia Residential REIT, Inc. is a real estate investment trust (REIT). The company invests in leasing city apartments mainly in Tokyo area.

MORI TRUST Sogo Reit, Inc. is a real estate investment trust (REIT), which invests in income producing properties.  The Company mainly invests in office buildings in metropolitan area and local cities.

Getty Realty Corporation owns and leases properties in the Northeastern and Middle Atlantic states. These properties, consisting of service stations, convenience stores and petroleum marketing terminals are leased to Getty Petroleum Marketing Inc. Getty Realty Holding is also a marketer of heating oil in Pennsylvania and Maryland.

Activia Properties, Inc. is a real estate investment trust (J-REIT). The company mainly invests in commercial and office buildings in the Tokyo metropolitan area.

DiamondRock Hospitality Company is a self-advised real estate investment trust. The Company owns, acquires, and invests in upper scale and upscale hotel properties located in North America.  DiamondRock also invests in premium limited-service and extended-stay hotel properties in urban locations.

RLJ Lodging Trust is a self-advised and self-administered Maryland real estate investment trust. The Trust invests primarily in premium-branded, focused-service and compact full-service hotels. RLJ Lodging owns hotels in multiple states and the District of Columbia.

Empire State Realty Trust Inc. is a real estate investment trust. The trust owns, manages, operates, acquires and repositions office and retail properties in Manhattan and the greater New York metropolitan area.

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.

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ESR-LOGOS REIT (EREIT SP)

ASEAN Builder's Scoop (27Jan22) - AAREIT Resilient Performance

AAREIT resilient performance; EREIT reversions turning positive; MCT VivoCity recovery sustained; KORE reversions slowing; AIT robust portfolio...

SCCM Asia Research

ASEAN Builder's Scoop (26Jan22) - SGREIT Rebounded from Bottom

FCT tenant sales besting pre-covid levels; KREIT occupancy fell despite rents picking up pace; SUN office picking up retail's slack; MINT US...

SCCM Asia Research

ASEAN Builder's Scoop (24Jan22) - EREIT Closing in on ALLT Merger with Revised Pricing

EREIT closing in on ALLT merger with revised pricing; Suburban malls' rents fared better in 2021; Belgravia Ace 72% sold over the wkd; AC transfers...

SCCM Asia Research

REIT Watch - S-Reits: Bigger and bolder over the years

For S-Reits, listing on the exchange is the beginning of a journey. Twenty-four S-Reits had announced asset acquisitions valued...

Singapore Exchange Ltd (SGX)

ASEAN Builder's Scoop (11Jan22) - EREIT to Divest 28 Senoko Drive

EREIT to divest 28 Senoko Drive; Tanglin Shopping Centre en-bloc; Co-living robust occupancies; Retail rents down 7 straight quarters; DMW...

SCCM Asia Research

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