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><h3>SREITs results in a glance (see detailed spreadsheet and calendar attached)</h3><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/238/456/original/image_76502934321635528996334.png?1635528999" class="editor-image img-responsive" data-smartkarma-image-id="238456"></figure><h3><a href="https://www.smartkarma.com/entities/starhill-global-reit" target="_blank" data-smartkarma-citation="entities:10791" rel="noopener">Starhill Global REIT (SGREIT SP)</a> 1Q22 Business Updates; Little help from VTL leading up to festive season</h3><ul><li>1Q22 revenue and NPI rose by +4.0% and +15.1% YoY, respectively, to S$44.8m (22.8% of BB est.) and S$34.3m (25.3% of BB est.), respectively, mainly due to lower rental assistance and lower operating expenses, which was partially offset by lower contributions from Wisma Atria (Revenue: -8.9%, NPI: -8% YoY). No DI nor DPU was disclosed</li></ul><div style="display: none;"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/238/455/original/blobid0.png?1635528963" class="editor-image img-responsive" data-smartkarma-image-id="238455"></figure></div>

SingaporeSREITs results in a glance (see detailed spreadsheet and calendar attached)Starhill Global REIT (SGREIT SP) 1Q22 Business Updates; Little help from VTL leading up to festive season1Q22 revenue and NPI rose by +4.0% and +15.1% YoY, respectively, to S$44.8m (22.8% of BB est.) and S$34.3m (25.3% of BB est.), respectively, mainly due to lower rental assistance and lower operating expenses, which was partially offset by lower contributions from Wisma Atria (Revenue: -8.9%, NPI: -8% YoY). No DI nor DPU was disclosed

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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<p>The iEdge S-REIT Index ended the third quarter of 2021 relatively flat with 0.2 per cent total returns, in line with global REIT markets which declined towards the later half of the quarter due to steepening of yield curves. This brings the index year-to-date total returns to 4.5 per cent.</p>

<p>There are 20 trusts which outperformed the index in 3Q2021, including ten of the 11 trusts that entered the FTSE EPRA Nareit Global Developed Index following the most recent September review. The top five performing trusts, which were all recent index inclusions, were: OUE Commercial REIT (14.2 per cent), Starhill Global REIT (12.4 per cent), ARA LOGOS Logistics Trust (10.1 per cent), Far East Hospitality Trust (9.9 per cent), and ESR-REIT (9.3 per cent). These five trusts received net institutional inflows of S$192 million and net retail outflows of S$89 million this quarter.</p>

<p>In the year-to-date, the five best performing trusts where: ARA LOGOS Logistics Trust (60.2 per cent), Sabana REIT (34.3 per cent), Starhill Global REIT (32.6 per cent), Keppel Pacific Oak US REIT (28.4 per cent) and First REIT (27.8 per cent). These five trusts received net institutional inflows of S$132 million and net retail outflows of S$66 million in the year-to-date.<br><br>
Overall, institutional investors were net buyers of the S-Reits and property trusts sector in the third quarter, after being net sellers in the first half of 2021.</p>

<p>The sector received three consecutive months of net institutional inflows from July to September 2021, amounting to S$270 million.</p>

<p>Retail investors continue to be net buyers of the sector since the start of the year, with the exception of July, which saw net retail outflows of S$95 million. In the year to date, retail investors net buying activities in the sector totalled S$917 million.<br><br>
There are four trusts that received net inflows from both institutional and retail investors in the year-to-date: Frasers Logistics &amp; Commercial Trust (institutional: S$16.4 million; retail: S$8.5 million) , Far East Hospitality Trust (institutional: S$8.2 million; retail: S$1.7 million), Keppel Pacific Oak US REIT (institutional: S$5.5 million; retail: S$9.7 million) and Prime US REIT (institutional: S$0.5 million; retail: S$12.8 million).</p>

<p>Top three performing sub-sectors for the 3Q2021 period are Industrial REITs (3.3 per cent total returns), Specialised REITs (2.9 per cent), and Diversified REITs (2.0 per cent). Top three performing sub-sectors in the year-to-date are Healthcare REITs (25.4 per cent total returns), Industrial REITs (21.0 per cent), and Office REITs (11.8 per cent).<br><br><strong><em>REIT Watch is a weekly column on The Business Times,<a href="https://www.businesstimes.com.sg/companies-markets/china-focused-s-reits-resilient-amid-onshore-property-focus"> </a><a href="https://www.businesstimes.com.sg/companies-markets/third-quarter-wrap-sees-institutional-investors-return-to-s-reits">read </a>the original version.</em></strong></p>
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    Rebound in flows


The iEdge S-REIT Index ended the third quarter of 2021 relatively flat with 0.2 per cent total returns, in line with global REIT markets which declined towards the later half of the quarter due to steepening of yield curves. This brings the index year-to-date total returns to 4.5 per cent.

There are 20 trusts which outperformed the index in 3Q2021, including ten of the 11 trusts that entered the FTSE EPRA Nareit Global Developed Index following the most recent September review. The top five performing trusts, which were all recent index inclusions, were: OUE Commercial REIT (14.2 per cent), Starhill Global REIT (12.4 per cent), ARA LOGOS Logistics Trust (10.1 per cent), Far East Hospitality Trust (9.9 per cent), and ESR-REIT (9.3 per cent). These five trusts received net institutional inflows of S$192 million and net retail outflows of S$89 million this quarter.

In the year-to-date, the five best performing trusts where: ARA LOGOS Logistics Trust (60.2 per cent), Sabana REIT (34.3 per cent), Starhill Global REIT (32.6 per cent), Keppel Pacific Oak US REIT (28.4 per cent) and First REIT (27.8 per cent). These five trusts received net institutional inflows of S$132 million and net retail outflows of S$66 million in the year-to-date.  
Overall, institutional investors were net buyers of the S-Reits and property trusts sector in the third quarter, after being net sellers in the first half of 2021.

The sector received three consecutive months of net institutional inflows from July to September 2021, amounting to S$270 million.

Retail investors continue to be net buyers of the sector since the start of the year, with the exception of July, which saw net retail outflows of S$95 million. In the year to date, retail investors net buying activities in the sector totalled S$917 million.  
There are four trusts that received net inflows from both institutional and retail investors in the year-to-date: Frasers Logistics &amp; Commercial Trust (institutional: S$16.4 million; retail: S$8.5 million) , Far East Hospitality Trust (institutional: S$8.2 million; retail: S$1.7 million), Keppel Pacific Oak US REIT (institutional: S$5.5 million; retail: S$9.7 million) and Prime US REIT (institutional: S$0.5 million; retail: S$12.8 million).

Top three performing sub-sectors for the 3Q2021 period are Industrial REITs (3.3 per cent total returns), Specialised REITs (2.9 per cent), and Diversified REITs (2.0 per cent). Top three performing sub-sectors in the year-to-date are Healthcare REITs (25.4 per cent total returns), Industrial REITs (21.0 per cent), and Office REITs (11.8 per cent).  REIT Watch is a weekly column on The Business Times, read the original version.



REIT Watch - Third quarter wrap sees institutional investors return to S-Reits

Frencken, iFAST & First Resources Among Most Consistent Gainers in 3Q21

<h2>Singapore</h2><h3><a href="https://www.smartkarma.com/entities/starhill-global-reit" target="_blank" data-smartkarma-citation="entities:10791" rel="noopener">Starhill Global REIT (SGREIT SP)</a> prices S$125m 2.23% notes due 2028</h3><p>SGREIT has priced S$125m notes with a fixed interest rate of 2.23% per annum due 2028, to be issued under its S$2bn multi-currency debt issuance programme. The interest for the Series 003 notes will be payable semi-annually in arrear, and have a tenor of seven years. The notes may be redeemed at the option of the issuer in whole or in part on any interest payment date prior to the maturity date on 13Sep28 at the make-whole amount together with interest accrued. The net proceeds from the notes will be used to refinance existing borrowings, meet capital expenditure requirements, or for working capital purposes.</p>

SingaporeStarhill Global REIT (SGREIT SP) prices S$125m 2.23% notes due 2028SGREIT has priced S$125m notes with a fixed interest rate of 2.23% per annum due 2028, to be issued under its S$2bn multi-currency debt issuance programme. The interest for the Series 003 notes will be payable semi-annually in arrear, and have a tenor of seven years. The notes may be redeemed at the option of the issuer in whole or in part on any interest payment date prior to the maturity date on 13Sep28 at the make-whole amount together with interest accrued. The net proceeds from the notes will be used to refinance existing borrowings, meet capital expenditure requirements, or for working capital purposes.

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<p>As the earnings season conclude, REITs and Property Trusts listed in Singapore have announced financial results or published business updates for the period ending 30 June 2021. Of the S-REITs which declared distributions for the first half of calendar year 2021, average change in distribution per unit (DPU) increased by 36 per cent year-on-year (y-o-y).</p>

<p>The five S-REITs with the highest y-o-y DPU increments for the period Jan to Jun 2021 are: SPH REIT (228 per cent), Sabana Shari'ah Compliant Industrial REIT (215 per cent), Starhill Global REIT (196 per cent), Ascott Residence Trust (95 per cent) and CapitaLand Integrated Commercial Trust (75 per cent).</p>

<p>SPH REIT declared a DPU of 1.38 Singapore cents for Q3 FY2021 ended 31 May, bringing its DPU for the period of Dec 2020 to May 2021 to 2.62 Singapore cents - a 228 per cent increase y-o-y. In its latest business update for 3Q FY2021, the REIT noted gradual recovery with improvements in gross revenue of 22.2 per cent y-o-y to S$209.6 million. This was led by recovery in performance across all assets while supported by additional quarter of contribution from Westfield Marion compared to the same period last year and a decrease in rent reliefs to Singapore and Australia eligible tenants.</p>

<p>Sabana Shari'ah Compliant Industrial REIT (Sabana REIT) reported DPU of 1.48 Singapore cents for 1H 2021, representing a 215 per cent y-o-y increase. This was mainly due to the temporary retainment of 55.0 per cent of its distributable income in 1H 2020 to conserve capital. The REIT also reported a 14.1 per cent y-o-y increase in gross revenue, mainly due to higher contribution from New Tech Park, 23 Serangoon North Avenue 5 and 10 Changi South Street 2 on higher occupancy. During the period, Sabana REIT announced the removal of its Shari’ah compliance requirement in order to accommodate the changing profile of tenants and enhance its flexibility for the next phase of growth.</p>

<p>Starhill Global REIT (SGREIT) reported 2H FY2020/2021 DPU of 2.07 Singapore cents, representing a y-o-y increase of 196 per cent, mainly due to the release of retained income for working capital requirements. SGREIT noted that gross revenue for the period increased 10.5 per cent y-o-y, resulting in a 20.2 per cent increase in its net property income (NPI). This was mainly attributed to lower rental assistance for eligible tenants affected by the COVID-19 pandemic and the appreciation of the Australian dollar against the Singapore dollar.</p>

<p>Ascott Residence Trust (ART) raised its DPU for 1H 2021 by 95 per cent y-o-y, attributable to active portfolio optimisation. The trust noted that distributable income for 1H 2021 included a one-off partial distribution of divestment gains of S$20 million to share divestment gains with unitholders, replace income loss from divested assets and mitigate the impact of COVID-19 on distributions.</p>

<p>CapitaLand Integrated Commercial Trust (CICT) announced a DPU of 5.18 Singapore cents for 1H 2021, representing a 75 per cent increase y-o-y. The REIT reported a 103 per cent and 118 per cent y-o-y increase in gross revenue and NPI respectively. In 1H 2021, CICT granted S$18.9 million of rental waivers for tenants affected by COVID-19, particularly during Singapore’s first Phase 2 (Heightened Alert) from 16 May to 13 June 2021.<br><br><strong><em>For more research and information on Singapore’s REIT sector, visit <a href="https://www.sgx.com/research-education/sectors">sgx.com/research-education/sectors</a> for the monthly SREITs &amp; Property Trusts Chartbook</em></strong></p>
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    Top 5 S-REITs with largest yoy increase in DPU for 1H2021


As the earnings season conclude, REITs and Property Trusts listed in Singapore have announced financial results or published business updates for the period ending 30 June 2021. Of the S-REITs which declared distributions for the first half of calendar year 2021, average change in distribution per unit (DPU) increased by 36 per cent year-on-year (y-o-y).

The five S-REITs with the highest y-o-y DPU increments for the period Jan to Jun 2021 are: SPH REIT (228 per cent), Sabana Shari'ah Compliant Industrial REIT (215 per cent), Starhill Global REIT (196 per cent), Ascott Residence Trust (95 per cent) and CapitaLand Integrated Commercial Trust (75 per cent).

SPH REIT declared a DPU of 1.38 Singapore cents for Q3 FY2021 ended 31 May, bringing its DPU for the period of Dec 2020 to May 2021 to 2.62 Singapore cents - a 228 per cent increase y-o-y. In its latest business update for 3Q FY2021, the REIT noted gradual recovery with improvements in gross revenue of 22.2 per cent y-o-y to S$209.6 million. This was led by recovery in performance across all assets while supported by additional quarter of contribution from Westfield Marion compared to the same period last year and a decrease in rent reliefs to Singapore and Australia eligible tenants.

Sabana Shari'ah Compliant Industrial REIT (Sabana REIT) reported DPU of 1.48 Singapore cents for 1H 2021, representing a 215 per cent y-o-y increase. This was mainly due to the temporary retainment of 55.0 per cent of its distributable income in 1H 2020 to conserve capital. The REIT also reported a 14.1 per cent y-o-y increase in gross revenue, mainly due to higher contribution from New Tech Park, 23 Serangoon North Avenue 5 and 10 Changi South Street 2 on higher occupancy. During the period, Sabana REIT announced the removal of its Shari’ah compliance requirement in order to accommodate the changing profile of tenants and enhance its flexibility for the next phase of growth.

Starhill Global REIT (SGREIT) reported 2H FY2020/2021 DPU of 2.07 Singapore cents, representing a y-o-y increase of 196 per cent, mainly due to the release of retained income for working capital requirements. SGREIT noted that gross revenue for the period increased 10.5 per cent y-o-y, resulting in a 20.2 per cent increase in its net property income (NPI). This was mainly attributed to lower rental assistance for eligible tenants affected by the COVID-19 pandemic and the appreciation of the Australian dollar against the Singapore dollar.

Ascott Residence Trust (ART) raised its DPU for 1H 2021 by 95 per cent y-o-y, attributable to active portfolio optimisation. The trust noted that distributable income for 1H 2021 included a one-off partial distribution of divestment gains of S$20 million to share divestment gains with unitholders, replace income loss from divested assets and mitigate the impact of COVID-19 on distributions.

CapitaLand Integrated Commercial Trust (CICT) announced a DPU of 5.18 Singapore cents for 1H 2021, representing a 75 per cent increase y-o-y. The REIT reported a 103 per cent and 118 per cent y-o-y increase in gross revenue and NPI respectively. In 1H 2021, CICT granted S$18.9 million of rental waivers for tenants affected by COVID-19, particularly during Singapore’s first Phase 2 (Heightened Alert) from 16 May to 13 June 2021.  For more research and information on Singapore’s REIT sector, visit sgx.com/research-education/sectors for the monthly SREITs &amp; Property Trusts Chartbook



REIT Watch - S-REITs release retained earnings, 1H2021 DPU up 36%

Singapore

Starhill Global REIT is a real estate investment trust.  The trust invests in retail and office buildings in Singapore and overseas.

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Starhill Global REIT (SGREIT SP)

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REIT Watch - S-REITs release retained earnings, 1H2021 DPU up 36%

As the earnings season conclude, REITs and Property Trusts listed in Singapore have announced financial results or published...

Singapore Exchange Ltd (SGX)

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