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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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

Lendlease Global Commercial REIT / Equity Bottom-Up





In the October MTD, five S-REITs: ARA Logos Logisitics Trust, Mapletree Logistics Trust, Elite Commercial REIT, Suntec REIT and Lendlease Global Commercial REIT announced proposed property acquisitions. Property locations spanned Australia, China, Malaysia, the UK and Singapore. 
	 
	
This year S-REIT performances have been aligned with the performance of global REITs, with the median total return of the ~800 REITs listed across the world at -15%. US REIT Sector trends such as Mortgage-REIT induced volatility in March and rotation to Data Centre REITs in 1H20, were observed across APAC.    
	 
	
The strongest performers of the S-REIT Sector in the October MTD included CapitaLand Retail China Trust, Lippo Malls Trust, EC World REIT, Far East Hospitality Trust and Keppel DC REIT, with 5% average returns. This compared to a 3% decline for the iEdge S-REIT Leaders Index, which brought the Index YTD decline to 7%.   
	 

S-REITs Have Continued to Pursue Portfolio Growth in October

 The combined market value of the S-REIT Sector has grown at a very strong Compound Annual Growth Rate of 15% over the 10 years ending 2019. As expected, not every year saw growth, for instance in 2015, the combined S-REIT Sector market value was down 8% from 2014, and compared to 2019, the 2020 combined market value is currently down by a similar magnitude.

Nevertheless, S-REITs are still expanding their portfolios. There are multiple instances of the growth continuing with managers of the following REITs proposing or completing acquisitions in the month to date: 
 



ARA Logos Logisitics Trust announced on 26 October proposed acquisitions from LOGOS Property Group Limited’s managed ventures including: five logistics properties located in Brisbane, Australia, including a development asset, Corner Heron Drive and Curlew Street, Port of Brisbane which will have an approximate purchase consideration of S$225.9 million; and the fund investment in 49.5% interest in New LAIVS Trust and 40.0% interest in Oxford Property Fund, which have a combined portfolio of five logistics properties in New South Wales and Victoria, for a consideration amount of approximately S$178.5 million. For more details click here.  
	 
	
Mapletree Logistics Trust (“MLT”) announced on 21 October the proposed acquisition of Acacia Ridge Distribution Centre located at 338 Bradman Street, Brisbane, at a property purchase price of A$114.0 million via the acquisition of all the units in the property trust holding the Property from Alset Australian Mid TC Pty Ltd. Following this acquisition, MLT will have three properties in Brisbane and a total of 13 properties with over 347,287 square metres of leasable space in Australia. For more details click here. Furthermore, on 19 October, MLT announced the proposed acquisitions of 100% interest in seven properties and the remaining 50% interest in 15 properties in China at an acquisition price of approximately RMB 4,477.1 million, a property in Malaysia at an acquisition price of approximately MYR 402.5 million and a property in Vietnam at an acquisition price of approximately US$ 22.2 million. For more details click here. 
	 
	
Elite Commercial REIT announced on 19 October the proposed acquisition of 58 quality, UK commercial properties for £212.5 million, primarily leased to the UK Government, increasing the REIT’s overall exposure to London to 14% of the enlarged portfolio. For more details click here. 
	 
	
AIMS APAC REIT announced the completion of the acquisition of 7 Bulim street, Singapore and the Plant and Equipment thereon for the Purchase Price of approximately S$129.6 million which was announced back on 11 August. For more details click here.  
	 
	
Suntec REIT announced on 8 October, that it had entered into a sale and purchase agreement with Canada Pension Plan Investment Board to acquire a 50.0% interest in two Grade A office buildings with ancillary retail in the heart of Victoria, West End, London for an agreed value of £430.6 million. The remaining 50.0% interest in Nova Properties will continue to be held by Land Securities Group, the developer and asset manager of the Nova Properties. For more details, click here. 
	 
	
Lendlease Global Commercial REIT announced on 1 October it had acquired a 5.0% equity stake in Lendlease Asian Retail Investment Fund Limited  which indirectly holds a 75.0% interest in Jem, from Lendlease International Pty Limited at a purchase consideration of approximately S$45.0 million. Jem is an integrated office and retail development located in Jurong Gateway, the commercial hub of the Jurong Lake District. For more details, click here. 
	 

This followed on from the announcement of multiple acquisitions in September which included Mapletree Investments Pte Ltd and Mapletree North Asia Commercial Trust announcing they had entered into a unit sale and purchase agreement to co-invest in an office building located at 119, Nonhyeon-dong, Gangnam-gu, Seoul known as “The Pinnacle Gangnam”, at an agreed property value of KRW 452 billion (click here for more). Mapletree Logistics Trust also completed the acquisition of a logistics property in Truganina, Melbourne, (click here for more) and Ascendas REIT completed the acquisition of 254 Wellington Road in Melbourne (click here for more). 
 

Mapletree Industrial Trust announced on 14 September the proposed acquisition of a data centre located in Virginia, US, increasing its Data Centre exposure from 39% to 41% of the portfolio AUM. This followed a placement to increase the portfolio AUM exposure to Data Centres from 32% to 39% in June 2020, and a placement in September 2019 to increase its Portfolio AUM exposure from 18% to 32%. Note that Back in July, Cromwell European REIT also entered into an agreement to invest in European Data Centres (click here for more). 
 

Frasers Centrepoint Trust (“FCT”) also announced on 3 September it acquiring the remaining 63% share of AsiaRetail Fund Limited for S$1.1 billion, increasing its portfolio total asset size to S$6.7 billion. Since listing in 2006, FCT has grown its NLA from 640 thousand square feet to 1.4 million square feet, in addition to the PGIM Real Estate Asia Retail Fund Limited also maintaining a total of 1.0 million square feet of NLA.

 

Universal REIT Market Drivers in 2020

The economic impact of containment and lockdown measures has been the biggest driver of the big sector and sub-sector returns this year. These staunch sector-driven returns in 2020 has seen the performance and swings of the US REIT Sector correlated with REIT sectors across the world. US-listed REITs currently make up as much as 48% of the weight of the FTSE EPRA Nareit Global Index, and have hence played a key role in setting the broad REIT trends in 2020. For instance:



While Mortgage REITs are not traded in Singapore, global Mortgage REITs led much of the global REIT volatility in March 2020. The FTSE Nareit Mortgage REITs Index declined 60% in the 2020 year to 24 March, with its 30-day volatility soaring to 120% on that day. By comparison the iEdge S-REIT Leaders Index had declined 28% over the period, with 30-day volatility at 60% on 24 March.  
	 
	
Data Centres have been the strongest REIT segment in the 2020 year to date, with the FTSE EPRA Nareit Data Centre Sub Index gaining 27%, led by the world’s largest Data Centre REIT, US-listed Equinix Inc, generating a 35% total return. By comparison, Data Centre pure play Keppel DC REIT has gained 46% and Mapletree Industrial Trust which over the past 13 months has increased its Data Centre exposure to close to half of the portfolio gained 23%. This global trend has had a significant impact in Singapore, with these two S-REITs becoming STI constituents in 2020. 
	 
	
Global REITs were supported from the Fed Reserve’s policy 2% inflation targeting in the US, particularly between 26 November 2019 and 16 September 2020, with policy signalling on the latter date suggesting more moderate inflation overshooting after years of undershooting. REITs also function as an inflation hedge to US investors, and the aforementioned period saw the total return the S&amp;P 500 REIT constituents perform in-line with the S&amp;P 500 Equal Weighted Index. However since, 16 September, the S&amp;P 500 REIT constituents were outpaced by the S&amp;P 500 Equal Weighted Index by as much as 5%. 


Within the regional REIT industry, prudent capital management, ability to recycle assets, diversity of property pipelines and portfolios remain key sector drivers going into 2021.

 

The strongest performers of the S-REIT Sector in the October month to date included CapitaLand Retail China Trust, Lippo Malls Trust, EC World REIT, Far East Hospitality Trust and Keppel DC REIT, with 5% average returns. This compared to a 3% decline for the iEdge S-REIT Leaders Index, which brought the Index’s year to date decline to 7%. Meanwhile BHG Retail REIT, Keppel DC REIT, Frasers Cpt Trust, CapitaLand Retail China Trust and CDL Hospitality Trust have seen the most net institutional inflows in the October month-to-date. 

The table below details the S-REIT performances in both the October month to date, and the 2020 year to date. 

The indicative yields, debt to asset ratios and price to book ratios as of 30 September are also included. The combined Assets Under Management of the Nikko AM Asia Ex Japan REIT ETF, the Lion-Phillip S-REIT ETF and the Phillip SGX APAC DIV REIT ETF have increased from S$388 million at the end of 2019, to S$446 million at the end of September.




			Trusts
			
			
			Code
			
			
			Mkt Cap S$M
			
			
			YTD Net Insti Inflow (S$M)
			
			
			YTD Total Return 
			
			
			QTD Net Insti Inflow (S$M)
			
			
			QTD Total Return
			
			
			Debt/ Asset as of 30 Sep 
			
			
			Ind. Div. Yield as of 30 Sep
			
			
			P/B (x) as of 30 Sep
			
		


			Ascendas REIT
			
			
			A17U
			
			
			11,150
			
			
			361.1
			
			
			7.0%
			
			
			-21.8
			
			
			-4.9%
			
			
			36.1%
			
			
			4.6%
			
			
			1.5
			
		


			Mapletree Log Tr
			
			
			M44U
			
			
			7,660
			
			
			102.2
			
			
			20.5%
			
			
			-8.3
			
			
			-0.1%
			
			
			39.6%
			
			
			3.9%
			
			
			1.7
			
		


			Mapletree Ind Tr
			
			
			ME8U
			
			
			7,286
			
			
			25.9
			
			
			23.3%
			
			
			-23.0
			
			
			-3.4%
			
			
			38.8%
			
			
			3.8%
			
			
			2.0
			
		


			CapitaMall Trust***
			
			
			C38U
			
			
			6,716
			
			
			-192.3
			
			
			-22.7%
			
			
			-49.4
			
			
			-4.2%
			
			
			34.4%
			
			
			4.7%
			
			
			1.0
			
		


			Mapletree Com Tr
			
			
			N2IU
			
			
			6,131
			
			
			-66.2
			
			
			-21.6%
			
			
			-19.9
			
			
			-4.6%
			
			
			33.7%
			
			
			4.1%
			
			
			1.1
			
		


			Keppel DC REIT
			
			
			AJBU
			
			
			4,834
			
			
			53.7
			
			
			45.7%
			
			
			4.7
			
			
			1.7%
			
			
			34.5%
			
			
			2.8%
			
			
			2.5
			
		


			Frasers L&amp;C Tr
			
			
			BUOU
			
			
			4,540
			
			
			62.4
			
			
			11.4%
			
			
			-16.0
			
			
			-4.3%
			
			
			37.4%
			
			
			5.0%
			
			
			1.4
			
		


			Suntec REIT
			
			
			T82U
			
			
			4,097
			
			
			-68.1
			
			
			-18.2%
			
			
			-22.9
			
			
			0.0%
			
			
			41.3%
			
			
			5.5%
			
			
			0.7
			
		


			Frasers Cpt Tr
			
			
			J69U
			
			
			3,901
			
			
			-21.3
			
			
			-14.5%
			
			
			4.4
			
			
			-1.3%
			
			
			35.0%
			
			
			3.8%
			
			
			1.1
			
		


			Keppel REIT
			
			
			K71U
			
			
			3,535
			
			
			10.8
			
			
			-13.0%
			
			
			-10.6
			
			
			-2.8%
			
			
			36.3%
			
			
			5.2%
			
			
			0.8
			
		


			Mapletree NAC Tr
			
			
			RW0U
			
			
			2,935
			
			
			-54.7
			
			
			-19.7%
			
			
			-10.1
			
			
			-3.2%
			
			
			39.6%
			
			
			8.0%
			
			
			0.7
			
		


			Ascott Residence Trust *
			
			
			HMN
			
			
			2,685
			
			
			-24.7
			
			
			-32.1%
			
			
			-5.0
			
			
			-2.8%
			
			
			36.1%
			
			
			5.9%
			
			
			0.8
			
		


			ParkwayLife REIT
			
			
			C2PU
			
			
			2,426
			
			
			33.1
			
			
			24.3%
			
			
			-3.3
			
			
			-3.4%
			
			
			38.3%
			
			
			3.2%
			
			
			2.1
			
		


			SPHREIT
			
			
			SK6U
			
			
			2,128
			
			
			-6.5
			
			
			-26.9%
			
			
			-5.4
			
			
			-12.4%
			
			
			29.3%
			
			
			4.1%
			
			
			0.8
			
		


			Cromwell REIT EUR
			
			
			CNNU
			
			
			1,886
			
			
			-7.9
			
			
			-2.2%
			
			
			-0.9
			
			
			-4.7%
			
			
			34.4%
			
			
			7.8%
			
			
			0.9
			
		


			OUE Com REIT
			
			
			TS0U
			
			
			1,787
			
			
			-26.5
			
			
			-38.8%
			
			
			-3.0
			
			
			-7.0%
			
			
			40.1%
			
			
			7.4%
			
			
			0.6
			
		


			Ascendas-iTrust **
			
			
			CY6U
			
			
			1,584
			
			
			-5.1
			
			
			-7.5%
			
			
			0.9
			
			
			0.7%
			
			
			28.9%
			
			
			6.6%
			
			
			1.2
			
		


			Manulife REIT USD
			
			
			BTOU
			
			
			1,520
			
			
			-23.3
			
			
			-24.8%
			
			
			-3.0
			
			
			-5.1%
			
			
			39.1%
			
			
			8.0%
			
			
			1.0
			
		


			CapitaR China Tr
			
			
			AU8U
			
			
			1,503
			
			
			-105.6
			
			
			-20.4%
			
			
			1.9
			
			
			9.9%
			
			
			33.6%
			
			
			7.0%
			
			
			0.7
			
		


			ESR-REIT
			
			
			J91U
			
			
			1,293
			
			
			-12.1
			
			
			-27.9%
			
			
			-4.1
			
			
			-5.2%
			
			
			41.8%
			
			
			8.2%
			
			
			0.9
			
		


			CDL H Trust *
			
			
			J85
			
			
			1,244
			
			
			-69.5
			
			
			-34.0%
			
			
			1.2
			
			
			-2.9%
			
			
			37.1%
			
			
			6.1%
			
			
			0.7
			
		


			Far East H Trust
			
			
			Q5T
			
			
			1,106
			
			
			-14.4
			
			
			-20.9%
			
			
			0.8
			
			
			2.7%
			
			
			39.2%
			
			
			5.5%
			
			
			0.6
			
		


			Prime US REITUSD
			
			
			OXMU
			
			
			1,100
			
			
			-12.9
			
			
			-13.9%
			
			
			-1.4
			
			
			-7.7%
			
			
			33.0%
			
			
			8.1%
			
			
			0.9
			
		


			Starhill Global REIT
			
			
			P40U
			
			
			944
			
			
			-46.0
			
			
			-38.8%
			
			
			-5.4
			
			
			-2.3%
			
			
			39.7%
			
			
			6.7%
			
			
			0.5
			
		


			Sasseur REIT
			
			
			CRPU
			
			
			927
			
			
			-30.5
			
			
			-7.8%
			
			
			-1.9
			
			
			0.0%
			
			
			28.1%
			
			
			7.9%
			
			
			0.9
			
		


			KepPacOakREITUSD
			
			
			CMOU
			
			
			897
			
			
			-5.9
			
			
			-4.1%
			
			
			-2.7
			
			
			-3.9%
			
			
			37.4%
			
			
			8.3%
			
			
			0.9
			
		


			AIMS APAC REIT
			
			
			O5RU
			
			
			855
			
			
			-19.3
			
			
			-11.0%
			
			
			-2.0
			
			
			0.8%
			
			
			35.4%
			
			
			7.5%
			
			
			0.9
			
		


			Frasers H Trust *
			
			
			ACV
			
			
			807
			
			
			-10.0
			
			
			-40.4%
			
			
			-0.4
			
			
			-2.3%
			
			
			35.9%
			
			
			5.8%
			
			
			0.6
			
		


			Lendlease REIT
			
			
			JYEU
			
			
			773
			
			
			-68.6
			
			
			-25.9%
			
			
			-5.0
			
			
			-2.9%
			
			
			35.1%
			
			
			5.8%
			
			
			N/A
			
		


			ARA LOGOS Log Tr
			
			
			K2LU
			
			
			681
			
			
			-15.9
			
			
			-7.4%
			
			
			-3.3
			
			
			0.8%
			
			
			40.4%
			
			
			8.1%
			
			
			1.1
			
		


			Dasin Retail Tr **
			
			
			CEDU
			
			
			613
			
			
			1.2
			
			
			-0.6%
			
			
			-0.1
			
			
			-1.2%
			
			
			37.9%
			
			
			6.2%
			
			
			0.6
			
		


			Soilbuild Biz REIT
			
			
			SV3U
			
			
			597
			
			
			-7.6
			
			
			-1.9%
			
			
			-6.6
			
			
			-3.8%
			
			
			36.9%
			
			
			6.9%
			
			
			0.9
			
		


			IREIT Global
			
			
			UD1U
			
			
			569
			
			
			-2.6
			
			
			-10.8%
			
			
			0.4
			
			
			-0.8%
			
			
			39.0%
			
			
			8.2%
			
			
			0.8
			
		


			EC World REIT
			
			
			BWCU
			
			
			563
			
			
			-10.5
			
			
			0.0%
			
			
			0.5
			
			
			2.9%
			
			
			39.1%
			
			
			8.2%
			
			
			0.8
			
		


			United Hampshire REIT USD
			
			
			ODBU
			
			
			384
			
			
			-6.8
			
			
			N/A
			
			
			-1.8
			
			
			1.4%
			
			
			36.2%
			
			
			7.4%
			
			
			0.8
			
		


			Elite Com REIT GBP
			
			
			MXNU
			
			
			376
			
			
			1.2
			
			
			N/A
			
			
			-0.5
			
			
			0.8%
			
			
			32.6%
			
			
			7.1%
			
			
			1.0
			
		


			Sabana REIT
			
			
			M1GU
			
			
			369
			
			
			4.8
			
			
			-21.7%
			
			
			0.0
			
			
			-4.1%
			
			
			33.7%
			
			
			5.5%
			
			
			0.7
			
		


			First REIT
			
			
			AW9U
			
			
			338
			
			
			-29.0
			
			
			-55.6%
			
			
			-1.7
			
			
			-3.4%
			
			
			34.9%
			
			
			15.2%
			
			
			0.4
			
		


			BHG Retail REIT
			
			
			BMGU
			
			
			281
			
			
			15.1
			
			
			-15.9%
			
			
			15.2
			
			
			0.0%
			
			
			35.9%
			
			
			4.9%
			
			
			0.7
			
		


			Lippo Malls Tr
			
			
			D5IU
			
			
			249
			
			
			-10.4
			
			
			-60.6%
			
			
			-0.5
			
			
			6.3%
			
			
			35.7%
			
			
			16.4%
			
			
			0.3
			
		


			ARA H Trust USD *
			
			
			XZL
			
			
			236
			
			
			-2.7
			
			
			-62.7%
			
			
			-0.5
			
			
			1.2%
			
			
			42.5%
			
			
			14.0%
			
			
			0.3
			
		


			Average
			
			
			 
			
			
			 
			
			
			 
			
			
			-15.2%
			
			
			 
			
			
			-1.8%
			
			
			36.4%
			
			
			6.8%
			
			
			0.95
			
		

Note * Stapled Trust, ** Business Trust, *** With regard to the CapitaLand Mall Trust and CapitaLand Commercial Trust  merger, this table  does not include the CapitaMall Trust Temporary Line established by FTSE Russell, following the last day of trading of CapitaLand Commercial Trust, and ahead of the renaming of CapitaLand Mall Trust to CapitaLand Integrated Commercial Trust, indicatively expected on 3 November.

Source: SGX StockFacts, Bloomberg, Thomson Reuters (Data as of 27 October 2020).



S-REITs Continued to Pursue Acquisitions in October 

Taiwan

Joinsoon Electronics Mfg Co Ltd manufactures and markets cables and connectors for 3C (computer, communication, consumer electronics) industries.

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Joinsoon Electronics Manufac (3322 TT)

S-REITs Continued to Pursue Acquisitions in October

In the October MTD, five S-REITs: ARA Logos Logisitics Trust, Mapletree Logistics Trust, Elite Commercial REIT, Suntec REIT and Lendlease...

Singapore Exchange Ltd (SGX)

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