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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According to the UN Environmental Programme, the real estate sector has one of the largest carbon footprints, contributing to 30 per cent of global annual greenhouse gas (GHG) emissions and consumes around 40 per cent of the world's energy.

This explains the increasing focus on climate change issues and responsible investment practices.

SGX and UOB Asset Management have jointly launched the iEdge-UOB Apac Yield Focus Green Reit Index, an index which tracks the performance of 50 higher-yielding Reits in Asia-Pacific (Apac) with positive environmental attributes based on the GRESB assessment framework. 
GRESB is the global leader for ESG research of real assets, covering more than 1,500 property companies, Reits, funds and developers with US$5.7 trillion in assets under management. 
Out of the 50 constituents, nine are S-REITs &amp; Property Trusts: CapitaLand Integrated Commercial Trust, Mapletree Logistics Trust, Mapletree Industrial Trust, Mapletree Commercial Trust, Frasers Logistics &amp; Commercial Trust, Suntec REIT, Keppel REIT, Mapletree North Asia Commercial Trust, and Ascendas India Trust. 
The iEdge-UOB Apac Yield Focus Green Reit Index is the first index globally to go beyond using the overall GRESB score and focus on four key environmental indicators to determine the environmental attributes - energy consumption, water consumption, GHG emissions, and green building certifications. 
The index is expected to be fully investable and tradable, as Apac Reits are included into the index based on minimum size of US$1 billion in free-float market capitalisation, liquidity requirements of at least US$400,000 in median daily average traded value, dividend yield-ranking within market cap quartiles, and a minimum GRESB public disclosure score among others.

After which a green tilt is applied using the GRESB Real Estate Assessment environmental scores.

Reits that have more favourable environmental attributes will be rewarded with a higher weighting factor, compared to Reits that have relative lower environmental scores.

By applying the green portfolio tilt, the iEdge-UOB Apac Yield Focus Green Reit Index constituents emit 7 per cent less GHG, consume 12 per cent less water and 9 per cent less energy than the non-green market-cap weighted version of the index.

Green building certification by floor area is also 13 per cent for certifications obtained at the time of design, construction or renovation, and 10 per cent for operational green building certifications.

All constituent weights are capped at 7 per cent and overall country exposure capped at 40 per cent.

Japan makes up 40 per cent of the index, while Australia, Singapore and Hong Kong are at 36 per cent, 16 per cent and 8 per cent respectively.

The index has a trailing 12-month dividend yield of 4.25 per cent.

The UOB Apac Green Reit ETF, which has filed a prospectus with an expected listing on Nov 23, will track the iEdge-UOB Apac Yield Focus Green Reit Index.

The ETF has a target dividend distribution policy of up to 4 per cent of net asset value per annum on a quarterly basis.  REIT Watch is a weekly column on The Business Times,<a href="https://www.businesstimes.com.sg/companies-markets/retail-and-hospitality-sector-s-reits-outperform-in-october"> </a><a href="https://www.businesstimes.com.sg/companies-markets/nine-s-reits-in-yield-focus-index-based-on-positive-environmental-attributes">read</a><a href="https://www.businesstimes.com.sg/companies-markets/retail-and-hospitality-sector-s-reits-outperform-in-october"> </a>the original version.
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    Greener REIT


According to the UN Environmental Programme, the real estate sector has one of the largest carbon footprints, contributing to 30 per cent of global annual greenhouse gas (GHG) emissions and consumes around 40 per cent of the world's energy.

This explains the increasing focus on climate change issues and responsible investment practices.

SGX and UOB Asset Management have jointly launched the iEdge-UOB Apac Yield Focus Green Reit Index, an index which tracks the performance of 50 higher-yielding Reits in Asia-Pacific (Apac) with positive environmental attributes based on the GRESB assessment framework.  
GRESB is the global leader for ESG research of real assets, covering more than 1,500 property companies, Reits, funds and developers with US$5.7 trillion in assets under management.  
Out of the 50 constituents, nine are S-REITs &amp; Property Trusts: CapitaLand Integrated Commercial Trust, Mapletree Logistics Trust, Mapletree Industrial Trust, Mapletree Commercial Trust, Frasers Logistics &amp; Commercial Trust, Suntec REIT, Keppel REIT, Mapletree North Asia Commercial Trust, and Ascendas India Trust.  
The iEdge-UOB Apac Yield Focus Green Reit Index is the first index globally to go beyond using the overall GRESB score and focus on four key environmental indicators to determine the environmental attributes - energy consumption, water consumption, GHG emissions, and green building certifications.  
The index is expected to be fully investable and tradable, as Apac Reits are included into the index based on minimum size of US$1 billion in free-float market capitalisation, liquidity requirements of at least US$400,000 in median daily average traded value, dividend yield-ranking within market cap quartiles, and a minimum GRESB public disclosure score among others.

After which a green tilt is applied using the GRESB Real Estate Assessment environmental scores.

Reits that have more favourable environmental attributes will be rewarded with a higher weighting factor, compared to Reits that have relative lower environmental scores.

By applying the green portfolio tilt, the iEdge-UOB Apac Yield Focus Green Reit Index constituents emit 7 per cent less GHG, consume 12 per cent less water and 9 per cent less energy than the non-green market-cap weighted version of the index.

Green building certification by floor area is also 13 per cent for certifications obtained at the time of design, construction or renovation, and 10 per cent for operational green building certifications.

All constituent weights are capped at 7 per cent and overall country exposure capped at 40 per cent.

Japan makes up 40 per cent of the index, while Australia, Singapore and Hong Kong are at 36 per cent, 16 per cent and 8 per cent respectively.

The index has a trailing 12-month dividend yield of 4.25 per cent.

The UOB Apac Green Reit ETF, which has filed a prospectus with an expected listing on Nov 23, will track the iEdge-UOB Apac Yield Focus Green Reit Index.

The ETF has a target dividend distribution policy of up to 4 per cent of net asset value per annum on a quarterly basis.   REIT Watch is a weekly column on The Business Times, read the original version.



REIT Watch - Nine S-Reits in Yield Focus index based on positive environmental attributes

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)

<h2>Singapore</h2>SREITs results in a glance (see detailed spreadsheet and calendar attached)<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/237/882/original/image_38758426221635344719889.png?1635344723" class="editor-image img-responsive" data-smartkarma-image-id="237882"></figure><h3><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> 2H21 DPU +39.3% YoY; Resilient occupancy and tenants’ sales amidst Phase-2 temporary setbacks</h3>2H21 revenue and NPI surged by 159.9% and 213.2% YoY, respectively, to S$167.5m and S$120.9m, mainly boosted by ARF acquisition. This brought FY21 revenue and NPI to S$341.2m (+107.5% YoY) and S$246.6m (+122.4%) or 96%/98% of BBG estimates, respectively. On a HoH basis, 2H21 revenue and NPI fell 3.5% and 3.8%, respectively, due to rental rebates provided to tenants in Sep21

SingaporeSREITs results in a glance (see detailed spreadsheet and calendar attached)Frasers Centrepoint Trust (FCT SP) 2H21 DPU +39.3% YoY; Resilient occupancy and tenants’ sales amidst Phase-2 temporary setbacks2H21 revenue and NPI surged by 159.9% and 213.2% YoY, respectively, to S$167.5m and S$120.9m, mainly boosted by ARF acquisition. This brought FY21 revenue and NPI to S$341.2m (+107.5% YoY) and S$246.6m (+122.4%) or 96%/98% of BBG estimates, respectively. On a HoH basis, 2H21 revenue and NPI fell 3.5% and 3.8%, respectively, due to rental rebates provided to tenants in Sep21

APAC IPOs & Placements, Aequitas Research

Clarence Chu

APAC 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.

CapitaLand Ascendas REIT / Equity Bottom-Up

<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> reported its 3Q21 business updates post-market on 19 Oct 21. In this note, we will analyze its performance for the period, current capital management, and share our thoughts on its outlook.

Ascendas Real Estate Investment Trust (AREIT SP) reported its 3Q21 business updates post-market on 19 Oct 21. In this note, we will analyze its performance for the period, current capital management, and share our thoughts on its outlook.

Ascendas REIT 3Q21 - Data Centres Could Unlock Re-Rating Opportunity

IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

IPOs and Catalysts/Events

Uncompromised, Independent, Conflict-Free Research

Global Equity Research Ltd

Global Equity Research was started in 2017 by a group of experienced research professionals. It was founded on a passionate belief in the importance and the need for uncompromised, independent, conflict-free research. We aim to provide differentiated and actionable primary and bottom up fundamental research.

Event-Driven

<a href="https://www.smartkarma.com/entities/esr-reit" target="_blank" data-smartkarma-citation="entities:10934:1" rel="noopener">ESR-REIT (EREIT SP)</a> announced the proposed merger with <a href="https://www.smartkarma.com/entities/ara-logos-logistics-trust" target="_blank" data-smartkarma-citation="entities:937:1" rel="noopener">ARA LOGOS (ALLT SP)</a> by way of a trust scheme of arrangement. Under the scheme consideration, each ALLT unitholder will receive S$0.095 in cash and 1.6765 new EREIT units at an issue price of S$0.510. The total consideration implies a gross exchange ratio of 1.863x and a total scheme consideration of S$0.950 per ALLT unit, which is a 1.6% premium to the ALLT last close price of S$0.935 per unit (on 14 October). The merger was widely anticipated to avoid conflicts of interest arising from the proposed acquisition of ARA Asset Management by <a href="https://www.smartkarma.com/entities/esr-cayman-ltd" target="_blank" data-smartkarma-citation="entities:27983:1" rel="noopener">ESR Cayman (1821 HK)</a> for a total consideration of US$5.2 billion, which was announced on 5 August 2021. ESR Cayman which owns 67% of EREIT’s manager would also own 100% of ALLT’s manager on completion of the acquisition resulting in overlapping investment mandates.A key issue is on pricing particularly the EREIT issue price of S$0.510 which is based on EREIT’s 52-week high. Notably, at the last close EREIT price of S$0.465, implies a scheme consideration of S$0.875 per ALLT unit, which is a -6.5% discount to the ALLT last close price of S$0.935 per unit (on 14 October). <div class="content-highlight">As the cash consideration represents just 10% of the total scheme consideration, ALLT unitholders have greater exposure to any post-merger share price gains driven by the enlarged REIT’s higher free float, lower cost of capital, cost savings and higher growth potential. While short-term pricing concerns will linger, we note that the scheme consideration even at the last close EREIT price seems reasonable. Consequently, we believe that the merger will get the nod from both sets of unitholders.</div>

ESR-REIT (EREIT SP) announced the proposed merger with ARA LOGOS (ALLT SP) by way of a trust scheme of arrangement. Under the scheme consideration, each ALLT unitholder will receive S$0.095 in cash and 1.6765 new EREIT units at an issue price of S$0.510. The total consideration implies a gross exchange ratio of 1.863x and a total scheme consideration of S$0.950 per ALLT unit, which is a 1.6% premium to the ALLT last close price of S$0.935 per unit (on 14 October). The merger was widely anticipated to avoid conflicts of interest arising from the proposed acquisition of ARA Asset Management by ESR Cayman (1821 HK) for a total consideration of US$5.2 billion, which was announced on 5 August 2021. ESR Cayman which owns 67% of EREIT’s manager would also own 100% of ALLT’s manager on completion of the acquisition resulting in overlapping investment mandates.A key issue is on pricing particularly the EREIT issue price of S$0.510 which is based on EREIT’s 52-week high. Notably, at the last close EREIT price of S$0.465, implies a scheme consideration of S$0.875 per ALLT unit, which is a -6.5% discount to the ALLT last close price of S$0.935 per unit (on 14 October). As the cash consideration represents just 10% of the total scheme consideration, ALLT unitholders have greater exposure to any post-merger share price gains driven by the enlarged REIT’s higher free float, lower cost of capital, cost savings and higher growth potential. While short-term pricing concerns will linger, we note that the scheme consideration even at the last close EREIT price seems reasonable. Consequently, we believe that the merger will get the nod from both sets of unitholders.

ESR-REIT’s Proposed Merger with ARA LOGOS

Yoma Strategic Holdings / Equity Bottom-Up

Key Singapore Market Moves and Flows in 3Q21

Singapore

Mapletree Pan Asia Commercial Trust is a Singapore-focused real estate investment trust. The Trust invests on a long-term basis, directly or indirectly, in a diversified portfolio of income-producing real estate used primarily for office and/or retail purposes, whether wholly or partially, as well as real estate-related assets.

Mapletree Pan Asia Commercial Trust (MCT SP)

Mapletree Logistics Trust is an Asia-focused logistics real estate investment trust. The Company invests in a diversified portfolio of income-producing real estate which is used for logistics purposes.

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.

Frasers Centrepoint Trust is a retail real estate investment trust focused on growing unitholder value through asset management, financial management and strategic investments.  The trust invests in retail properties in Singapore and overseas.

FLT offers investors an opportunity to invest in logistics and industrial real estate assets strategically located within major logistics and industrial markets of Australia, Germany and the Netherlands.

Frasers Logistics & Commercial Trust (FLT SP)

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.

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.

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.

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.

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.

GPT Group is an active owner and manager of a diversified portfolio of Australian retail, office and industrial property assets. The Group's property portfolio include the MLC Centre, Australia Square, Rouse Hill Town Centre and Melbourne Central.

Vicinity Centres retails asset and property management services. The Company offers a retail property investment and services organization involved in the ownership, management, and development of retail properties. The Company operates shopping centers across Australia.

Dexus provides real estate services. The Company manages and invests in a portfolio of diversified properties, including office and industrial buildings, retail shopping centers, and car parks. Dexus serves customers in Australia and New Zealand.

Japan Metropolitan Fund Investment Corporation operates real estate investment trust. The Company provides securitized real estate investment, real estate leasing, shopping centers investment, and other services. Japan Metropolitan Fund Investment provides its services throughout Japan.

Japan Metropolitan Fund Investment Corporation (8953 JP)

Japan Metropolitan Fund Investment Corporation

Ryman Hospitality Properties, Inc. is a real estate investment trust specializing in group-oriented, destination hotel assets in urban and resort markets.

Sabra Health Care REIT, Inc. is a real estate investment trust.  The trust owns nursing homes, rehabilitation centers, assisted living facilities, and independent living centers.

The Macerich Company is a fully integrated, self-administered and self-managed real estate investment trust.  The Company acquires, owns, redevelops, manages, and leases regional and community shopping centers located throughout the United States.

Independence Realty Trust, Inc. is an externally managed and advised apartment REIT focused on acquiring and owning well-located garden-style and mid-rise apartment properties throughout the United States.

Kite Realty Group Trust is a full-service, vertically integrated real estate company focused primarily on the development, construction, acquisition, ownership and operation of neighborhood and community shopping centers.  The company own properties in Indiana, Florida, Texas, Washington, Oregon, New Jersey, Illinois and Georgia.

Charter Hall Group invests in and develops real estate.  The Company manages real estate investment funds and develops commercial, residential, and industrial properties.

Mapletree Industrial Trust is a Singapore-focused real estate investment trust with a large and diversified portfolio of industrial properties. The Trust invests in a diverse portfolio of industrial properties with the primary objective of achieving an attractive level of return from rental income and for long-term capital growth.

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Mapletree Industrial Trust (MINT SP)

REIT Watch - Nine S-Reits in Yield Focus index based on positive environmental attributes

According to the UN Environmental Programme, the real estate sector has one of the largest carbon footprints, contributing to...

Singapore Exchange Ltd (SGX)

ASEAN Builder's Scoop (27Oct21)

FCT temporary hiccups; EREIT persistent negative reversions; MINT boosted by US acquisitions; LMRT early signs of recovery; FIRT performance...

SCCM Asia Research

Ascendas REIT 3Q21 - Data Centres Could Unlock Re-Rating Opportunity

Ascendas Real Estate Investment Trust (AREIT SP) reported its 3Q21 business updates post-market on 19 Oct 21. In this note, we will analyze its...

Clarence Chu

ESR-REIT’s Proposed Merger with ARA LOGOS

A key issue is on pricing particularly the EREIT issue price of S$0.510, based on EREIT’s 52-week high. While short-term pricing concerns will...

Arun George

Key Singapore Market Moves and Flows in 3Q21

In 3Q21, the STI saw its narrowest quarterly trading range since 3Q17, generating a 0.2% decline in total return, while the FTSE APAC Index...

Singapore Exchange Ltd (SGX)

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