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

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<ul>
<li>
MOF, IRAS &amp; MAS have announced new measures for S-REITs – 1) distribution timeline extensions to qualify for tax transparency, 2) leverage limit raised from 45% to 50% and 3) defer implementation of a new minimum interest coverage ratio (ICR) requirement to 2022. 
	 </li>
	<li>
The measures are expected to support S-REIT managers in their capital management, adding further flexibility to manage cash flows. Focus will be on DPUs and industry outlooks as S-REITs report quarter earnings over the next few weeks. 
	 </li>
	<li>
The FTSE ST REIT Index opened up 3% on 17 April, after declining 20% in the 2020 YTD through to 16 April, trimming its longer term 10 year annualised total returns to 8%, which has been in-line with regional REIT Indices.
</li>
</ul>
 

 To support S-REITs during these challenging times, <a href="https://www.mas.gov.sg/news/media-releases/2020/new-measures-to-help-reits-navigate-operating-challenges-posed-by-covid-19">MOF, IRAS and MAS have jointly announced new measures</a> on 16 April. These new measures include:

<ol>
<li>Extension of timeline for S-REITs to distribute at least 90% of their taxable income from 3 months to 12 months (after the end of FY2020) to qualify for tax transparency;</li>
	<li>Increasing leverage limit from 45% to 50%; and</li>
	<li>Defer of implementation of a new minimum interest coverage ratio (ICR) requirement to 1 Jan 2022.</li>
</ol>
The new measures, together with enhanced share issue limit announced by SGX RegCo last week, will provide S-REITs more flexibility to access various funding options and manage cash flows. With active capital management by REIT managers, S-REITs have maintained an average Debt to Asset ratio of 35.3%, based on latest company data as of 31 March 2020. Raising the leverage limit may provide S-REITs more flexibility to manage their capital structure.

List of 10 S-REITs with highest debt-to-asset ratios

<table class="table table-striped"><tbody>
<tr>
<td>Name</td>
			<td>SGX Code</td>
			<td>Mkt Cap S$M</td>
			<td>2020 YTD daily turnover S$’000</td>
			<td>17 Apr Morning Session Price Change %</td>
			<td>Debt to Assets ratio %</td>
		</tr>
<tr>
<td>
			ESR-REIT
			</td>
			<td>
			J91U
			</td>
			<td>
			1,196
			</td>
			<td>
			8,652
			</td>
			<td>
			5.9%
			</td>
			<td>
			41.5
			</td>
		</tr>
<tr>
<td>
			OUE COMMERCIAL REIT
			</td>
			<td>
			TS0U
			</td>
			<td>
			2,218
			</td>
			<td>
			1,765
			</td>
			<td>
			4.9%
			</td>
			<td>
			40.3
			</td>
		</tr>
<tr>
<td>
			CACHE LOGISTICS TRUST
			</td>
			<td>
			K2LU
			</td>
			<td>
			573
			</td>
			<td>
			1,502
			</td>
			<td>
			2.9%
			</td>
			<td>
			40.1
			</td>
		</tr>
<tr>
<td>
			IREIT GLOBAL
			</td>
			<td>
			UD1U
			</td>
			<td>
			423
			</td>
			<td>
			1,984
			</td>
			<td>
			0.8%
			</td>
			<td>
			39.3
			</td>
		</tr>
<tr>
<td>
			FAR EAST HOSPITALITY TRUST
			</td>
			<td>
			Q5T
			</td>
			<td>
			927
			</td>
			<td>
			2,242
			</td>
			<td>
			5.3%
			</td>
			<td>
			39.2
			</td>
		</tr>
<tr>
<td>
			EC WORLD REIT
			</td>
			<td>
			BWCU
			</td>
			<td>
			507
			</td>
			<td>
			1,255
			</td>
			<td>
			1.6%
			</td>
			<td>
			38.7
			</td>
		</tr>
<tr>
<td>
			KEPPEL PACIFIC OAK US REIT
			</td>
			<td>
			CMOU
			</td>
			<td>
			762
			</td>
			<td>
			3,070
			</td>
			<td>
			3.2%
			</td>
			<td>
			38.5
			</td>
		</tr>
<tr>
<td>
			SOILBUILD BUSINESS SPACE REIT
			</td>
			<td>
			SV3U
			</td>
			<td>
			469
			</td>
			<td>
			980
			</td>
			<td>
			2.7%
			</td>
			<td>
			38.2
			</td>
		</tr>
<tr>
<td>
			MANULIFE US REIT
			</td>
			<td>
			BTOU
			</td>
			<td>
			1,594
			</td>
			<td>
			8,190
			</td>
			<td>
			2.5%
			</td>
			<td>
			37.7
			</td>
		</tr>
<tr>
<td>
			SUNTEC REIT
			</td>
			<td>
			T82U
			</td>
			<td>
			3,723
			</td>
			<td>
			23,855
			</td>
			<td>
			6.8%
			</td>
			<td>
			37.7
			</td>
		</tr>
<tr>
<td>Average</td>
			<td> </td>
			<td> </td>
			<td> </td>
			<td>3.6%</td>
			<td>39.1</td>
		</tr>
<tr>
<td>Median</td>
			<td> </td>
			<td> </td>
			<td> </td>
			<td>3.0%</td>
			<td>39.0</td>
		</tr>
</tbody></table>
Source: Thomson Reuters, Company data (Data as of 16 April 2020). Price Change based on S$-terms. Note Debt/Asset metrics taken from Company data as of 31 March 2020.

S-REITs 10-year annualised returns remains above global REITs average

In the 2020 year-to-date through to 16 April, the FTSE ST REIT Index declined 19.8%, in line with the average 22.2% decline among global REIT indices. Annualised 10 year total returns of FTSE ST REIT Index was also trimmed to 8.0% but remained slightly above the average of 7.2% for global REIT indices.
</body></html>

<figure>
 <img src='https://api2.sgx.com/sites/default/files/2020-04/Annualised%2010%20year.PNG' alt='Annualised 10 Year Total Return' />
 </figure>
 <div class='content-caption'>Annualised 10 Year Total Return</div>
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<html><body>The FTSE ST REIT Index is currently trading at a Price-to-Book ratio of 0.96x (below its 10 year average of 1.01x) and a forward dividend yield spread of 5.15% against Singapore 10 year Benchmark Government Bond Yield, above the STI forward dividend yield spread of 3.92%.</body></html>

<figure>
 <img src='https://api2.sgx.com/sites/default/files/2020-04/FTSE%20ST%20REIT%20Index%20Yield.PNG' alt='FTSE ST REIT Index Yield ' />
 </figure>
 <div class='content-caption'>FTSE ST REIT Index Yield </div>
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S-REITs with majority of their retail properties Singapore

These 7 S-REITs averaged a decline of 29.2% for the 2020 year to date session through to 16 April. In the morning session of 17 April, they rebounded an average of 5.3% from the previous day.

<table class="table table-striped"><tbody>
<tr>
<td>
			Name
			</td>
			<td>
			SGX Code
			</td>
			<td colspan="2">
			Mkt Cap S$M
			</td>
			<td>
			Geographic Breakdown by Asset Portfolio
			</td>
			<td>
			YTD Price Return % as of 16 April
			</td>
			<td>
			Price Return on 17 April Morning Session %
			</td>
		</tr>
<tr>
<td>
			CAPITALAND MALL TRUST
			</td>
			<td colspan="2">
			C38U
			</td>
			<td>
			6,553
			</td>
			<td>
			100% SG
			</td>
			<td>
			-28.0%
			</td>
			<td>
			6.8%
			</td>
		</tr>
<tr>
<td>
			SUNTEC REIT
			</td>
			<td colspan="2">
			T82U
			</td>
			<td>
			3,723
			</td>
			<td>
			89% SG, 11% AU
			</td>
			<td>
			-28.3%
			</td>
			<td>
			6.8%
			</td>
		</tr>
<tr>
<td>
			MAPLETREE COMMERCIAL TRUST
			</td>
			<td colspan="2">
			N2IU
			</td>
			<td>
			5,873
			</td>
			<td>
			100% SG
			</td>
			<td>
			-25.9%
			</td>
			<td>
			5.6%
			</td>
		</tr>
<tr>
<td>
			FRASERS CENTREPOINT TRUST
			</td>
			<td colspan="2">
			J69U
			</td>
			<td>
			2,265
			</td>
			<td>
			100% SG
			</td>
			<td>
			-28.1%
			</td>
			<td>
			7.4%
			</td>
		</tr>
<tr>
<td>
			SPH REIT
			</td>
			<td colspan="2">
			SK6U
			</td>
			<td>
			2,185
			</td>
			<td>
			81% SG, 19% AU
			</td>
			<td>
			-26.2%
			</td>
			<td>
			3.2%
			</td>
		</tr>
<tr>
<td>
			STARHILL GLOBAL REIT
			</td>
			<td colspan="2">
			P40U
			</td>
			<td>
			1,064
			</td>
			<td>
			68.7% SG, 15.9% AU, 12.6% MY, 2.8% CN &amp; JP
			</td>
			<td>
			-33.1%
			</td>
			<td>
			4.1%
			</td>
		</tr>
<tr>
<td>
			LENDLEASE GLOBAL COMMERCIAL REIT
			</td>
			<td colspan="2">
			JYEU
			</td>
			<td>
			710
			</td>
			<td>
			71.5% SG, 28.5% Italy
			</td>
			<td>
			-34.9%
			</td>
			<td>
			3.3%
			</td>
		</tr>
<tr>
<td>
			Average
			</td>
			<td>
			 
			</td>
			<td colspan="2">
			 
			</td>
			<td>
			 
			</td>
			<td>
			-29.2%
			</td>
			<td>
			5.3%
			</td>
		</tr>
<tr>
<td>
			Median
			</td>
			<td>
			 
			</td>
			<td colspan="2">
			 
			</td>
			<td>
			 
			</td>
			<td>
			-28.1%
			</td>
			<td>
			5.6%
			</td>
		</tr>
</tbody></table>
Source: Thomson Reuters, Company data (Data as of 16 April 2020). Price change based on S$-terms. Note geographic breakdown by asset portfolio taken from Company data as 31 March 2020.

 All eyes on upcoming S-REITs quarterly earnings

S-REITs are expected to release their March quarterly earnings in the coming weeks and focus outlooks on multiple areas, from continued maintenance of strong tenant relationships, to utilising balance sheets for the most effective cash flows. The new measure also requires S-REITs to disclose leverage ratios and ICRs in annual reports and interim financial results, to provide investors with timely information on their risk profiles.

Refer to weekly <a href="https://www.sgxacademy.com/economiccalendar/">Economic Calendar</a> for the latest S-REITs earnings schedule.
</body></html>





MOF, IRAS &amp; MAS have announced new measures for S-REITs – 1) distribution timeline extensions to qualify for tax transparency, 2) leverage limit raised from 45% to 50% and 3) defer implementation of a new minimum interest coverage ratio (ICR) requirement to 2022. 
	 
	
The measures are expected to support S-REIT managers in their capital management, adding further flexibility to manage cash flows. Focus will be on DPUs and industry outlooks as S-REITs report quarter earnings over the next few weeks.  
	 
	
The FTSE ST REIT Index opened up 3% on 17 April, after declining 20% in the 2020 YTD through to 16 April, trimming its longer term 10 year annualised total returns to 8%, which has been in-line with regional REIT Indices.


 

 To support S-REITs during these challenging times, MOF, IRAS and MAS have jointly announced new measures on 16 April. These new measures include:


Extension of timeline for S-REITs to distribute at least 90% of their taxable income from 3 months to 12 months (after the end of FY2020) to qualify for tax transparency;
	Increasing leverage limit from 45% to 50%; and
	Defer of implementation of a new minimum interest coverage ratio (ICR) requirement to 1 Jan 2022.

The new measures, together with enhanced share issue limit announced by SGX RegCo last week, will provide S-REITs more flexibility to access various funding options and manage cash flows. With active capital management by REIT managers, S-REITs have maintained an average Debt to Asset ratio of 35.3%, based on latest company data as of 31 March 2020. Raising the leverage limit may provide S-REITs more flexibility to manage their capital structure.

List of 10 S-REITs with highest debt-to-asset ratios



Name
			SGX Code
			Mkt Cap S$M
			2020 YTD daily turnover S$’000
			17 Apr Morning Session Price Change %
			Debt to Assets ratio %
		


			ESR-REIT
			
			
			J91U
			
			
			1,196
			
			
			8,652
			
			
			5.9%
			
			
			41.5
			
		


			OUE COMMERCIAL REIT
			
			
			TS0U
			
			
			2,218
			
			
			1,765
			
			
			4.9%
			
			
			40.3
			
		


			CACHE LOGISTICS TRUST
			
			
			K2LU
			
			
			573
			
			
			1,502
			
			
			2.9%
			
			
			40.1
			
		


			IREIT GLOBAL
			
			
			UD1U
			
			
			423
			
			
			1,984
			
			
			0.8%
			
			
			39.3
			
		


			FAR EAST HOSPITALITY TRUST
			
			
			Q5T
			
			
			927
			
			
			2,242
			
			
			5.3%
			
			
			39.2
			
		


			EC WORLD REIT
			
			
			BWCU
			
			
			507
			
			
			1,255
			
			
			1.6%
			
			
			38.7
			
		


			KEPPEL PACIFIC OAK US REIT
			
			
			CMOU
			
			
			762
			
			
			3,070
			
			
			3.2%
			
			
			38.5
			
		


			SOILBUILD BUSINESS SPACE REIT
			
			
			SV3U
			
			
			469
			
			
			980
			
			
			2.7%
			
			
			38.2
			
		


			MANULIFE US REIT
			
			
			BTOU
			
			
			1,594
			
			
			8,190
			
			
			2.5%
			
			
			37.7
			
		


			SUNTEC REIT
			
			
			T82U
			
			
			3,723
			
			
			23,855
			
			
			6.8%
			
			
			37.7
			
		

Average
			 
			 
			 
			3.6%
			39.1
		

Median
			 
			 
			 
			3.0%
			39.0
		

Source: Thomson Reuters, Company data (Data as of 16 April 2020). Price Change based on S$-terms. Note Debt/Asset metrics taken from Company data as of 31 March 2020.

S-REITs 10-year annualised returns remains above global REITs average

In the 2020 year-to-date through to 16 April, the FTSE ST REIT Index declined 19.8%, in line with the average 22.2% decline among global REIT indices. Annualised 10 year total returns of FTSE ST REIT Index was also trimmed to 8.0% but remained slightly above the average of 7.2% for global REIT indices.



      
    
    Annualised 10 Year Total Return

The FTSE ST REIT Index is currently trading at a Price-to-Book ratio of 0.96x (below its 10 year average of 1.01x) and a forward dividend yield spread of 5.15% against Singapore 10 year Benchmark Government Bond Yield, above the STI forward dividend yield spread of 3.92%.


      
    
    FTSE ST REIT Index Yield 


S-REITs with majority of their retail properties Singapore

These 7 S-REITs averaged a decline of 29.2% for the 2020 year to date session through to 16 April. In the morning session of 17 April, they rebounded an average of 5.3% from the previous day.




			Name
			
			
			SGX Code
			
			
			Mkt Cap S$M
			
			
			Geographic Breakdown by Asset Portfolio
			
			
			YTD Price Return % as of 16 April
			
			
			Price Return on 17 April Morning Session %
			
		


			CAPITALAND MALL TRUST
			
			
			C38U
			
			
			6,553
			
			
			100% SG
			
			
			-28.0%
			
			
			6.8%
			
		


			SUNTEC REIT
			
			
			T82U
			
			
			3,723
			
			
			89% SG, 11% AU
			
			
			-28.3%
			
			
			6.8%
			
		


			MAPLETREE COMMERCIAL TRUST
			
			
			N2IU
			
			
			5,873
			
			
			100% SG
			
			
			-25.9%
			
			
			5.6%
			
		


			FRASERS CENTREPOINT TRUST
			
			
			J69U
			
			
			2,265
			
			
			100% SG
			
			
			-28.1%
			
			
			7.4%
			
		


			SPH REIT
			
			
			SK6U
			
			
			2,185
			
			
			81% SG, 19% AU
			
			
			-26.2%
			
			
			3.2%
			
		


			STARHILL GLOBAL REIT
			
			
			P40U
			
			
			1,064
			
			
			68.7% SG, 15.9% AU, 12.6% MY, 2.8% CN &amp; JP
			
			
			-33.1%
			
			
			4.1%
			
		


			LENDLEASE GLOBAL COMMERCIAL REIT
			
			
			JYEU
			
			
			710
			
			
			71.5% SG, 28.5% Italy
			
			
			-34.9%
			
			
			3.3%
			
		


			Average
			
			
			 
			
			
			 
			
			
			 
			
			
			-29.2%
			
			
			5.3%
			
		


			Median
			
			
			 
			
			
			 
			
			
			 
			
			
			-28.1%
			
			
			5.6%
			
		

Source: Thomson Reuters, Company data (Data as of 16 April 2020). Price change based on S$-terms. Note geographic breakdown by asset portfolio taken from Company data as 31 March 2020.

 All eyes on upcoming S-REITs quarterly earnings

S-REITs are expected to release their March quarterly earnings in the coming weeks and focus outlooks on multiple areas, from continued maintenance of strong tenant relationships, to utilising balance sheets for the most effective cash flows. The new measure also requires S-REITs to disclose leverage ratios and ICRs in annual reports and interim financial results, to provide investors with timely information on their risk profiles.

Refer to weekly Economic Calendar for the latest S-REITs earnings schedule.



New Significant Supportive Measures for S-REITs 

ARA LOGOS

New Significant Supportive Measures for S-REITs