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)

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Equity Bottom-Up

Lendlease Global Commercial REIT / Equity Bottom-Up

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    <div class='content-caption'>Top performer SREIT and property</div>
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<p>In the year to date, Singapore-listed Reits and property trusts averaged total returns of close to 11 per cent. The 10 best-performing trusts were mostly mid-caps, which averaged 32 per cent total returns and own assets across industrial, retail, healthcare, office and hospitality sub-segments.</p>

<p>Among the 10 best performers, seven were recent inclusions into the FTSE EPRA Nareit Global Developed Index following the September review.<br><br>
The five trusts which received the highest amount of net institutional inflows this year were mid-cap REITs (data as of 28 October): ARA LOGOS Logistics Trust (+S$79 million), OUE Commercial REIT (+S$39 million), Starhill Global REIT (+S$36 million), Lendlease Global Commercial REIT (+S$27 million) and ESR-REIT (+S$26 million).<br><br>
In the month of October, the sector averaged 3 per cent in total returns. Retail investors net bought the sector with net inflows of S$158 million while institutional investors net sold S$195 million (data as at Oct 28).<br><br>
Four of the top five performers over the month were trusts with exposure to the retail or hospitality segments - Dasin Retail Trust (21 per cent), CDL Hospitality Trusts (15 per cent), Ascott Residence Trust (11 per cent), Lippo Malls Indonesia Retail Trust (8 per cent) and Keppel REIT (7 per cent). Three of them reported before market opened last Friday.<br><br>
CDLHT reported year-on-year (yoy) growth of 34.8 per cent in net property income for Q3 2021 attributable to the ongoing recovery from negative effects of the pandemic, broader distribution of vaccines as well as easing of travel restrictions which resulted in more accommodation demand.<br><br>
LMIRT declared Q3 2021 distribution per unit (DPU) of 0.09 cents, up 28.6 per cent yoy. The trust's rental revenue and gross revenue for the period grew 16.2 per cent and 7.0 per cent yoy respectively, due to income from the newly acquired Lippo Mall Puri, which contributed S$8.2 million to rental revenue and S$10.3 million to gross revenue for the quarter.</p>

<p>Keppel Reit reported 20.8 per cent yoy growth in distributable income from operations for the nine months of 2021, due mainly to contributions from Victoria Police Centre in Melbourne, Pinnacle Office Park in Sydney and Keppel Bay Tower in Singapore. The Reit noted that despite the pandemic, portfolio leasing activities remained positive with new leases and expansions seen from diverse industry sectors.</p>

<p>Aside from the three trusts above, more than half of the 40 S-Reits have also released financial results or business updates, before market opened last Friday.</p>

<p>Most of the trusts reported financial and operating metrics which were in line with analysts' estimates, with some exceeding expectations.</p>

<p>Among the trusts that have reported, 14 of them declared DPUs for the latest quarter or half year period. These trusts, on average, saw a 20 per cent year-on-year growth in declared DPUs. Some reasons provided for the increase in DPUs across these trusts include new acquisitions which boosted revenues, lower rental rebates which reduced expense and gradual reopening across the globe.<br><br><strong><em>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"> read </a>the original version.</em></strong></p>
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    Top performer SREIT and property


In the year to date, Singapore-listed Reits and property trusts averaged total returns of close to 11 per cent. The 10 best-performing trusts were mostly mid-caps, which averaged 32 per cent total returns and own assets across industrial, retail, healthcare, office and hospitality sub-segments.

Among the 10 best performers, seven were recent inclusions into the FTSE EPRA Nareit Global Developed Index following the September review.  
The five trusts which received the highest amount of net institutional inflows this year were mid-cap REITs (data as of 28 October): ARA LOGOS Logistics Trust (+S$79 million), OUE Commercial REIT (+S$39 million), Starhill Global REIT (+S$36 million), Lendlease Global Commercial REIT (+S$27 million) and ESR-REIT (+S$26 million).  
In the month of October, the sector averaged 3 per cent in total returns. Retail investors net bought the sector with net inflows of S$158 million while institutional investors net sold S$195 million (data as at Oct 28).  
Four of the top five performers over the month were trusts with exposure to the retail or hospitality segments - Dasin Retail Trust (21 per cent), CDL Hospitality Trusts (15 per cent), Ascott Residence Trust (11 per cent), Lippo Malls Indonesia Retail Trust (8 per cent) and Keppel REIT (7 per cent). Three of them reported before market opened last Friday.  
CDLHT reported year-on-year (yoy) growth of 34.8 per cent in net property income for Q3 2021 attributable to the ongoing recovery from negative effects of the pandemic, broader distribution of vaccines as well as easing of travel restrictions which resulted in more accommodation demand.  
LMIRT declared Q3 2021 distribution per unit (DPU) of 0.09 cents, up 28.6 per cent yoy. The trust's rental revenue and gross revenue for the period grew 16.2 per cent and 7.0 per cent yoy respectively, due to income from the newly acquired Lippo Mall Puri, which contributed S$8.2 million to rental revenue and S$10.3 million to gross revenue for the quarter.

Keppel Reit reported 20.8 per cent yoy growth in distributable income from operations for the nine months of 2021, due mainly to contributions from Victoria Police Centre in Melbourne, Pinnacle Office Park in Sydney and Keppel Bay Tower in Singapore. The Reit noted that despite the pandemic, portfolio leasing activities remained positive with new leases and expansions seen from diverse industry sectors.

Aside from the three trusts above, more than half of the 40 S-Reits have also released financial results or business updates, before market opened last Friday.

Most of the trusts reported financial and operating metrics which were in line with analysts' estimates, with some exceeding expectations.

Among the trusts that have reported, 14 of them declared DPUs for the latest quarter or half year period. These trusts, on average, saw a 20 per cent year-on-year growth in declared DPUs. Some reasons provided for the increase in DPUs across these trusts include new acquisitions which boosted revenues, lower rental rebates which reduced expense and gradual reopening across the globe.  REIT Watch is a weekly column on The Business Times, read the original version.



REIT Watch - Retail and hospitality sector S-Reits outperform in October

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

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    <div class='content-caption'>Rebound in flows</div>
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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.

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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