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>SREITs – Reflation is working in SREIT’s favour (BUY FCT DASIN AAREIT AREIT ECWREIT)</h3>
<p>With Singapore moving into Phase 3, economic recovery should regain momentum, albeit uneven across sectors. The accelerated timetable for US interest rate hikes has triggered yield spread compression, but also signaled a stronger and sustainable economic growth, which bodes well for trade-dependent Singapore. We reinitiate the SREIT sector with BUY. Top picks are FCT, DASIN, AAREIT and AREIT. SGREIT offers a good entry point for midterm recovery play; while ECWREIT could see a DPU boost from deferred DI.</p>
<ul>
<li>Economy recovery provides strong tailwind for yield, albeit uneven across sectors. Following a setback from a month-long partial lockdown in Phase 2, Singapore has resume gradual reopening on 14Jun, thus setting economy back on track to recovery. However, we should see some deviation from initial expected timeline and recovery pace across sectors. In particular, tourism-related sectors are set to see further delays in recovery given the slower lifting of global travel curbs and the recent cut in capacity limits at local attractions. On the other hand, domestic-driven expenditures and outward-oriented sectors, such as retail and manufacturing, are expected to benefit from the pick-up in demand</li>
<li>We prefer Retail and Commercial subsectors, which should recover on stronger pace and offer attractive yields within the SREIT sector, while trading at c.1.0x forward P/B. Industrial subsector offers mixed picture, where we are positive on warehouse space, but neutral on other property types. Continued M&amp;A activities within the Industrial subsector should boost future DPU growth in addition to organic growth</li>
<li>We underweight both Hospitality and Healthcare subsectors. Outlook for Hospitality subsector remains cloudy in near term. Nonetheless, we remain upbeat on the longer-term prospect of the subsector in anticipation of international border reopening. On the other hand, the robust valuations of Healthcare subsector and low cash-flow growth realizations could indicate over optimism in investors’ expectations</li>
<li>Our top picks: FCT (Buy; S$2.89) for its faster recovery in near term. DASIN (Buy; S$0.81) for China-focused retail play with its Greater Bay Area (GBA) exposure. We favour AAREIT (Buy; S$1.60) and AREIT (Buy; S$3.55) for their strong balance sheet, which allows them financial flexibility in pursuing new acquisitions, or embarking on development/ redevelopment/ AEI projects. Tactical investment into ECWREIT (Buy; S$0.82) on potential DPU boost from deferred DI.
<section class="figure">
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/216/247/original/image003+%283%29.png?1625105065" class="editor-image img-responsive" data-smartkarma-image-id="216247"></figure>
</section>
</li>
</ul>

Singapore
SREITs – Reflation is working in SREIT’s favour (BUY FCT DASIN AAREIT AREIT ECWREIT)
With Singapore moving into Phase 3, economic recovery should regain momentum, albeit uneven across sectors. The accelerated timetable for US interest rate hikes has triggered yield spread compression, but also signaled a stronger and sustainable economic growth, which bodes well for trade-dependent Singapore. We reinitiate the SREIT sector with BUY. Top picks are FCT, DASIN, AAREIT and AREIT. SGREIT offers a good entry point for midterm recovery play; while ECWREIT could see a DPU boost from deferred DI.

Economy recovery provides strong tailwind for yield, albeit uneven across sectors. Following a setback from a month-long partial lockdown in Phase 2, Singapore has resume gradual reopening on 14Jun, thus setting economy back on track to recovery. However, we should see some deviation from initial expected timeline and recovery pace across sectors. In particular, tourism-related sectors are set to see further delays in recovery given the slower lifting of global travel curbs and the recent cut in capacity limits at local attractions. On the other hand, domestic-driven expenditures and outward-oriented sectors, such as retail and manufacturing, are expected to benefit from the pick-up in demand
We prefer Retail and Commercial subsectors, which should recover on stronger pace and offer attractive yields within the SREIT sector, while trading at c.1.0x forward P/B. Industrial subsector offers mixed picture, where we are positive on warehouse space, but neutral on other property types. Continued M&amp;A activities within the Industrial subsector should boost future DPU growth in addition to organic growth
We underweight both Hospitality and Healthcare subsectors. Outlook for Hospitality subsector remains cloudy in near term. Nonetheless, we remain upbeat on the longer-term prospect of the subsector in anticipation of international border reopening. On the other hand, the robust valuations of Healthcare subsector and low cash-flow growth realizations could indicate over optimism in investors’ expectations
Our top picks: FCT (Buy; S$2.89) for its faster recovery in near term. DASIN (Buy; S$0.81) for China-focused retail play with its Greater Bay Area (GBA) exposure. We favour AAREIT (Buy; S$1.60) and AREIT (Buy; S$3.55) for their strong balance sheet, which allows them financial flexibility in pursuing new acquisitions, or embarking on development/ redevelopment/ AEI projects. Tactical investment into ECWREIT (Buy; S$0.82) on potential DPU boost from deferred DI.






ASEAN Builder's Scoop (1Jul21) - SREITs Reflation Is Working in Its Favour

<h2>Singapore</h2><h3><a href="https://www.smartkarma.com/entities/ireit-global" target="_blank" data-smartkarma-citation="entities:10596" rel="noopener">IREIT Global (IREIT SP)</a> to raise S$126.7m from proposed equity fund raising      </h3><ul><li>IREIT is proposing an equity fund raising comprising an offering of new units to raise gross proceeds of ~S$126.7m. The proposed EFR will be comprised of a non-underwritten placement of 11,372,868 new units to Bond Capital Partners at an issue price of S$0.6155/new unit, which is expected to raise gross proceeds of ~S$7m. In addition, an underwritten pro rata and non-renounceable preferential offering of 201,137,870 new Units on the basis of 214 new units for every 1,000 existing units to be held on 29Jun21 to eligible unitholders at an issue price of S$0.595/new unit to raise gross proceeds of ~S$119.7m. IREIT intends to use part of the net proceeds to partially finance the total acquisition cost of ~S$195.7m (~EUR122.3m) in connection with the proposed acquisition of a portfolio of 27 retail properties located in France</li><li>The aggregate percentage unitholding of City Strategic Equity (CSEPL) and its concert parties is expected to decrease from 50.8% to 50.2% after the Placement. Assuming that CSEPL is allocated in full its application for the Excess Preferential Offering Units, CSEPL would hold 25.8% (comprising 297,207,061 Units) and, assuming that each of CSEPL’s concert parties only takes up their respective provisional allotments, CSEPL and its concert parties would hold 55.3%</li><li>As the unitholding of CSEPL and its concert parties does not fall below 50% after the Placement and CSEPL would not individually hold 30% or more of the Units even if CSEPL is allocated in full its application for the Excess Preferential Offering Units, accordingly, the requirement to make a mandatory general offer pursuant to Rule 14 of the Singapore Code of Take-overs and Mergers will not be triggered. For the avoidance of doubt, Tikehau Capital, CSEPL, AT Investments and IGGPL, among others, will rank last in the allocation of Excess Preferential Offering Units applications.</li></ul>

SingaporeIREIT Global (IREIT SP) to raise S$126.7m from proposed equity fund raising      IREIT is proposing an equity fund raising comprising an offering of new units to raise gross proceeds of ~S$126.7m. The proposed EFR will be comprised of a non-underwritten placement of 11,372,868 new units to Bond Capital Partners at an issue price of S$0.6155/new unit, which is expected to raise gross proceeds of ~S$7m. In addition, an underwritten pro rata and non-renounceable preferential offering of 201,137,870 new Units on the basis of 214 new units for every 1,000 existing units to be held on 29Jun21 to eligible unitholders at an issue price of S$0.595/new unit to raise gross proceeds of ~S$119.7m. IREIT intends to use part of the net proceeds to partially finance the total acquisition cost of ~S$195.7m (~EUR122.3m) in connection with the proposed acquisition of a portfolio of 27 retail properties located in FranceThe aggregate percentage unitholding of City Strategic Equity (CSEPL) and its concert parties is expected to decrease from 50.8% to 50.2% after the Placement. Assuming that CSEPL is allocated in full its application for the Excess Preferential Offering Units, CSEPL would hold 25.8% (comprising 297,207,061 Units) and, assuming that each of CSEPL’s concert parties only takes up their respective provisional allotments, CSEPL and its concert parties would hold 55.3%As the unitholding of CSEPL and its concert parties does not fall below 50% after the Placement and CSEPL would not individually hold 30% or more of the Units even if CSEPL is allocated in full its application for the Excess Preferential Offering Units, accordingly, the requirement to make a mandatory general offer pursuant to Rule 14 of the Singapore Code of Take-overs and Mergers will not be triggered. For the avoidance of doubt, Tikehau Capital, CSEPL, AT Investments and IGGPL, among others, will rank last in the allocation of Excess Preferential Offering Units applications.

ASEAN Builder's Scoop (23Jun21) - IREIT Proposes ~S$127m EFR

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

<div><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></div>
<div></div>
<div>
<div>
<div>
<div>
<div>
<h2>IREIT Global</h2>
</div>
</div>
</div>
</div>
</div>
<div>
<div>
<div>
<div>
<h3>The French Evolution</h3>
<div>
<div>
<div>
<ul>
<li>We initiate on IREIT with an OUTPERFORM and a target price of S$0.69.</li>
<li>Fairly stable European office market – While office property investment has slowed down substantially in Europe and vacancy rates are trending up, rents have held firm, and IREIT has managed to collect on due rents. IREIT should see positive news into the future as inflation rates climb in 2021.</li>
<li>Staying active with French entrée – The proposed acquisition of 27 Decathlon properties will provide IREIT with further reduction of its tenant and geographical concentration risk, while potentially achieving both DPU and yield accretion.</li>
<li>Room for yield premiums to compress. Foreign office REITs on SGX tend to trade at a dividend yield premium to local office REITs. This yield premium has widened since the pandemic begun, and we expect it to narrow as office markets stabilise in the future.</li>
</ul>
<div>
<div>
<div>
<h3>Investment Thesis:</h3>
<p><strong>European office market holding up.</strong> Office leasing activity is currently weak, as vacancies trend up from a global shift towards work-from-home arrangements. IREIT has fared relatively well in the recent pandemic as the company was able to promptly collect on rents, while settling new lease agreements with its key tenant, GMG, a wholly owned unit of Deutsche Telekom.</p>
<p><strong>Inflation trends beneficial for IREIT</strong> – Similar to the US, Europe is now experiencing above average inflation, and the European Central Bank (ECB) has adopted an identical “wait- and-see” approach, maintaining a loose stance on monetary policies. A temporal spike in inflation could be beneficial for IREIT, as they can lock in earlier-than-expected rent increases with their tenants.</p>
<p><strong>The French Evolution</strong>. The proposal to acquire 27 Decathlon properties represents IREIT’s first foray into France, and first foray into retail properties. We see the acquisition to be beneficial as it reduces key tenant, geographical and sector concentration risk, while being potentially DPU and yield accretive.</p>
<p><strong>Dividend yield premiums at a high.</strong> IREIT, together with other foreign office REITs listed in SGX, often trade at a dividend yield premium to local office REITs. The yield premium has steadily risen over the years from around 1% to over 2%, as local investors demand a larger risk premium to hold onto foreign office property. We expect stabilisation in global office markets to reduce this risk premium, and for IREIT to benefit when foreign REITs become attractive again.</p>
</div>
</div>
</div>
</div>
</div>
</div>
</div>
</div>
</div>
</div>

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.






IREIT Global









The French Evolution




We initiate on IREIT with an OUTPERFORM and a target price of S$0.69.
Fairly stable European office market – While office property investment has slowed down substantially in Europe and vacancy rates are trending up, rents have held firm, and IREIT has managed to collect on due rents. IREIT should see positive news into the future as inflation rates climb in 2021.
Staying active with French entrée – The proposed acquisition of 27 Decathlon properties will provide IREIT with further reduction of its tenant and geographical concentration risk, while potentially achieving both DPU and yield accretion.
Room for yield premiums to compress. Foreign office REITs on SGX tend to trade at a dividend yield premium to local office REITs. This yield premium has widened since the pandemic begun, and we expect it to narrow as office markets stabilise in the future.




Investment Thesis:
European office market holding up. Office leasing activity is currently weak, as vacancies trend up from a global shift towards work-from-home arrangements. IREIT has fared relatively well in the recent pandemic as the company was able to promptly collect on rents, while settling new lease agreements with its key tenant, GMG, a wholly owned unit of Deutsche Telekom.
Inflation trends beneficial for IREIT – Similar to the US, Europe is now experiencing above average inflation, and the European Central Bank (ECB) has adopted an identical “wait- and-see” approach, maintaining a loose stance on monetary policies. A temporal spike in inflation could be beneficial for IREIT, as they can lock in earlier-than-expected rent increases with their tenants.
The French Evolution. The proposal to acquire 27 Decathlon properties represents IREIT’s first foray into France, and first foray into retail properties. We see the acquisition to be beneficial as it reduces key tenant, geographical and sector concentration risk, while being potentially DPU and yield accretive.
Dividend yield premiums at a high. IREIT, together with other foreign office REITs listed in SGX, often trade at a dividend yield premium to local office REITs. The yield premium has steadily risen over the years from around 1% to over 2%, as local investors demand a larger risk premium to hold onto foreign office property. We expect stabilisation in global office markets to reduce this risk premium, and for IREIT to benefit when foreign REITs become attractive again.











(Non-SGX Report) IREIT Global: The French Evolution

<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>
<div>
<div>
<div>
<div>
<h2>IREIT Global</h2>
<div>
<div>
<div>
<div>
<h3>Growth spurt</h3>
<div>
<div>
<div>
<div>
<ul>
<li>1Q21 likely in line as portfolio occupancy was stable at 95.9%. No rent rebates or deferrals were provided.</li>
<li>New sale and leaseback of Decathlon portfolio in France to increase scale and diversification. Greater income stability from longer portfolio WALE of 4.5 years.</li>
<li>Maintain ACCUMULATE with lower DDM TP (7.85% discount rate) of S$0.68 from S$0.70. FY21e DPU dips 7% to reflect impending equity fund-raising. Our TP implies 7% yields and total prospective returns of 14.1%.</li>
</ul>
<div>
<div>
<div>
<div>
<p><strong>The Positives</strong></p>
<ul>
<li><strong>1Q21 likely in line.</strong> Portfolio occupancy inched up from 95.8% to 95.9% following expansion of an existing lease at Concor Park. Despite lockdowns in Germany and Spain, Covid-19’s impact on IREIT’s portfolio was limited. There were no requests for rental rebates or deferrals from tenants. All paid their rents in 1Q21.</li>
<li><strong>27 Decathlon properties in France to increase scale,</strong> diversification and WALE. IREIT’s AUM is expected to grow by 15.8% to €833.5m after its acquisition of 27 properties from Decathlon. The acquisition is expected to reduce its reliance on Germany, with the French portfolio expected to contribute 16% to portfolio GRI. The acquisition will also add a new trade sector – sports &amp; leisure – and one of the world’s largest sporting goods retailer to IREIT. GRI contribution by IREIT’s largest tenant, GMG, will drop from 39% to 33%. The 27 properties are 100% leased to Decathlon on triple-net leases with a WALE of 10 years and WALB of 6 years, extending its current WALE from 3.5 years to 4.5 years. We believe IREIT will be also able to benefit from strategic partner Tikehau Capital’s (TKO FP, Not Rated) market presence and expertise in the French real-estate market.</li>
<li><strong>Strategic stakeholders demonstrated support.</strong> IREIT intends to raise funds for the acquisition cost of €122.3mn via a private placement and/or a preferential offering. If the fund-raising includes a preferential offering, Tikehau Capital, CDL (CDL SP, BUY, S$10.68), AT Investments and IREIT - which collectively hold 56% of IREIT - have undertaken to subscribe for their full allotments. CDL will also subscribe to excess units to bring its total subscription to S$59mn. The balance will be funded by a bank loan of €51.4mn. IREIT’s market capitalisation is expected to increase by 20.7% to S$737mn. Should market conditions be unfavourable, IREIT may draw down a bridge loan facility from Tikehau Capital of up to €79.0mn.</li>
</ul>
<p><strong>The Negative</strong></p>
<ul>
<li>P<strong>ortfolio NAV to fall 6.2% after French acquisition</strong>; lower FY21e DPU by 7%. Assuming the rights issue and its Spanish and French properties were acquired on 1 January 2020 and operated through 31 December 2020, the French acquisition would have increased IREIT’s adjusted NPI yield from 5.5% to 5.7%. Adjusted DPU would have risen 1% to 2.84 € cents. This assumes €79.0m equity funding in the form of 212mn new units at S$0.596 a share and €51.4m of new debt. However, assuming the Spanish acquisition was completed on 22 October 2020, pro-forma FY20 DPU would have fallen by 2.2%. Aggregate leverage would have climbed by 1.2% to 36% while NAV would have fallen by 6.2% to €0.44. We lower FY21e DPU by 7% to factor in the impact.</li>
</ul>
</div>
</div>
</div>
</div>
</div>
</div>
</div>
</div>
</div>
</div>
</div>
</div>
</div>
</div>
</div>
</div>

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.




IREIT Global




Growth spurt





1Q21 likely in line as portfolio occupancy was stable at 95.9%. No rent rebates or deferrals were provided.
New sale and leaseback of Decathlon portfolio in France to increase scale and diversification. Greater income stability from longer portfolio WALE of 4.5 years.
Maintain ACCUMULATE with lower DDM TP (7.85% discount rate) of S$0.68 from S$0.70. FY21e DPU dips 7% to reflect impending equity fund-raising. Our TP implies 7% yields and total prospective returns of 14.1%.





The Positives

1Q21 likely in line. Portfolio occupancy inched up from 95.8% to 95.9% following expansion of an existing lease at Concor Park. Despite lockdowns in Germany and Spain, Covid-19’s impact on IREIT’s portfolio was limited. There were no requests for rental rebates or deferrals from tenants. All paid their rents in 1Q21.
27 Decathlon properties in France to increase scale, diversification and WALE. IREIT’s AUM is expected to grow by 15.8% to €833.5m after its acquisition of 27 properties from Decathlon. The acquisition is expected to reduce its reliance on Germany, with the French portfolio expected to contribute 16% to portfolio GRI. The acquisition will also add a new trade sector – sports &amp; leisure – and one of the world’s largest sporting goods retailer to IREIT. GRI contribution by IREIT’s largest tenant, GMG, will drop from 39% to 33%. The 27 properties are 100% leased to Decathlon on triple-net leases with a WALE of 10 years and WALB of 6 years, extending its current WALE from 3.5 years to 4.5 years. We believe IREIT will be also able to benefit from strategic partner Tikehau Capital’s (TKO FP, Not Rated) market presence and expertise in the French real-estate market.
Strategic stakeholders demonstrated support. IREIT intends to raise funds for the acquisition cost of €122.3mn via a private placement and/or a preferential offering. If the fund-raising includes a preferential offering, Tikehau Capital, CDL (CDL SP, BUY, S$10.68), AT Investments and IREIT - which collectively hold 56% of IREIT - have undertaken to subscribe for their full allotments. CDL will also subscribe to excess units to bring its total subscription to S$59mn. The balance will be funded by a bank loan of €51.4mn. IREIT’s market capitalisation is expected to increase by 20.7% to S$737mn. Should market conditions be unfavourable, IREIT may draw down a bridge loan facility from Tikehau Capital of up to €79.0mn.

The Negative

Portfolio NAV to fall 6.2% after French acquisition; lower FY21e DPU by 7%. Assuming the rights issue and its Spanish and French properties were acquired on 1 January 2020 and operated through 31 December 2020, the French acquisition would have increased IREIT’s adjusted NPI yield from 5.5% to 5.7%. Adjusted DPU would have risen 1% to 2.84 € cents. This assumes €79.0m equity funding in the form of 212mn new units at S$0.596 a share and €51.4m of new debt. However, assuming the Spanish acquisition was completed on 22 October 2020, pro-forma FY20 DPU would have fallen by 2.2%. Aggregate leverage would have climbed by 1.2% to 36% while NAV would have fallen by 6.2% to €0.44. We lower FY21e DPU by 7% to factor in the impact.


















(Non-SGX Report) IREIT Global: Growth Spurt

ARA US Hospitality Trust / Equity Bottom-Up

<figure>
      <img src='https://api2.sgx.com/sites/default/files/2021-05/Capture_12.PNG' alt='REIT watch' />
    </figure>
    <div class='content-caption'>REIT watch</div>
<!DOCTYPE html PUBLIC "-//W3C//DTD HTML 4.0 Transitional//EN" "http://www.w3.org/TR/REC-html40/loose.dtd">
<html><body>
<p>WITHIN Singapore's Reits &amp; Property Trusts (S-Reits) that are listed for trading, there are five (ARA US Hospitality Trust, Manulife US Reit, Prime US Reit, United Hampshire US Reit, Keppel Pacific Oak US Reit) with 100 per cent of assets located in the US and three (IReit Global, Cromwell European Reit, Elite Commercial Reit) with 100 per cent of their assets in Europe.</p>

<p>These eight S-Reits have an average distribution yield of 7.5 per cent and generated positive average total returns of 8.9 per cent in the 2021 year-to-date till May 12.</p>

<p>In the past week, Cromwell European Reit (CE Reit), Manulife US Reit (MUST) and United Hampshire US Reit (UHU Reit) published their business/operational updates for the first quarter of 2021. Common outlook expectations revolved around the recovery of economic activities in 2021 as vaccination roll-outs progress, restrictions ease, daily activities resume and employment data rebound.</p>

<p>With most of Europe still under tight restrictions during the quarter, GDP for the eurozone economy fell by 0.6 per cent quarter-on-quarter, based on preliminary data released by Europe's statistics office Eurostat. CE Reit noted that, barring a further deterioration of the current Covid-19 situation, the eurozone's 2021 GDP growth is projected at 4.1 per cent (according to Oxford Economics).<br><br>
CE Reit's gross revenue and net property income (NPI) declined marginally by 0.1 per cent and 0.4 per cent, respectively for Q1 FY2021. This was attributed to prolonged Covid-19 lockdowns in most of CE Reit's countries of operations. However, the Reit believes that there will be higher demand for light industrial /logistics space as e-commerce continues to expand in 2021, supplemented by further demand coming from the reconfiguration and expansion of supply chains so as to be better prepared for future disruptions and consumer demand shocks. In March 2021, CE Reit completed the acquisition of 11 modern logistics assets in Czech Republic and Slovakia. The Reit aims to increase exposure to logistics to 50 per cent of portfolio asset under management (AUM), up from the current 38 per cent.<br><br>
In contrast to Europe's GDP contraction in the Q1 2021, the US reported a quarter-on-quarter GDP growth of 1.6 per cent. Both MUST and UHU Reit noted that the GDP rebound indicates momentum coupled with improving unemployment rate, fast-paced vaccination roll-out and two rounds of federal stimulus payments.</p>

<p>In its Q1 FY2021 operational update, MUST reported strong lease renewals (93.6 per cent of leases by NLA) but minimal new leases as prospective tenants continue to stay cautious. Looking forward, MUST expects post Covid-19 themes such as the acceleration of population and company migration, growing technology sector, strong demand for healthcare and fast developing knowledge economy to provide uplift to the Reit. MUST intends to target cities that are business-friendly, have growing technology and healthcare industries as well as robust population growth.</p>

<p>Compared to IPO forecasts, UHU Reit's Q1 FY2021 distributable income was up 1.3 per cent while gross revenue and NPI were down 1.9 per cent and 1.8 per cent respectively. UHU Reit noted that, according to the National Retail Federation (NRF), US retail sales are expected to grow between 6.5 per cent and 8.2 per cent in 2021, underpinned by healthy consumer fundamentals, pent-up demand and widespread vaccination. This was evident in the new and renewal leases signed this quarter, most of which were food &amp; beverage and consumer services tenants.</p>

<p>The Reit also expects trends such as increase in consumer awareness of the benefits of self-storage, an increasingly mobile population and the decluttering of homes to create more efficient workspaces to continue even as the country transitions to a post-Covid environment.<br><br><strong><em>REIT Watch is a weekly column on The Business Times,<a href="https://www.businesstimes.com.sg/companies-markets/china-poised-to-drive-economic-growth"> </a><a href="https://www.businesstimes.com.sg/companies-markets/western-s-reits-sanguine-on-post-covid-outlook">read</a><a href="https://www.businesstimes.com.sg/companies-markets/bulk-of-s-reits-in-key-global-real-estate-indices"> </a>the original version.</em></strong></p>
</body></html>



      
    
    REIT watch


WITHIN Singapore's Reits &amp; Property Trusts (S-Reits) that are listed for trading, there are five (ARA US Hospitality Trust, Manulife US Reit, Prime US Reit, United Hampshire US Reit, Keppel Pacific Oak US Reit) with 100 per cent of assets located in the US and three (IReit Global, Cromwell European Reit, Elite Commercial Reit) with 100 per cent of their assets in Europe.

These eight S-Reits have an average distribution yield of 7.5 per cent and generated positive average total returns of 8.9 per cent in the 2021 year-to-date till May 12.

In the past week, Cromwell European Reit (CE Reit), Manulife US Reit (MUST) and United Hampshire US Reit (UHU Reit) published their business/operational updates for the first quarter of 2021. Common outlook expectations revolved around the recovery of economic activities in 2021 as vaccination roll-outs progress, restrictions ease, daily activities resume and employment data rebound.

With most of Europe still under tight restrictions during the quarter, GDP for the eurozone economy fell by 0.6 per cent quarter-on-quarter, based on preliminary data released by Europe's statistics office Eurostat. CE Reit noted that, barring a further deterioration of the current Covid-19 situation, the eurozone's 2021 GDP growth is projected at 4.1 per cent (according to Oxford Economics).  
CE Reit's gross revenue and net property income (NPI) declined marginally by 0.1 per cent and 0.4 per cent, respectively for Q1 FY2021. This was attributed to prolonged Covid-19 lockdowns in most of CE Reit's countries of operations. However, the Reit believes that there will be higher demand for light industrial /logistics space as e-commerce continues to expand in 2021, supplemented by further demand coming from the reconfiguration and expansion of supply chains so as to be better prepared for future disruptions and consumer demand shocks. In March 2021, CE Reit completed the acquisition of 11 modern logistics assets in Czech Republic and Slovakia. The Reit aims to increase exposure to logistics to 50 per cent of portfolio asset under management (AUM), up from the current 38 per cent.  
In contrast to Europe's GDP contraction in the Q1 2021, the US reported a quarter-on-quarter GDP growth of 1.6 per cent. Both MUST and UHU Reit noted that the GDP rebound indicates momentum coupled with improving unemployment rate, fast-paced vaccination roll-out and two rounds of federal stimulus payments.

In its Q1 FY2021 operational update, MUST reported strong lease renewals (93.6 per cent of leases by NLA) but minimal new leases as prospective tenants continue to stay cautious. Looking forward, MUST expects post Covid-19 themes such as the acceleration of population and company migration, growing technology sector, strong demand for healthcare and fast developing knowledge economy to provide uplift to the Reit. MUST intends to target cities that are business-friendly, have growing technology and healthcare industries as well as robust population growth.

Compared to IPO forecasts, UHU Reit's Q1 FY2021 distributable income was up 1.3 per cent while gross revenue and NPI were down 1.9 per cent and 1.8 per cent respectively. UHU Reit noted that, according to the National Retail Federation (NRF), US retail sales are expected to grow between 6.5 per cent and 8.2 per cent in 2021, underpinned by healthy consumer fundamentals, pent-up demand and widespread vaccination. This was evident in the new and renewal leases signed this quarter, most of which were food &amp; beverage and consumer services tenants.

The Reit also expects trends such as increase in consumer awareness of the benefits of self-storage, an increasingly mobile population and the decluttering of homes to create more efficient workspaces to continue even as the country transitions to a post-Covid environment.  REIT Watch is a weekly column on The Business Times, read the original version.



REIT Watch - Western S-Reits sanguine on post-Covid outlook

Singapore

IREIT Global is the first Singapore-listed real estate investment trust with the investment strategy of principally investing, directly or indirectly, in a portfolio of income-producing real estate in Europe which is used primarily for office, retail and industrial (including logistics) purposes, as well as real estate-related assets.

IREIT Global’s current portfolio comprises 5 freehold office properties in Germany, 5 freehold office properties in Spain and 27 freehold retail properties in France, with a total lettable area of approximately 384,000 sqm and a portfolio valuation of approximately €974.9 million.

IREIT Global is managed by IREIT Global Group Pte. Ltd., which is jointly owned by Tikehau Capital and City Developments Limited ("CDL"). Tikehau Capital is a global alternative asset management group listed in France, while CDL is a leading global real estate company listed in Singapore.

Price Gauge
52-week Range	0.00 - 0.00
Market Cap (USDm)	0.00
P/E	0.00
Dividend (Yield)	0.00

IREIT Global (IREIT SP)

ASEAN Builder's Scoop (1Jul21) - SREITs Reflation Is Working in Its Favour

SREITs reflation is working in its favour; 2Q21 resi prices up 0.9% QoQ; CAPL exits malls, expands into logistics in Japan; KREIT divests Brisbane...

SCCM Asia Research

ASEAN Builder's Scoop (23Jun21) - IREIT Proposes ~S$127m EFR

IREIT proposes ~S$127m EFR; IWG adds 20 Cecil to its portfolio; Alibaba Cloud builds 1st DC in Manila; Thai REIT laggards vs peers; Indo extends...

SCCM Asia Research

(Non-SGX Report) IREIT Global: The French Evolution

Non- SGX Report: These equity research reports are not written by the SGX. SGX supports the distribution of the research reports by external...

Singapore Exchange Ltd (SGX)

(Non-SGX Report) IREIT Global: Growth Spurt

Non- SGX Report: These equity research reports are not written by the SGX. SGX supports the distribution of the research reports by external...

Singapore Exchange Ltd (SGX)

REIT Watch - Western S-Reits sanguine on post-Covid outlook

WITHIN Singapore's Reits & Property Trusts (S-Reits) that are listed for trading, there are five (ARA US Hospitality Trust,...

Singapore Exchange Ltd (SGX)

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)