Pan-Asia Index Rebalances/ Events/ Delta One, Periscope Analytics

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Periscope Analytics

Periscope Analytics focuses on event-driven trades across Asia Pacific and provides comprehensive, timely and systematic coverage of index changes to major Asia Pacific indices in a structured manner.

The analysis includes forecasted inclusions and exclusions to all major Asian indices that have significant amount of tracking assets, including estimates of passive buy/sell flow on the stocks. The service also provides commentary and impact of market consultations, ground rule changes, and other events (IPOs, spin-offs, M&A) that could lead to index changes and passive flow.

Periscope Analytics works with multi-strategy hedge funds, proprietary trading firms, stat arb trading groups and long-only investors that invest and trade in the Asia Pacific region with the data being used to trade index rebalances, avoid pre-positioning and passive flow, and to time entry into and exit from stocks.

Event-Driven Trades Across Asia Pacific

Event-Driven

<ul>
<li>The three-way merger of <a href="https://www.smartkarma.com/entities/kenedix-office-investment-co" target="_blank" data-smartkarma-citation="entities:16263:1" rel="noopener">Kenedix Office Investment Co (8972 JP)</a>, <a href="https://www.smartkarma.com/entities/kenedix-residential-investment" target="_blank" data-smartkarma-citation="entities:17149:1" rel="noopener">Kenedix Residential Investment (3278 JP)</a> and <a href="https://www.smartkarma.com/entities/kenedix-retail-reit-corp" target="_blank" data-smartkarma-citation="entities:188:1" rel="noopener">Kenedix Retail REIT (3453 JP)</a> will be implemented in less than 3 weeks.</li>
<li>With the market cap of the merged entity at US$4.85bn, there will be upgrades to indices with larger tracking assets and significant passive buying at the time of merger implementation.</li>
<li>All three stocks have outperformed their peers since merger announcement and over the last month and at least part of the upcoming passive flow is baked into the price.</li>
</ul>


The three-way merger of Kenedix Office Investment Co (8972 JP), Kenedix Residential Investment (3278 JP) and Kenedix Retail REIT (3453 JP) will be implemented in less than 3 weeks.
With the market cap of the merged entity at US$4.85bn, there will be upgrades to indices with larger tracking assets and significant passive buying at the time of merger implementation.
All three stocks have outperformed their peers since merger announcement and over the last month and at least part of the upcoming passive flow is baked into the price.


Kenedix Merger: Significant Passive Inflows Expected in Three Weeks

Pan-Asia Index Flows & Special Situations, Quiddity Advisors

Janaghan Jeyakumar, CFA

Pan-Asia Index Flows & Special Situations

Quiddity Advisors

Pan-Asia Catalysts/Events

Japan Rental Housing Investment / Event-Driven

<ul>
<li>Midsize residential JREIT <a href="https://www.smartkarma.com/entities/japan-rental-housing-investment" target="_blank" data-smartkarma-citation="entities:20653:1" rel="noopener">Daiwa Securities Living (8986 JP)</a> ("<strong>DSLIC</strong>") launched a follow-on equity offering to partially fund their recently-announced acquisitions.</li>
<li>The primary offer quantity will be 139,047 units and there will also be an over-allotment quantity of 6,953 units.</li>
<li>In this insight, we take a closer look at the details of this offering and the historical performance of DSLIC's previous follow-on equity offerings.</li>
</ul>


Midsize residential JREIT Daiwa Securities Living (8986 JP) ("DSLIC") launched a follow-on equity offering to partially fund their recently-announced acquisitions.
The primary offer quantity will be 139,047 units and there will also be an over-allotment quantity of 6,953 units.
In this insight, we take a closer look at the details of this offering and the historical performance of DSLIC's previous follow-on equity offerings.


Daiwa Securities Living (8986 JP): Historical Post-Offering Performance Does Not Look Good At All

<ul>
<li>The shareholders of <a href="https://www.smartkarma.com/entities/kenedix-office-investment-co" target="_blank" data-smartkarma-citation="entities:16263:1" rel="noopener">Kenedix Office Investment (8972 JP)</a>, <a href="https://www.smartkarma.com/entities/kenedix-residential-investment" target="_blank" data-smartkarma-citation="entities:17149:1" rel="noopener">Kenedix Residential Investment (3278 JP)</a> and <a href="https://www.smartkarma.com/entities/kenedix-retail-reit-corp" target="_blank" data-smartkarma-citation="entities:188:1" rel="noopener">Kenedix Retail REIT (3453 JP)</a> meet in a couple of weeks to vote on the merger.</li>
<li>The stocks are trading in line with the merger ratio and the initial spike following merger announcement has been followed by some selling.</li>
<li>The market cap of the combined entity should now be large enough for migration to indices with larger tracking assets bringing in large passive flows on merger completion.</li>
</ul>


The shareholders of Kenedix Office Investment (8972 JP), Kenedix Residential Investment (3278 JP) and Kenedix Retail REIT (3453 JP) meet in a couple of weeks to vote on the merger.
The stocks are trading in line with the merger ratio and the initial spike following merger announcement has been followed by some selling.
The market cap of the combined entity should now be large enough for migration to indices with larger tracking assets bringing in large passive flows on merger completion.


Kenedix Merger: Big Passive Inflows on the Cards

Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

<ul>
<li>
<a href="https://www.smartkarma.com/entities/nippon-building-fund-inc" target="_blank" data-smartkarma-citation="entities:1900:1" rel="noopener">Nippon Building Fund (8951 JP)</a> announced a smallish primary offering to assist in funding a portion of its Asset Replacement Campaign involving sales and purchases and an uplift in DPU.</li>
<li>That is an occasion to look at how much of float is held by passive trackers. </li>
<li>A test was done on the top 10 J-REITs on a holder-by-holder basis to see what one could expect at a minimum. The result may surprise some.</li>
</ul>



Nippon Building Fund (8951 JP) announced a smallish primary offering to assist in funding a portion of its Asset Replacement Campaign involving sales and purchases and an uplift in DPU.
That is an occasion to look at how much of float is held by passive trackers. 
A test was done on the top 10 J-REITs on a holder-by-holder basis to see what one could expect at a minimum. The result may surprise some.


Nippon Building Fund (8951) - Calculating Passive Tracking of J-REITs and Index Events Around Offers

<ul>
<li>Yesterday after the close, <a href="https://www.smartkarma.com/entities/comforia-residential-reit-inc" target="_blank" data-smartkarma-citation="entities:8200:1" rel="noopener">Comforia Residential REIT (3282 JP)</a> (<strong>"CRR"</strong>) announced a follow-on equity offering to fund part of their recently announced property acquisition. </li>
<li>The primary offer quantity is 22,960 units. In addition, there will also be an over-allotment quantity of 1,140 units. The total size of this offering could be roughly ¥7.4bn (~US$64mn). </li>
<li>Below, we take a look at the attractiveness of CRR's latest offering with greater emphasis on the potential for strong post-offering secondary market performance.</li>
</ul>


Yesterday after the close, Comforia Residential REIT (3282 JP) ("CRR") announced a follow-on equity offering to fund part of their recently announced property acquisition. 
The primary offer quantity is 22,960 units. In addition, there will also be an over-allotment quantity of 1,140 units. The total size of this offering could be roughly ¥7.4bn (~US$64mn). 
Below, we take a look at the attractiveness of CRR's latest offering with greater emphasis on the potential for strong post-offering secondary market performance.


Comforia Residential REIT (3282 JP):  Offering Could Trigger Outperformance Vs Comps

Japan

Japan Prime Realty Investment Corporation is a real estate investment trust (REIT) which mainly invests in office buildings and commercial-use facilities nationwide.

Industrial & Infrastructure Fund Investment Corporation is a a real estate investment trust (REIT). The Company invests in real estate properties such as facilities for industry and infrastructure institution.

Industrial & Infrastructure Fund Investment (3249 JP)

Industrial & Infrastructure Fund Investment

Sekisui House Reit, Inc. is a real estate investment trust (REIT) which mainly invests in real estate and securitized real estate products. Properties are mainly Business office buildings and are located in Tokyo, Osaka and Nagoya area. Sekisui House Reit, Inc. also invests in commercial properties in foreign countries.

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

AEON REIT Investment Corporation is a real estate investment trust (REIT) which invests in securitized real estate products. The REIT mainly invests in suburban shopping centers.

Daiwa Office Investment Corporation is a real estate investment trust (REIT) which invests in securitized real estate products.

LaSalle Logiport REIT is a real estate investment trust (REIT) which invests in logistics facilities. It focus on investing in facilities in Tokyo and Osaka area.

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

Mori Hills REIT Investment Corporation (3234 JP)

Japan Hotel REIT Investment Corporation is a real estate investment trust(REIT) which invests in securitized real estate products. The Company mainly invests in real estate properties used in hotels.

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

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.

The Geo Group Inc. operates private correctional facilities located mostly in the United States, but also in Australia, Canada, New Zealand, and South Africa.  The Company offers educational programs, vocational training, and rehabilitation therapy services.

Equity Commonwealth is a real estate investment trust, or REIT. The Company primarily owns office buildings located in Central Business District and suburban areas of major metropolitan markets in the United States, and has a large concentration of properties leased to the U.S. Government and medical related tenants. Equity CommonWealth also owns industrial lands in Hawaii.

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

Sunstone Hotel Investors, Inc. is a hospitality and lodging real estate investment trust that owns primarily upper scale and upscale hotels in the United States. The Company's hotels are operated under various branded names.

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

Urban Edge Properties is a real estate investment trust. The Company acquires, develops, owns and operates strip shopping centers and malls located in high barrier-to-entry markets. The Company operates within the United States.

Goodman Property Trust is a property trust that invests in, manages and develope portfolio of diversified property assets in Auckland. The Trust's portfolio comprises of office, industrial and retail properties.

National Storage REIT is a Real Estate Investment Trust.  The Trust owns self storage facilities in Brisbane, Sunshine Coast and Gold Coast in Queensland, Sydney Western Suburbs in New South Wales, Melbourne and Geelong in Victoria, Adelaide in South Australia, Perth in Western Australia and Hobart in Tasmania.

Acadia Realty Trust is a fully integrated and self-managed real estate investment trust. The trust specializes in the acquisition, redevelopment and operation of shopping centers which are anchored by grocery and value-oriented retail.  Acadia is headquartered in White Plains, NY.

Nippon Accommodations Fund Inc. is a real estate investment trust (REIT), which invests in income producing properties.  The Company invests in residential buildings.

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Nippon Accommodations Fund (3226 JP)

Kenedix Merger: Significant Passive Inflows Expected in Three Weeks

The Kenedix merger will be implemented in less than 3 weeks and there will be large passive inflows. All 3 stocks have outperformed their peers...

Brian Freitas

Daiwa Securities Living (8986 JP): Historical Post-Offering Performance Does Not Look Good At All

The historical track record of DSLIC's secondary market performance in the wake of follow-on equity offerings is not attractive. I see this as an...

Janaghan Jeyakumar, CFA

Kenedix Merger: Big Passive Inflows on the Cards

The Kenedix REITs are trading around the merger ratios and have outperformed peers since merger announcement. The increased market cap could result...

Brian Freitas

Nippon Building Fund (8951) - Calculating Passive Tracking of J-REITs and Index Events Around Offers

Nippon Building Fund (8951) - Japan's oldest and largest REIT - announced a small secondary offering. That provides an occasion to look at J-REIT...

Travis Lundy

Comforia Residential REIT (3282 JP): Offering Could Trigger Outperformance Vs Comps

CRR launched a ~US$64mn follow-on public equity offering to fund their recently announced acquisition of six residential properties. This offering...

Janaghan Jeyakumar, CFA

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