Pan-Asia Catalysts/Events, Quiddity Advisors

Travis Lundy

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

Last week, after gaining approval at its EGM, Singaporean healthcare REIT, <a href="https://www.smartkarma.com/entities/first-real-estate-investment-trust" target="_blank" data-smartkarma-citation="entities:15848:1" rel="noopener">First REIT (FIRT SP)</a>, launched a renouncable <a href="https://firstreit.listedcompany.com/newsroom/20210119_173452_AW9U_O5KKB80T35AKNDMP.1.pdf" target="_blank" rel="noopener">Rights Issue</a> to raise gross proceeds of approximately S$158.2 million.First REIT was facing a significant refinancing hurdle, with approximately 80.2% (or approximately S$395.7 million) of its debt coming due within the next 17 months. To meet their debt obligations, the company negotiated with lenders to refinance their existing S$400 million secured loan facilities with a new S$260 million loan facility. Although their lenders agreed to this, it was conditional on First REIT being able to raise the remaining S$140 million though a rights issue. The sponsor group of First REIT, <a href="https://www.smartkarma.com/entities/oue-ltd" target="_blank" data-smartkarma-citation="entities:9984:1" rel="noopener">OUE Ltd (OUE SP)</a>, has provided an irrevocable undertaking to backstop the entire Proposed Rights Issue.Separately, First REIT will also be restructuring their Master Lease Agreements ("MLA") with <a href="https://www.smartkarma.com/entities/lippo-karawaci-tbk-pt" target="_blank" data-smartkarma-citation="entities:3121:1" rel="noopener">Lippo Karawaci (LPKR IJ)</a> and PT Metropolis Propertindo Utama (MPU) to restructure the MLAs relating to the 11 hospitals and 3 hospitals, respectively, which they were leasing from <a href="https://www.smartkarma.com/entities/first-real-estate-investment-trust" target="_blank" data-smartkarma-citation="entities:15848:1" rel="noopener">First REIT (FIRT SP)</a>.Below is a look at the details of the rights issue and the impact of the MLA restructuring on <a href="https://www.smartkarma.com/entities/first-real-estate-investment-trust" target="_blank" data-smartkarma-citation="entities:15848:1" rel="noopener">First REIT (FIRT SP)</a>.

Last week, after gaining approval at its EGM, Singaporean healthcare REIT, First REIT (FIRT SP), launched a renouncable Rights Issue to raise gross proceeds of approximately S$158.2 million.First REIT was facing a significant refinancing hurdle, with approximately 80.2% (or approximately S$395.7 million) of its debt coming due within the next 17 months. To meet their debt obligations, the company negotiated with lenders to refinance their existing S$400 million secured loan facilities with a new S$260 million loan facility. Although their lenders agreed to this, it was conditional on First REIT being able to raise the remaining S$140 million though a rights issue. The sponsor group of First REIT, OUE Ltd (OUE SP), has provided an irrevocable undertaking to backstop the entire Proposed Rights Issue.Separately, First REIT will also be restructuring their Master Lease Agreements ("MLA") with Lippo Karawaci (LPKR IJ) and PT Metropolis Propertindo Utama (MPU) to restructure the MLAs relating to the 11 hospitals and 3 hospitals, respectively, which they were leasing from First REIT (FIRT SP).Below is a look at the details of the rights issue and the impact of the MLA restructuring on First REIT (FIRT SP). 

FIRST REIT Rights Set FIRST REIT Right. Right On.

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 Bottom-Up

Capitaland Integrated Commercial Trust / Equity Bottom-Up

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The Ministry of Finance (MOF), the Inland Revenue Authority of Singapore (IRAS), and the Monetary Authority of Singapore (MAS) yesterday announced a set of new measures to provide REITs with greater flexibility to manage their cash flows.
In this insight, I'll talk about the likely implications of the same.
Links to my previous insights on SREITs are below:
<ul>
<li>In <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>In my follow-up insight, <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> I spoke about the factors that have been impacting retail REITs.</li>
<li>In <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> I spoke about how the office REITs might fare better.</li>
<li>In <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> I spoke about how the larger industrial REITs appear to be a little too expensive.</li>
</ul>
</div>


The Ministry of Finance (MOF), the Inland Revenue Authority of Singapore (IRAS), and the Monetary Authority of Singapore (MAS) yesterday announced a set of new measures to provide REITs with greater flexibility to manage their cash flows.
In this insight, I'll talk about the likely implications of the same.
Links to my previous insights on SREITs are below:

In 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.
In my follow-up insight, Trade Ideas for SGREITs - Retail REITs Share Price Has Been More Resilient than It Should Be, I spoke about the factors that have been impacting retail REITs.
In Trade Ideas SG Office REITs - This Time It’s Different I spoke about how the office REITs might fare better.
In Trade Ideas SG Industrial REITs - Bigger Names Have Been Holding up a Little Too Well I spoke about how the larger industrial REITs appear to be a little too expensive.



Singapore REITs - Get Out of Jail Free Card, for the Tenants

Singapore REITs have been on a tear for most of the past decade, however, the recent market turmoil has resulted in most of them correcting more than the market.
In this insight, I'll provide an overview of how the Singapore REITs (SGREITs) have performed this year, outlining the main out/under performers.

Singapore REITs have been on a tear for most of the past decade, however, the recent market turmoil has resulted in most of them correcting more than the market.
In this insight, I'll provide an overview of how the Singapore REITs (SGREITs) have performed this year, outlining the main out/under performers.

Singapore REITs - What's Been Cooking This Year

On 1 November, <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><a href="https://links.sgx.com/FileOpen/2.%20Offer%20Information%20Statement.ashx?App=Announcement&amp;FileID=583976" target="_blank" rel="noopener">announced</a> a S$1.3bn Renounceable Underwritten Rights Issue, issuing 16 rights for every 100 shares held as of Record Date 11 November 2019. The Rights Issue goes to finance the p<a href="https://ir.ascendas-reit.com/newsroom/1._Press_Release_-_Proposed_Acquisition.pdf" target="_blank" rel="noopener">roposed S$1.66bn acquisition</a> of 30 business parks - 28 in the United States and 2 in Singapore.The Rights give rightholders the option to purchase new AREIT shares at S$2.63/share against S$3.17 at the time of issue. This is a 15% discount to the Theoretical Ex-Rights Price (TERP) of S$3.0955 and by the calculation in the presentation, NAV will rise by AREIT parent <a href="https://www.smartkarma.com/entities/capitaland-ltd" target="_blank" data-smartkarma-citation="entities:55:1" rel="noopener">Capitaland Ltd (CAPL SP)</a> and affiliates have announced an Irrevocable Intention to exercise their rights up to their full ownership (~19.0%). DBS and JP Morgan have underwritten the rest of the rights on a 50/50 split.Other shareholders who have purchased shares before the close of trading on 7 November will receive rights. The shares will trade ex-rights on 8 November. The rights will be listed, and will trade on the market, from November 14 through November 22. The last day for Acceptance of Rights Entitlements is 28 November. Units delivered through Rights Entitlements are expected to be credited and tradable on 6 December. Many Singapore REITs in the past few years have raised funds through rights issues though most of them have been unlisted. This will be a little more entertaining. And there are definitely things to do here. More below.

On 1 November, Ascendas Real Estate Investment Trust (AREIT SP)announced a S$1.3bn Renounceable Underwritten Rights Issue, issuing 16 rights for every 100 shares held as of Record Date 11 November 2019. The Rights Issue goes to finance the proposed S$1.66bn acquisition of 30 business parks - 28 in the United States and 2 in Singapore.The Rights give rightholders the option to purchase new AREIT shares at S$2.63/share against S$3.17 at the time of issue. This is a 15% discount to the Theoretical Ex-Rights Price (TERP) of S$3.0955 and by the calculation in the presentation, NAV will rise by AREIT parent Capitaland Ltd (CAPL SP) and affiliates have announced an Irrevocable Intention to exercise their rights up to their full ownership (~19.0%). DBS and JP Morgan have underwritten the rest of the rights on a 50/50 split.Other shareholders who have purchased shares before the close of trading on 7 November will receive rights. The shares will trade ex-rights on 8 November. The rights will be listed, and will trade on the market, from November 14 through November 22. The last day for Acceptance of Rights Entitlements is 28 November. Units delivered through Rights Entitlements are expected to be credited and tradable on 6 December. Many Singapore REITs in the past few years have raised funds through rights issues though most of them have been unlisted. This will be a little more entertaining. And there are definitely things to do here.  More below.

Ascendas REIT Listed Rights Issue - Worth Owning

Technical Analyst, Vermilion Research

Joe Jasper

Technical Analyst

Technical and Quantitative Research

Vermilion Research

Vermilion’s objective is to deliver timely, actionable, and unique technical research to professional investors through the application of our various technical indicators.

Our research strategists seek to highlight securities which we believe are at major inflection points, based on our various technical and quantitative indicators, and offer asymmetric risk/return profiles. Our unique research methodology, centered on relative strength, enables our strategists to deliver superior investment recommendations.

Our process begins by organizing the universe of actively traded stocks into discrete sectors, then into industry groups. We then apply our technical and quantitative tools to identify developing price trends. Once attractive trends are identified within a selected sector or group, we screen for individual stocks which we believe offer the best risk/reward profile. We provide a historical perspective that often reveals, through our long-term charts, how price patterns often repeat themselves over time.

Technical Analysis

After failing to break above resistance, global equities (MSCI ACWI) have had a rough start to the third quarter. Continued weakness in global manufacturing and the U.S.-EU tariff escalation raises the potential for a breakdown in global equities, however our outlook remains neutral as long as the MSCI ACWI remains confined to its horizontal range. In today's report we highlight attractive and actionable set-ups within technology, construction and engineering, and real estate.

After failing to break above resistance, global equities (MSCI ACWI) have had a rough start to the third quarter. Continued weakness in global manufacturing and the U.S.-EU tariff escalation raises the potential for a breakdown in global equities, however our outlook remains neutral as long as the MSCI ACWI remains confined to its horizontal range. In today's report we highlight attractive and actionable set-ups within technology, construction and engineering, and real estate.

Global Equity Strategy: Prevailing Trends Persist

Singapore

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.

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Parkway Life REIT (PREIT SP)

FIRST REIT Rights Set FIRST REIT Right. Right On.

FIRST REIT's has been crushed, then crushed again, then again. COVID created declining discretionary hospital usage putting operator tenants in...

Travis Lundy

Singapore REITs - Get Out of Jail Free Card, for the Tenants

The Ministry of Finance (MOF), the Inland Revenue Authority of Singapore (IRAS), and the Monetary Authority of Singapore (MAS) yesterday announced...

Sumeet Singh

Singapore REITs - What's Been Cooking This Year

Singapore REITs have been on a tear for most of the past decade, however, the recent market turmoil has resulted in most of them correcting more...

Sumeet Singh

Ascendas REIT Listed Rights Issue - Worth Owning

On 1 November, Ascendas Real Estate Investment Trust (AREIT SP)announced a S$1.3bn Renounceable Underwritten Rights Issue, issuing 16 rights for...

Travis Lundy

Global Equity Strategy: Prevailing Trends Persist

After failing to break above resistance, global equities (MSCI ACWI) have had a rough start to the third quarter. Continued weakness in global...

Vermilion Research

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