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.

Asia’s leading multi-asset exchange

SGX Market Strategist, Equity & Fixed Income, Singapore Exchange Ltd (SGX)

Geoff Howie

SGX Market Strategist, Equity & Fixed Income

Equity Bottom-Up

Manulife US REIT (MUST) / Equity Bottom-Up

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<ul>
<li>Of the S-REITs on SGX, at least 10 are engaged in the acquisition, development, ownership, leasing, management and operation of office properties located in Singapore, Malaysia, South Korea, Australia, Europe, UK and the US. Among them, three – Manulife US REIT, Prime US REIT and Keppel Pacific Oak US REIT – are focused on the US office market. </li>
</ul>
<ul>
<li>
For the quarter ended 31 Dec 2019, the three trusts averaged a DPU of 1.57 US cents. The trio averaged a net property income of US$24.2 million and a gross revenue of US$38.7 million. 
	 </li>
	<li>SGX’s three US-focused office REITs have a combined market cap of more than S$3 billion. In the 2020 YTD they have averaged a total return of 11.4%, bringing their 1Y total returns to 29.5%. As Prime US REIT was listed on 19 July 2019, its 1Y performance spans only 7M.</li>
</ul>
 

As at end-2019, Singapore listed 35 REITs, six stapled trusts and two property trusts. These trusts contributed 24% to day-to-day turnover of Singapore’s stock market over the last calendar year. In contrast, the 43 trusts maintained a combined market value of more than S$111.9 billion, representing 12% of Singapore’s stock market capitalisation of S$937.8 billion at the end of last year.

Of the S-REITs on SGX, at least 10 are engaged in the acquisition, development, ownership, leasing, management and operation of office properties located in Singapore, Malaysia, South Korea, Australia, Europe, UK and the US.  Among them, three – Manulife US REIT, Prime US REIT and Keppel Pacific Oak US REIT – are focused on the US office market. Last month, the trio reported their results for the three months ended 31 December 2019. 
 

Earnings Highlights

For the quarter ended 31 December 2019, the three trusts averaged a distribution per unit (DPU) of 1.57 US cents. Prime US REIT, which made its trading debut on 19 July 2019, reported the highest DPU of 1.77 US cents, up 9.0% from its IPO forecast. Manulife US REIT reported a 5.9% YoY decline in DPU to 1.44 US cents due to its enlarged unit base, following its private placement and preferential offerings to fund acquisitions.

The trio averaged a net property income of US$24.2 million and a gross revenue of US$38.7 million.

The three REITs averaged an aggregate leverage ratio of 36.1% as of the quarter ended 31 December 2019. Manulife US REIT had the highest aggregate leverage ratio of 37.7%, while Prime US REIT had the lowest gearing of 33.7%. Interest cover for the trio averaged 4.7 times in the Dec quarter. Prime US REIT had the highest interest coverage ratio of 5.5 times, followed by Keppel Pacific Oak US REIT at 4.8 times.

Dec 2019 Quarter Financial Results

<table class="table table-striped"><tbody>
<tr>
<td>
			Name
			</td>
			<td>
			DPU (US cts)
			</td>
			<td>
			YoY Chg (%)
			</td>
			<td>
			Net Property Income (US$M)
			</td>
			<td>
			YoY Chg (%)
			</td>
			<td>
			Gross Revenue (US$M)
			</td>
			<td>
			YoY Chg (%)
			</td>
		</tr>
<tr>
<td>
			MANULIFE US REIT
			</td>
			<td>
			1.44*
			</td>
			<td>
			-5.9
			</td>
			<td>
			30.3
			</td>
			<td>
			18.9
			</td>
			<td>
			48.8
			</td>
			<td>
			20.4
			</td>
		</tr>
<tr>
<td>
			PRIME US REIT
			</td>
			<td>
			1.77
			</td>
			<td>
			9.0^
			</td>
			<td>
			22.3
			</td>
			<td>
			3.0^
			</td>
			<td>
			33.5
			</td>
			<td>
			2.0^
			</td>
		</tr>
<tr>
<td>
			KEPPEL PACIFIC OAK US REIT
			</td>
			<td>
			1.51
			</td>
			<td>
			20.8
			</td>
			<td>
			20.1
			</td>
			<td>
			37.1
			</td>
			<td>
			33.8
			</td>
			<td>
			37.8
			</td>
		</tr>
<tr>
<td>
			Average
			</td>
			<td>
			1.57
			</td>
			<td>
			 
			</td>
			<td>
			24.2
			</td>
			<td>
			 
			</td>
			<td>
			38.7
			</td>
			<td>
			 
			</td>
		</tr>
</tbody></table>
*4Q2019 DPU calculation based on enlarged unit base following the private placement under which 91,325,000 units were issued on 30 Sep 2019 (Capitol Private Placement Units) and preferential offering where 72,855,530 units were issued on 18 Oct 2019 (Capitol Preferential Offering Units).

^Using IPO Forecast, not YoY Performance, as comparison basis since trading debut was 19 July 2019

<table class="table table-striped"><tbody>
<tr>
<td>
			Name
			</td>
			<td>
			Aggregate Leverage Ratio (%) as at 31 Dec 2019
			</td>
			<td>
			Aggregate Leverage Ratio (%) as at 30 Sep 2019
			</td>
			<td>
			Interest Coverage Ratio (x) as at 31 Dec 2019
			</td>
			<td>
			Interest Coverage Ratio (x) as at 30 Sep 2019
			</td>
		</tr>
<tr>
<td>
			MANULIFE US REIT
			</td>
			<td>
			37.7
			</td>
			<td>
			36.3
			</td>
			<td>
			3.8
			</td>
			<td>
			3.8
			</td>
		</tr>
<tr>
<td>
			PRIME US REIT
			</td>
			<td>
			33.7
			</td>
			<td>
			NA~
			</td>
			<td>
			5.5
			</td>
			<td>
			NA~
			</td>
		</tr>
<tr>
<td>
			KEPPEL PACIFIC OAK US REIT
			</td>
			<td>
			36.9
			</td>
			<td>
			38.5
			</td>
			<td>
			4.8
			</td>
			<td>
			4.6
			</td>
		</tr>
<tr>
<td>
			Average
			</td>
			<td>
			36.1
			</td>
			<td>
			 
			</td>
			<td>
			4.7
			</td>
			<td>
			 
			</td>
		</tr>
</tbody></table>
~No YoY performance data available as listing date was 19 July 2019

Source: Company data

Outlook

Manulife US REIT

<ul>
<li>The lagged effects of the US Federal Reserve’s monetary policy tightening and trade-related uncertainties are expected to impact the growth in the first half of the year.</li>
	<li>We expect modest acceleration to take place in the second half of the year as the decline in mortgage rates, a reacceleration in business investment, and easier monetary conditions work their way through the broader economy.</li>
	<li>With a healthy jobs market (unemployment rate is at 40-year low) and the low interest rate environment, the stage is set for consumer spending to continue to grow at a healthy pace in 2020.</li>
	<li>As for the coronavirus outbreak in China, it is too soon to know how deep the impact may be on the global and US economies.</li>
</ul>
Click <a href="https://links.sgx.com/FileOpen/MUST%20FY%202019%20Press%20Release.ashx?App=Announcement&amp;FileID=595328">here</a> for the full results release 
 

Prime US REIT

<ul>
<li>Prime’s diversified portfolio is supported by its favourable tenant exposure in the STEM (Science, Technology, Engineering and Mathematics) and/or TAMI (Technology, Advertising, Media and Information) sectors.</li>
	<li>Real estate information provider CoStar expects the tech sector to continue its outperformance through 2020.</li>
	<li>With the coronavirus outbreak unfolding in China and globally, we continue to closely monitor its impact on the global economy.</li>
	<li>Barring any unforeseen circumstances, we remain cautiously optimistic about the US office market.</li>
</ul>
Click <a href="https://links.sgx.com/FileOpen/Prime%20-%20Press%20Release.ashx?App=Announcement&amp;FileID=596016">here</a> for the full results release

Keppel Pacific Oak US REIT

<ul>
<li>We will continue to leverage KORE’s strategic exposure to fast-expanding tech hubs and the REIT’s unique value proposition of having its office towers and business campus-style properties that are desired by many companies, especially those in the tech sector.</li>
	<li>The Manager will also continue its strategy of pursuing value-accretive acquisitions in first-choice submarkets in key US growth markets with visible organic growth opportunities supported by positive rental reversion.</li>
	<li>The Manager’s continued prudent approach towards capital management and its proactive leasing efforts will also see KORE capture rental escalations and positive rental reversions as leases expire.</li>
</ul>
Click <a href="https://links.sgx.com/FileOpen/KORE%204Q19%20Results.ashx?App=Announcement&amp;FileID=593921">here</a> for the full results release

2019 Performances

SGX’s three US-focused office REITs have a combined market cap of more than S$3 billion. In the 2020 year-to-date, they have averaged a total return of 11.4%, bringing their one-year total returns to 29.5%. Note that since Prime US REIT was listed on 19 July 2019, its one-year performance spans only seven months.

The table below details SGX’s three US-focused office REITs, sorted by market cap. The trio trades in USD, with their SGD equivalents shown in table. 
 

<table class="table table-striped"><tbody>
<tr>
<td>
			Name
			</td>
			<td>
			SGX Code
			</td>
			<td>
			Market Cap (S$M)
			</td>
			<td>
			Total Return 2019 (%)
			</td>
			<td>
			Total Return YTD (%)
			</td>
			<td>
			Total Return 1Y (%)
			</td>
		</tr>
<tr>
<td>
			MANULIFE US REIT
			</td>
			<td>
			BTOU
			</td>
			<td>
			1,631
			</td>
			<td>
			40.2
			</td>
			<td>
			9.9
			</td>
			<td>
			37.6
			</td>
		</tr>
<tr>
<td>
			PRIME US REIT
			</td>
			<td>
			OXMU
			</td>
			<td>
			1,061
			</td>
			<td>
			NA
			</td>
			<td>
			16.7
			</td>
			<td>
			17.0
			</td>
		</tr>
<tr>
<td>
			KEPPEL PACIFIC OAK US REIT
			</td>
			<td>
			CMOU
			</td>
			<td>
			744
			</td>
			<td>
			39.1
			</td>
			<td>
			7.6
			</td>
			<td>
			33.9
			</td>
		</tr>
<tr>
<td>
			Average
			</td>
			<td>
			 
			</td>
			<td>
			 
			</td>
			<td>
			 
			</td>
			<td>
			11.4
			</td>
			<td>
			29.5
			</td>
		</tr>
</tbody></table>
 Source: Bloomberg &amp; StockFacts (data as of 20 Feb 20)

*7M performance as listing date was 19 July 2019
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Of the S-REITs on SGX, at least 10 are engaged in the acquisition, development, ownership, leasing, management and operation of office properties located in Singapore, Malaysia, South Korea, Australia, Europe, UK and the US. Among them, three – Manulife US REIT, Prime US REIT and Keppel Pacific Oak US REIT – are focused on the US office market. 



For the quarter ended 31 Dec 2019, the three trusts averaged a DPU of 1.57 US cents. The trio averaged a net property income of US$24.2 million and a gross revenue of US$38.7 million. 
	 
	SGX’s three US-focused office REITs have a combined market cap of more than S$3 billion. In the 2020 YTD they have averaged a total return of 11.4%, bringing their 1Y total returns to 29.5%. As Prime US REIT was listed on 19 July 2019, its 1Y performance spans only 7M.

 

As at end-2019, Singapore listed 35 REITs, six stapled trusts and two property trusts. These trusts contributed 24% to day-to-day turnover of Singapore’s stock market over the last calendar year. In contrast, the 43 trusts maintained a combined market value of more than S$111.9 billion, representing 12% of Singapore’s stock market capitalisation of S$937.8 billion at the end of last year.

Of the S-REITs on SGX, at least 10 are engaged in the acquisition, development, ownership, leasing, management and operation of office properties located in Singapore, Malaysia, South Korea, Australia, Europe, UK and the US.  Among them, three – Manulife US REIT, Prime US REIT and Keppel Pacific Oak US REIT – are focused on the US office market. Last month, the trio reported their results for the three months ended 31 December 2019. 
 

Earnings Highlights

For the quarter ended 31 December 2019, the three trusts averaged a distribution per unit (DPU) of 1.57 US cents. Prime US REIT, which made its trading debut on 19 July 2019, reported the highest DPU of 1.77 US cents, up 9.0% from its IPO forecast. Manulife US REIT reported a 5.9% YoY decline in DPU to 1.44 US cents due to its enlarged unit base, following its private placement and preferential offerings to fund acquisitions.

The trio averaged a net property income of US$24.2 million and a gross revenue of US$38.7 million.

The three REITs averaged an aggregate leverage ratio of 36.1% as of the quarter ended 31 December 2019. Manulife US REIT had the highest aggregate leverage ratio of 37.7%, while Prime US REIT had the lowest gearing of 33.7%. Interest cover for the trio averaged 4.7 times in the Dec quarter. Prime US REIT had the highest interest coverage ratio of 5.5 times, followed by Keppel Pacific Oak US REIT at 4.8 times.

Dec 2019 Quarter Financial Results




			Name
			
			
			DPU (US cts)
			
			
			YoY Chg (%)
			
			
			Net Property Income (US$M)
			
			
			YoY Chg (%)
			
			
			Gross Revenue (US$M)
			
			
			YoY Chg (%)
			
		


			MANULIFE US REIT
			
			
			1.44*
			
			
			-5.9
			
			
			30.3
			
			
			18.9
			
			
			48.8
			
			
			20.4
			
		


			PRIME US REIT
			
			
			1.77
			
			
			9.0^
			
			
			22.3
			
			
			3.0^
			
			
			33.5
			
			
			2.0^
			
		


			KEPPEL PACIFIC OAK US REIT
			
			
			1.51
			
			
			20.8
			
			
			20.1
			
			
			37.1
			
			
			33.8
			
			
			37.8
			
		


			Average
			
			
			1.57
			
			
			 
			
			
			24.2
			
			
			 
			
			
			38.7
			
			
			 
			
		

*4Q2019 DPU calculation based on enlarged unit base following the private placement under which 91,325,000 units were issued on 30 Sep 2019 (Capitol Private Placement Units) and preferential offering where 72,855,530 units were issued on 18 Oct 2019 (Capitol Preferential Offering Units).

^Using IPO Forecast, not YoY Performance, as comparison basis since trading debut was 19 July 2019




			Name
			
			
			Aggregate Leverage Ratio (%) as at 31 Dec 2019
			
			
			Aggregate Leverage Ratio (%) as at 30 Sep 2019
			
			
			Interest Coverage Ratio (x) as at 31 Dec 2019
			
			
			Interest Coverage Ratio (x) as at 30 Sep 2019
			
		


			MANULIFE US REIT
			
			
			37.7
			
			
			36.3
			
			
			3.8
			
			
			3.8
			
		


			PRIME US REIT
			
			
			33.7
			
			
			NA~
			
			
			5.5
			
			
			NA~
			
		


			KEPPEL PACIFIC OAK US REIT
			
			
			36.9
			
			
			38.5
			
			
			4.8
			
			
			4.6
			
		


			Average
			
			
			36.1
			
			
			 
			
			
			4.7
			
			
			 
			
		

~No YoY performance data available as listing date was 19 July 2019

Source: Company data

Outlook

Manulife US REIT


The lagged effects of the US Federal Reserve’s monetary policy tightening and trade-related uncertainties are expected to impact the growth in the first half of the year.
	We expect modest acceleration to take place in the second half of the year as the decline in mortgage rates, a reacceleration in business investment, and easier monetary conditions work their way through the broader economy.
	With a healthy jobs market (unemployment rate is at 40-year low) and the low interest rate environment, the stage is set for consumer spending to continue to grow at a healthy pace in 2020.
	As for the coronavirus outbreak in China, it is too soon to know how deep the impact may be on the global and US economies.

Click here for the full results release 
 

Prime US REIT


Prime’s diversified portfolio is supported by its favourable tenant exposure in the STEM (Science, Technology, Engineering and Mathematics) and/or TAMI (Technology, Advertising, Media and Information) sectors.
	Real estate information provider CoStar expects the tech sector to continue its outperformance through 2020.
	With the coronavirus outbreak unfolding in China and globally, we continue to closely monitor its impact on the global economy.
	Barring any unforeseen circumstances, we remain cautiously optimistic about the US office market.

Click here for the full results release

Keppel Pacific Oak US REIT


We will continue to leverage KORE’s strategic exposure to fast-expanding tech hubs and the REIT’s unique value proposition of having its office towers and business campus-style properties that are desired by many companies, especially those in the tech sector.
	The Manager will also continue its strategy of pursuing value-accretive acquisitions in first-choice submarkets in key US growth markets with visible organic growth opportunities supported by positive rental reversion.
	The Manager’s continued prudent approach towards capital management and its proactive leasing efforts will also see KORE capture rental escalations and positive rental reversions as leases expire.

Click here for the full results release

2019 Performances

SGX’s three US-focused office REITs have a combined market cap of more than S$3 billion. In the 2020 year-to-date, they have averaged a total return of 11.4%, bringing their one-year total returns to 29.5%. Note that since Prime US REIT was listed on 19 July 2019, its one-year performance spans only seven months.

The table below details SGX’s three US-focused office REITs, sorted by market cap. The trio trades in USD, with their SGD equivalents shown in table. 
 




			Name
			
			
			SGX Code
			
			
			Market Cap (S$M)
			
			
			Total Return 2019 (%)
			
			
			Total Return YTD (%)
			
			
			Total Return 1Y (%)
			
		


			MANULIFE US REIT
			
			
			BTOU
			
			
			1,631
			
			
			40.2
			
			
			9.9
			
			
			37.6
			
		


			PRIME US REIT
			
			
			OXMU
			
			
			1,061
			
			
			NA
			
			
			16.7
			
			
			17.0
			
		


			KEPPEL PACIFIC OAK US REIT
			
			
			CMOU
			
			
			744
			
			
			39.1
			
			
			7.6
			
			
			33.9
			
		


			Average
			
			
			 
			
			
			 
			
			
			 
			
			
			11.4
			
			
			29.5
			
		

 Source: Bloomberg &amp; StockFacts (data as of 20 Feb 20)

*7M performance as listing date was 19 July 2019



December Quarter Earnings of SGX’s US-Focused Office REITs