Head of Research, IPOs & Placements, Aequitas Research

Sumeet Singh

Head of Research, IPOs & Placements

IPOs and Placements coverage across Asia Pacific

Aequitas Research

We cover all listing across the Asia Pacific along with follow-up placements. As of Dec 2020, our team had covered 539 IPOs with a hit rate of 73.5% and 685 placements with a hit rate of 66.8%.

We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic coverage across new listings and placements. Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis as well.

Equity Capital Markets

Brookfield India Real Estate Trust / Equity Capital Markets

<div><p><a href="https://www.smartkarma.com/entities/brookfield-india-real-estate-trust" target="_blank" data-smartkarma-citation="entities:31036:1" rel="noopener">Brookfield India Real Estate Trust (BIREIT IN)</a> (BREIT from hereon) aims to raise up to US$600m in its India IPO. BREIT aims to be the leading owner of high quality income producing commercial real estate assets in key gateway Indian markets. Its initial portfolio consists of 14.0msf, with call options to acquire a further 8.3msf and rights of first offer on an additional 6.7msf.</p></div><div><p>Its initial portfolio consists of four large campus-format office parks located in Mumbai, Gurugram, Noida and Kolkata. Of the initial 14msf, 9.8msf was completed, 0.6msf was under construction and 3.6msf was reserved for future development potential. The initial portfolio is 96% occupied and had a weighted average lease expiry (WALE) of 6.8 years.</p></div><div>
<p>The portfolio has recorded steady net operating income (NOI) growth in the past of 6.46% and 7.64% in FY19 and FY20, respectively. Future growth as well appears promising with NOI for the initial portfolio expected to grow by 20% over FY20-23. The call and ROFO assets provide further avenues for growth.</p>
<p>In my previous note, I spoke about the positive aspects of the deal, <a href="https://www.smartkarma.com/insights/brookfields-india-real-estate-trust-pre-ipo-the-positives-provides-different-geographic-exposure" target="_blank" rel="noopener">Brookfields India Real Estate Trust Pre-IPO - The Positives- Provides Different Geographic Exposure</a>.</p>
<p>In this note, I'll talk about the not so flattering aspects.</p>
</div>

Brookfield India Real Estate Trust (BIREIT IN) (BREIT from hereon) aims to raise up to US$600m in its India IPO. BREIT aims to be the leading owner of high quality income producing commercial real estate assets in key gateway Indian markets. Its initial portfolio consists of 14.0msf, with call options to acquire a further 8.3msf and rights of first offer on an additional 6.7msf.Its initial portfolio consists of four large campus-format office parks located in Mumbai, Gurugram, Noida and Kolkata. Of the initial 14msf, 9.8msf was completed, 0.6msf was under construction and 3.6msf was reserved for future development potential. The initial portfolio is 96% occupied and had a weighted average lease expiry (WALE) of 6.8 years.
The portfolio has recorded steady net operating income (NOI) growth in the past of 6.46% and 7.64% in FY19 and FY20, respectively. Future growth as well appears promising with NOI for the initial portfolio expected to grow by 20% over FY20-23. The call and ROFO assets provide further avenues for growth.
In my previous note, I spoke about the positive aspects of the deal, Brookfields India Real Estate Trust Pre-IPO - The Positives- Provides Different Geographic Exposure.
In this note, I'll talk about the not so flattering aspects.


Brookfields India Real Estate Trust Pre-IPO- The Negatives- Asset Details Leave Questions Unanswered

<p><a href="https://www.smartkarma.com/entities/brookfield-india-real-estate-trust" target="_blank" data-smartkarma-citation="entities:31036:1" rel="noopener">Brookfield India Real Estate Trust (BIREIT IN)</a> (BREIT from hereon) aims to raise up to US$600m in its India IPO. BREIT aims to be the leading owner of high quality income producing commercial real estate assets in key gateway Indian markets. Its initial portfolio consists of 14.0msf, with call options to acquire a further 8.3msf and rights of first offer on an additional 6.7msf.</p><p>Its initial portfolio consists of four large campus-format office parks located in Mumbai, Gurugram, Noida and Kolkata. Of the initial 14msf, 9.8msf was completed, 0.6msf was under construction and 3.6msf was reserved for future development potential. The initial portfolio is 96% occupied and had a weighted average lease expiry (WALE) of 6.8 years.</p><p>The portfolio has recorded steady net operating income (NOI) growth in the past of 6.46% and 7.64% in FY19 and FY20, respectively. Future growth as well appears promising with NOI for the initial portfolio expected to grow by 20% over FY20-23. The call and ROFO assets provide further avenues for growth.</p>

Brookfield India Real Estate Trust (BIREIT IN) (BREIT from hereon) aims to raise up to US$600m in its India IPO. BREIT aims to be the leading owner of high quality income producing commercial real estate assets in key gateway Indian markets. Its initial portfolio consists of 14.0msf, with call options to acquire a further 8.3msf and rights of first offer on an additional 6.7msf.Its initial portfolio consists of four large campus-format office parks located in Mumbai, Gurugram, Noida and Kolkata. Of the initial 14msf, 9.8msf was completed, 0.6msf was under construction and 3.6msf was reserved for future development potential. The initial portfolio is 96% occupied and had a weighted average lease expiry (WALE) of 6.8 years.The portfolio has recorded steady net operating income (NOI) growth in the past of 6.46% and 7.64% in FY19 and FY20, respectively. Future growth as well appears promising with NOI for the initial portfolio expected to grow by 20% over FY20-23. The call and ROFO assets provide further avenues for growth.

Brookfields India Real Estate Trust Pre-IPO - The Positives- Provides Different Geographic Exposure

Silver Point

Thomas J. Monaco

Independent Insight Provider

Silver Point is a boutique research firm that focuses on the broader financial services sector, with a particular focus on troubled institutions globally. 

Asia Ex Japan

Equity Bottom-Up

<p>*<em><strong>Another Weak Set Of Metrics: </strong></em>Link REIT (823.HK) [Link REIT] reported negative FY 1H21 bottom-line results of HKD 4.1 bn. While still a loss, this figure represents about 17.2% of losses (HKD 23.9 bn) posted in FY 2H20. Losses in both periods were attributed to negative fair value marks of HKD 7.3 bn and HKD 27.6 bn, respectively. While results on an operating basis were positive, the trend unfortunately remains negative for Link REIT – declining HKD 564 mn (15.1%). The poor operating results were driven by weaker Hong Kong rental income which declined HKD 186 mn (5.4%) HOH; and a HKD 55 mn (9.8%) decline in mainland Chinese property-related revenues;</p><p><strong><em>*Worries Abound: </em></strong>Weaker than expected Hong Kong retail operations leading to lower level of rental reversions; and continued negative revaluation of property due to lower rents and/or higher cap rates remain long-term risks; and</p><p><strong><em>*Poor Capital Management: </em></strong>On July 26, 2020, Link announced its proposed acquisition of a Grade A office building, The Cabot at 25 Cabot Square at Canary Wharf in London. This transaction makes little sense for Link REIT on a number of levels. Management also reiterated its 2025 target, suggesting that intends to add to the existing "core" portfolio while adding "core-plus" and "value-add" assets, which would include mainland Chinese Tier-1 cities, the United Kingdom, Australia, Singapore and Japan. Link REIT has also completed the 60 mn share buyback. Instead of weighing a buybacks return versus new investment ROI, management views share buybacks as a mechanism to defend its shares against short-selling.</p>

*Another Weak Set Of Metrics: Link REIT (823.HK) [Link REIT] reported negative FY 1H21 bottom-line results of HKD 4.1 bn. While still a loss, this figure represents about 17.2% of losses (HKD 23.9 bn) posted in FY 2H20. Losses in both periods were attributed to negative fair value marks of HKD 7.3 bn and HKD 27.6 bn, respectively. While results on an operating basis were positive, the trend unfortunately remains negative for Link REIT – declining HKD 564 mn (15.1%). The poor operating results were driven by weaker Hong Kong rental income which declined HKD 186 mn (5.4%) HOH; and a HKD 55 mn (9.8%) decline in mainland Chinese property-related revenues;*Worries Abound: Weaker than expected Hong Kong retail operations leading to lower level of rental reversions; and continued negative revaluation of property due to lower rents and/or higher cap rates remain long-term risks; and*Poor Capital Management: On July 26, 2020, Link announced its proposed acquisition of a Grade A office building, The Cabot at 25 Cabot Square at Canary Wharf in London. This transaction makes little sense for Link REIT on a number of levels. Management also reiterated its 2025 target, suggesting that intends to add to the existing "core" portfolio while adding "core-plus" and "value-add" assets, which would include mainland Chinese Tier-1 cities, the United Kingdom, Australia, Singapore and Japan. Link REIT has also completed the 60 mn share buyback. Instead of weighing a buybacks return versus new investment ROI, management views share buybacks as a mechanism to defend its shares against short-selling.

Event-Driven

<div>
<p>With the long drawn out merger of CCT+CMT finally approved with minimal resistance, with the little there was coming mostly from CCT holders, the combined entity will add to the bunch of listed REITs which offer a mix of office and retail exposure. </p>
</div>
<p>For investors interested in obtaining Singapore (SG) office or suburban retail exposure, the pure play options are now fairly limited.</p>
<p></p>
<div>
<p><strong>Links to my previous REITs insights:</strong></p>
</div>
<div>
<ul style="list-style-type: disc;">
<li>
<a href="https://www.smartkarma.com/insights/singapore-reits-what-s-been-cooking-this-year" target="_blank" rel="noopener">Singapore REITs - What’s Been Cooking This Year,</a> I spoke about how the REITs have performed this year and touched upon some of the factors that have been driving them. </li>
<li>
<a href="https://www.smartkarma.com/insights/trade-ideas-for-sgreits-retail-reits-share-price-has-been-more-resilient-than-it-should-be" target="_blank" rel="noopener">Trade Ideas for SGREITs - Retail REITs Share Price Has Been More Resilient than It Should Be,</a> covers the factors that have been impacting retail REITs. </li>
<li>
<a href="https://www.smartkarma.com/insights/trade-ideas-sg-office-reits-this-time-it-s-different" target="_blank" rel="noopener">Trade Ideas SG Office REITs - This Time It’s Different</a> covers how the office REITs might fare better.</li>
<li>
<a href="https://www.smartkarma.com/insights/trade-ideas-sg-industrial-reits-bigger-names-have-been-holding-up-a-little-too-well" target="_blank" rel="noopener">Trade Ideas SG Industrial REITs - Bigger Names Have Been Holding up a Little Too Well </a> looks at the industrial REITs</li>
<li>
<a href="https://www.smartkarma.com/insights/singapore-reits-get-out-of-jail-free-card-for-the-tenants" target="_blank" rel="noopener">Singapore REITs - Get Out of Jail Free Card, for the Tenants</a> I spoke about how the recent changes announced by the government would benefit the smaller tenants more than the landlords.</li>
<li>
<a href="https://www.smartkarma.com/insights/trade-ideas-sg-eu-us-focus-reits-the-orphaned-lot-is-starting-to-look-interesting" target="_blank" rel="noopener">Trade Ideas SG EU/​US Focus REITs - The Orphaned Lot Is Starting to Look Interesting</a> looks at the EU/US focussed REITs trading wider than their SG and US listed peers</li>
<li>
<a href="https://www.smartkarma.com/insights/trade-ideas-for-sgreits-update-on-office-vs-retail-trade-up-8-so-far" target="_blank" rel="noopener">Trade Ideas for SGREITs - Update on Office Vs Retail Trade, up 8% so Far</a> I spoke about the recent updates impacting the REITs and implications of Suntec Results</li>
<li>
<a href="https://www.smartkarma.com/insights/trade-ideas-for-sgreits-more-updates-on-office-vs-retail-trade-from-kreit-and-mct-results" target="_blank" rel="noopener">Trade Ideas for SGREITs - More Updates on Office Vs Retail Trade from KREIT and MCT Results</a> I spoke about KREIT and MCT results</li>
<li>
<a href="https://www.smartkarma.com/insights/trade-ideas-sgreits-office-vs-retail-vs-industrial-up-16-so-far" target="_blank" rel="noopener">Trade Ideas SGREITs - Office Vs Retail Vs Industrial, up 16% so Far</a> I spoke about sticking to the trade till CMT results and post that switching to office versus industrial</li>
<li>
<a href="https://www.smartkarma.com/insights/singapore-reits-update-even-as-circuit-breaker-ends-2q-dpu-for-retail-reits-will-be-close-to-0" target="_blank" rel="noopener">Singapore REITs Update - Even as Circuit Breaker Ends, 2Q DPU for Retail REITs Will Be Close to 0</a> I covered the impact of the governments plans for circuit breaker exit</li>
<li>
<a href="https://www.smartkarma.com/insights/trade-ideas-for-singapore-reits-coming-back-to-life" target="_blank" rel="noopener">Trade Ideas for Singapore REITs - Coming Back to Life</a> I covered the updates over the Jan-Mar 2020 earnings season</li>
<li>
<a href="https://www.smartkarma.com/insights/singapore-reits-reits-will-have-to-fund-some-sme-rents-by-law" target="_blank" rel="noopener">Singapore REITs - REITs Will Have to Fund Some SME Rents, by Law</a>, I spoke out the updates from the Fortitude budget</li>
<li>
<a href="https://www.smartkarma.com/insights/singapore-reits-new-rental-relief-framework-for-smes" target="_blank" rel="noopener">Singapore REITs - New Rental Relief Framework for SMEs</a>, I spoke about the impact of the rental relief for SMEs</li>
</ul>
</div>


With the long drawn out merger of CCT+CMT finally approved with minimal resistance, with the little there was coming mostly from CCT holders, the combined entity will add to the bunch of listed REITs which offer a mix of office and retail exposure. 

For investors interested in obtaining Singapore (SG) office or suburban retail exposure, the pure play options are now fairly limited.


Links to my previous REITs insights:




Singapore REITs - What’s Been Cooking This Year, I spoke about how the REITs have performed this year and touched upon some of the factors that have been driving them. 

Trade Ideas for SGREITs - Retail REITs Share Price Has Been More Resilient than It Should Be, covers the factors that have been impacting retail REITs. 

Trade Ideas SG Office REITs - This Time It’s Different covers how the office REITs might fare better.

Trade Ideas SG Industrial REITs - Bigger Names Have Been Holding up a Little Too Well  looks at the industrial REITs

Singapore REITs - Get Out of Jail Free Card, for the Tenants I spoke about how the recent changes announced by the government would benefit the smaller tenants more than the landlords.

Trade Ideas SG EU/​US Focus REITs - The Orphaned Lot Is Starting to Look Interesting looks at the EU/US focussed REITs trading wider than their SG and US listed peers

Trade Ideas for SGREITs - Update on Office Vs Retail Trade, up 8% so Far I spoke about the recent updates impacting the REITs and implications of Suntec Results

Trade Ideas for SGREITs - More Updates on Office Vs Retail Trade from KREIT and MCT Results I spoke about KREIT and MCT results

Trade Ideas SGREITs - Office Vs Retail Vs Industrial, up 16% so Far I spoke about sticking to the trade till CMT results and post that switching to office versus industrial

Singapore REITs Update - Even as Circuit Breaker Ends, 2Q DPU for Retail REITs Will Be Close to 0 I covered the impact of the governments plans for circuit breaker exit

Trade Ideas for Singapore REITs - Coming Back to Life I covered the updates over the Jan-Mar 2020 earnings season

Singapore REITs - REITs Will Have to Fund Some SME Rents, by Law, I spoke out the updates from the Fortitude budget

Singapore REITs - New Rental Relief Framework for SMEs, I spoke about the impact of the rental relief for SMEs



Trade Ideas for Singapore REITs - Implications from CCT+CMT Merger

Lakshmi Iyer, CFA

Credit

<p>We think the recent S$ perpetual bond issue by <a href="https://www.smartkarma.com/entities/ascendas-real-estate-investment-trust" target="_blank" data-smartkarma-citation="entities:39:1" rel="noopener">Ascendas Real Estate Investment Trust (AREIT SP)</a> is attractive. We think it could tighten by around 30 bps from levels at which it was issued. We compare it with spreads on Ascendas' senior debt as well as the recent <a href="https://www.smartkarma.com/entities/keppel-reit" target="_blank" data-smartkarma-citation="entities:192:1" rel="noopener">Keppel REIT (KREIT SP)</a> perp and find value on both counts.</p>

We think the recent S$ perpetual bond issue by Ascendas Real Estate Investment Trust (AREIT SP) is attractive. We think it could tighten by around 30 bps from levels at which it was issued. We compare it with spreads on Ascendas' senior debt as well as the recent Keppel REIT (KREIT SP) perp and find value on both counts.

Acendas SGD 3% Perp - Potential Spread Tightening

Singapore

Keppel REIT operates as a commercial real estate investment trust. The Trust owns and invests in a portfolio of income-producing office buildings and related real estate assets. Keppel REIT offers its services in Asia and Australia.

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Keppel REIT (KREIT SP)

Brookfields India Real Estate Trust Pre-IPO- The Negatives- Asset Details Leave Questions Unanswered

Brookfield India Real Estate Trust aims to raise up to US$600m in its India IPO. BREIT aims to be the leading owner of high quality income...

Sumeet Singh

Brookfields India Real Estate Trust Pre-IPO - The Positives- Provides Different Geographic Exposure

Brookfield India Real Estate Trust aims to raise up to US$600m in its India IPO. BREIT aims to be the leading owner of high quality income...

Sumeet Singh

Link REIT – Bread and Butter Melting

LINK REIT: Almost Nothing Is Going Right For Link REIT. Rental Reversion Rates Weakening In Hong Kong; FV Marks Remain Negative; and Capital...

Thomas J. Monaco

Trade Ideas for Singapore REITs - Implications from CCT+CMT Merger

In my earlier insight on Singapore's Fortitude budget, Singapore REITs - REITs Will Have to Fund Some SME Rents, by Law, I had mentioned the...

Sumeet Singh

Acendas SGD 3% Perp - Potential Spread Tightening

We think the recent perp

Lakshmi Iyer, CFA

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