Research from SooChow CSSD Capital Markets (Asia), SCCM Asia Research

SCCM Asia Research

Research from SooChow CSSD Capital Markets (Asia)

Thematic (Sector/Industry)

<h2>Singapore</h2><h3><a href="https://www.smartkarma.com/entities/suntec-reit" target="_blank" data-smartkarma-citation="entities:151" rel="noopener">Suntec REIT (SUN SP)</a> issues 5yrs S$150m perpetual securities at 4.25% pa; Perps are back this year as funding alternatives</h3><p>SUN has priced S$150m of subordinated perpetual securities at 4.25% pa for five years. After the first reset date of 15Jun26, the new rate will be equivalent to the Swap Offer Rate, its successor rate, or if there is no successor rate, an alternative reference rate, with respect to the reset date plus the initial spread of 3.29%. The net proceeds from the issue will be used for refinancing its existing borrowings, financing or refinancing its acquisitions or investments and financing any asset enhancement works. The perpetuals will be issued under its US$2bn Euro Medium Term Securities Programme. Distributions under the perpetuals shall be payable semi-annually in arrears on 15Jun and 15Dec in each year, commencing on 15Dec21.</p><p>Comments: Perps are back and we have seen 3 SREITs issuing perps so far this year with an average coupon of 3.2-4.2%. We think perps are good funding alternatives for SREITs on top of traditional bank loan, bond, or equity – as long as they are not utilized as “financial engineering” to make deals look accretive on acquisitions. However, important metrics to look at 1) perps as % equity – anything above 10% can be perceived as “high” by the market; and 2) look-through gearing – preferably remains below the statutory limit of 50%.  </p><table class="table table-striped"><tbody><tr><td style="width: 154.422px;"><p> </p></td><td style="width: 165.188px;"><p>SUN</p></td><td style="width: 161.375px;"><p>LREIT</p></td><td style="width: 163.016px;"><p>MINT</p></td></tr><tr><td style="width: 154.422px;"><p>Date of Issue</p></td><td style="width: 165.188px;"><p>7-Jun-21</p></td><td style="width: 161.375px;"><p>27-May-21</p></td><td style="width: 163.016px;"><p>3-May-21</p></td></tr><tr><td style="width: 154.422px;"><p>Size</p></td><td style="width: 165.188px;"><p>S$150,000,000</p></td><td style="width: 161.375px;"><p>S$200,000,000</p></td><td style="width: 163.016px;"><p>S$300,000,000</p></td></tr><tr><td style="width: 154.422px;"><p>Rate</p></td><td style="width: 165.188px;"><p>15Jun21 - 15Jun26: 4.25%<br>31Jan23 onwards : 3.290% + Swap Offer Rate/Successor Rate/Alternative Reference Rate</p></td><td style="width: 161.375px;"><p>4.2% Pa</p></td><td style="width: 163.016px;"><p>3.15% Fixed Rate Pa</p></td></tr><tr><td style="width: 154.422px;"><p>Financial  </p><p>Calendar Referenced</p></td><td style="width: 165.188px;"><p>FY20</p></td><td style="width: 161.375px;"><p>1H21</p></td><td style="width: 163.016px;"><p>FY21</p></td></tr><tr><td style="width: 154.422px;"><p>Total Perps as % of Equity</p></td><td style="width: 165.188px;"><p>6.0</p></td><td style="width: 161.375px;"><p>16.7</p></td><td style="width: 163.016px;"><p>7.2</p></td></tr><tr><td style="width: 154.422px;"><p>Total Perps as % of Debt</p></td><td style="width: 165.188px;"><p>7.3</p></td><td style="width: 161.375px;"><p>36.6</p></td><td style="width: 163.016px;"><p>13.2</p></td></tr><tr><td style="width: 154.422px;"><p>(Debt + Perps) (S$ '000)</p></td><td style="width: 165.188px;"><p>4,976,461</p></td><td style="width: 161.375px;"><p>745,769</p></td><td style="width: 163.016px;"><p>2,571,100</p></td></tr><tr><td style="width: 154.422px;"><p>Total Asset (S$ ‘000)</p></td><td style="width: 165.188px;"><p>11,227,408</p></td><td style="width: 161.375px;"><p>1,577,523</p></td><td style="width: 163.016px;"><p>6,391,619</p></td></tr><tr><td style="width: 154.422px;"><p>Look-through Gearing Ratio</p></td><td style="width: 165.188px;"><p>44.3%</p></td><td style="width: 161.375px;"><p>47.3%</p></td><td style="width: 163.016px;"><p>40.2%</p></td></tr></tbody></table>

SingaporeSuntec REIT (SUN SP) issues 5yrs S$150m perpetual securities at 4.25% pa; Perps are back this year as funding alternativesSUN has priced S$150m of subordinated perpetual securities at 4.25% pa for five years. After the first reset date of 15Jun26, the new rate will be equivalent to the Swap Offer Rate, its successor rate, or if there is no successor rate, an alternative reference rate, with respect to the reset date plus the initial spread of 3.29%. The net proceeds from the issue will be used for refinancing its existing borrowings, financing or refinancing its acquisitions or investments and financing any asset enhancement works. The perpetuals will be issued under its US$2bn Euro Medium Term Securities Programme. Distributions under the perpetuals shall be payable semi-annually in arrears on 15Jun and 15Dec in each year, commencing on 15Dec21.Comments: Perps are back and we have seen 3 SREITs issuing perps so far this year with an average coupon of 3.2-4.2%. We think perps are good funding alternatives for SREITs on top of traditional bank loan, bond, or equity – as long as they are not utilized as “financial engineering” to make deals look accretive on acquisitions. However, important metrics to look at 1) perps as % equity – anything above 10% can be perceived as “high” by the market; and 2) look-through gearing – preferably remains below the statutory limit of 50%.   SUNLREITMINTDate of Issue7-Jun-2127-May-213-May-21SizeS$150,000,000S$200,000,000S$300,000,000Rate15Jun21 - 15Jun26: 4.25% 31Jan23 onwards : 3.290% + Swap Offer Rate/Successor Rate/Alternative Reference Rate4.2% Pa3.15% Fixed Rate PaFinancial  Calendar ReferencedFY201H21FY21Total Perps as % of Equity6.016.77.2Total Perps as % of Debt7.336.613.2(Debt + Perps) (S$ '000)4,976,461745,7692,571,100Total Asset (S$ ‘000)11,227,4081,577,5236,391,619Look-through Gearing Ratio44.3%47.3%40.2%

ASEAN Builder's Scoop (8Jun21) - SREITs Perps Are Back as Funding Alternatives

<h2>Singapore</h2><h3><a href="https://www.smartkarma.com/entities/lendlease-global-commercial-reit" target="_blank" data-smartkarma-citation="entities:28292" rel="noopener">Lendlease Global Commercial REIT (LREIT SP)</a> to increase stake in JEM mall; DPU accretive to be funded by debt and perps</h3><ul><li>LREIT has entered into sale and purchase agreements to increase its stake in Jem. Upon completion of the proposed acquisition, LREIT will hold an effective indirect interest of up to 31.8% interest in JEM. The proposed acquisition includes 1) an acquisition of a 53.0% interest in Lendlease Jem Partners Fund Limited (LLJP) from third party vendors for S$159.1m; and 2) an acquisition of a 5.0% interest in Lendlease Asian Retail Investment Fund 3 Limited (ARIF3) from Lendlease International Pty Limited for S$45.0m. LREIT may also acquire up to 19.8% interest in ARIF3 from other third-party investors for S$178.2m. LLJP/ARIF3 holds a 25%/75% indirect interest, respectively, in JEM mall</li><li>As of 31Mar21, JEM was independently valued at S$2,085m and S$2,061m by JLL and CBRE, respectively. It sits on a 99yr lease land site with total NLA of 892,148sqft and 99.7% occupied. The proposed transaction values JEM at S$2,077m (S$2,238psf on NLA – 4.5% retail cap rate, 3.5% office cap rate) – NPI yield of 3.9%</li><li>Following the acquisition, the enlarged portfolio size of S$1.8bn will have a diversified asset base and an increased exposure to more resilient suburban retail and decentralised office segments. The single largest asset by aggregate value of the enlarged portfolio would also decrease from 67.6% to 55.1% (WALE of 6.5 years by GRI)</li><li>On a 1H21 pro-forma basis, the acquisitions are expected to be DPU accretive to unitholders, with an accretive change of +3.0% (assuming 19.8% of ARIF3 is acquired) and +1.3% if only 5% of ARIF3 is acquired. On the other hand, NAV per unit (31Dec20 pro-forma) will slightly decline to S$0.84 and gearing will improve to 34.1% after the acquisition of 19.8% stake in ARIF3. NAV per unit will remain flat at S$0.85 if only 5% of ARIF3 is acquired and gearing will improve to 32.4%</li><li>LREIT will leverage its strong balance sheet to fund this acquisition through debt or a combination of debt and proceeds from the issuance of perpetual securities. The acquisition, which is conditional upon LREIT unitholders’ approval, is expected to complete by 30Sep21. <section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/211/591/original/image003.png?1623030785" class="editor-image img-responsive" data-smartkarma-image-id="211591"></figure></section></li></ul>

SingaporeLendlease Global Commercial REIT (LREIT SP) to increase stake in JEM mall; DPU accretive to be funded by debt and perpsLREIT has entered into sale and purchase agreements to increase its stake in Jem. Upon completion of the proposed acquisition, LREIT will hold an effective indirect interest of up to 31.8% interest in JEM. The proposed acquisition includes 1) an acquisition of a 53.0% interest in Lendlease Jem Partners Fund Limited (LLJP) from third party vendors for S$159.1m; and 2) an acquisition of a 5.0% interest in Lendlease Asian Retail Investment Fund 3 Limited (ARIF3) from Lendlease International Pty Limited for S$45.0m. LREIT may also acquire up to 19.8% interest in ARIF3 from other third-party investors for S$178.2m. LLJP/ARIF3 holds a 25%/75% indirect interest, respectively, in JEM mallAs of 31Mar21, JEM was independently valued at S$2,085m and S$2,061m by JLL and CBRE, respectively. It sits on a 99yr lease land site with total NLA of 892,148sqft and 99.7% occupied. The proposed transaction values JEM at S$2,077m (S$2,238psf on NLA – 4.5% retail cap rate, 3.5% office cap rate) – NPI yield of 3.9%Following the acquisition, the enlarged portfolio size of S$1.8bn will have a diversified asset base and an increased exposure to more resilient suburban retail and decentralised office segments. The single largest asset by aggregate value of the enlarged portfolio would also decrease from 67.6% to 55.1% (WALE of 6.5 years by GRI)On a 1H21 pro-forma basis, the acquisitions are expected to be DPU accretive to unitholders, with an accretive change of +3.0% (assuming 19.8% of ARIF3 is acquired) and +1.3% if only 5% of ARIF3 is acquired. On the other hand, NAV per unit (31Dec20 pro-forma) will slightly decline to S$0.84 and gearing will improve to 34.1% after the acquisition of 19.8% stake in ARIF3. NAV per unit will remain flat at S$0.85 if only 5% of ARIF3 is acquired and gearing will improve to 32.4%LREIT will leverage its strong balance sheet to fund this acquisition through debt or a combination of debt and proceeds from the issuance of perpetual securities. The acquisition, which is conditional upon LREIT unitholders’ approval, is expected to complete by 30Sep21. 

ASEAN Builder's Scoop (7Jun21) - LREIT Increases Stake in JEM Mall

<h2>Singapore</h2><h3>Strong leasing interest for part of Standard Chartered Bank’s vacating space in MBFC T1</h3><p>The asset manager of the Marina Bay Financial Centre (MBFC) has received strong interest from potential tenants for about 200,000sqft office space in Tower 1. This is part of the roughly 400,000sqft currently leased to Standard Chartered (StanChart) in the tower. The profiles of occupiers that have shown the strongest interest are tech firms from the United States, China and Singapore, as well as companies in media and financial services. It added that rents of between S$11-12psf a month are expected to be achieved. The final amount of space that StanChart will give up remains uncertain. In all, the London-headquartered bank currently leases 18.5 levels in the 33-storey Tower 1, which has office floor plates ranging from 18,000-22,000sqft. StanChart’s lease expires in late-Oct22, with an option for renewal. StanChart also has its own premises in Changi Business Park.</p><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/210/859/original/image003.png?1622683137" class="editor-image img-responsive" data-smartkarma-image-id="210859"></figure></section>

SingaporeStrong leasing interest for part of Standard Chartered Bank’s vacating space in MBFC T1The asset manager of the Marina Bay Financial Centre (MBFC) has received strong interest from potential tenants for about 200,000sqft office space in Tower 1. This is part of the roughly 400,000sqft currently leased to Standard Chartered (StanChart) in the tower. The profiles of occupiers that have shown the strongest interest are tech firms from the United States, China and Singapore, as well as companies in media and financial services. It added that rents of between S$11-12psf a month are expected to be achieved. The final amount of space that StanChart will give up remains uncertain. In all, the London-headquartered bank currently leases 18.5 levels in the 33-storey Tower 1, which has office floor plates ranging from 18,000-22,000sqft. StanChart’s lease expires in late-Oct22, with an option for renewal. StanChart also has its own premises in Changi Business Park.

ASEAN Builder's Scoop (3Jun21) - Standchart Space at MBFC T1 Drew Strong Interest

<h2>Singapore</h2><h3><a href="https://www.smartkarma.com/entities/lendlease-global-commercial-reit" target="_blank" data-smartkarma-citation="entities:28292" rel="noopener">Lendlease Global Commercial REIT (LREIT SP)</a> issues S$200m in perpetual securities at 4.2% pa</h3><p>LREIT has issued S$200m in perpetual securities at 4.20% pa, which was oversubscribed based on the initial target size of S$150m. LREIT raised the issuance size to S$200m and tightened the price to 4.20% from the initial guidance of 4.35%. The perpetual securities is issued under its S$1bn multicurrency debt-issuance programme will bear an initial rate of distribution of 4.20% pa. for the first five years. The first reset of the distribution rate will be on 4Jun26; subsequent resets will take place every five years thereafter. The proceeds will be used for the financing of potential acquisition and investment opportunities as well as for general working capital, capital expenditure requirements and refinancing of existing borrowings. Following the issuance, LREIT's aggregate leverage ratio is expected to drop to 31.3% from 35.4% as at 31Mar21.</p>

SingaporeLendlease Global Commercial REIT (LREIT SP) issues S$200m in perpetual securities at 4.2% paLREIT has issued S$200m in perpetual securities at 4.20% pa, which was oversubscribed based on the initial target size of S$150m. LREIT raised the issuance size to S$200m and tightened the price to 4.20% from the initial guidance of 4.35%. The perpetual securities is issued under its S$1bn multicurrency debt-issuance programme will bear an initial rate of distribution of 4.20% pa. for the first five years. The first reset of the distribution rate will be on 4Jun26; subsequent resets will take place every five years thereafter. The proceeds will be used for the financing of potential acquisition and investment opportunities as well as for general working capital, capital expenditure requirements and refinancing of existing borrowings. Following the issuance, LREIT's aggregate leverage ratio is expected to drop to 31.3% from 35.4% as at 31Mar21.

ASEAN Builder's Scoop (28May21) - LREIT issued perps at 4.2%

<h2>Singapore</h2>
<h3>
<a href="https://www.smartkarma.com/entities/eagle-hospitality-trust" target="_blank" data-smartkarma-citation="entities:28059" rel="noopener">Eagle Hospitality Trust (EAGLEHT SP)</a> five properties put on auction received qualified bids</h3>
<p>Five out of 15 properties put up for auction have received qualified bids in the second bid round for EAGLEHT Chapter 11 assets held on 20May. The DBS trustee said its Chapter 11 entities received qualified bids for Sheraton Denver Tech Center, Four Points by Sheraton San Jose Airport, Embassy Suites by Hilton Anaheim North, Doubletree by Hilton Salt Lake City Airport, and Hilton Atlanta Northeast. The auction resulted in a US$24.8m net increase in the aggregate consideration for EAGLEHT's auctioned properties. A stalking-horse bidder, Madison Phoenix LLC, an affiliate of Monarch Alternative Capital, emerged successful for its bid of nine non-auctioned properties with an aggregate purchase price of US$326.5m. This is in accordance with the terms of the stalking-horse agreement between entities of EAGLEHT and the bidder, which effectively sets an opening price or price floor to protect the company selling the assets at low bids. Properties remaining in EAGLEHT's portfolio upon approval of the sale would comprise Queen Mary Long Beach, Delta Woodbridge, Hilton Houston Galleria Area and Crowne Plaza Dallas Near Galleria-Addison.</p>

Singapore

Eagle Hospitality Trust (EAGLEHT SP) five properties put on auction received qualified bids
Five out of 15 properties put up for auction have received qualified bids in the second bid round for EAGLEHT Chapter 11 assets held on 20May. The DBS trustee said its Chapter 11 entities received qualified bids for Sheraton Denver Tech Center, Four Points by Sheraton San Jose Airport, Embassy Suites by Hilton Anaheim North, Doubletree by Hilton Salt Lake City Airport, and Hilton Atlanta Northeast. The auction resulted in a US$24.8m net increase in the aggregate consideration for EAGLEHT's auctioned properties. A stalking-horse bidder, Madison Phoenix LLC, an affiliate of Monarch Alternative Capital, emerged successful for its bid of nine non-auctioned properties with an aggregate purchase price of US$326.5m. This is in accordance with the terms of the stalking-horse agreement between entities of EAGLEHT and the bidder, which effectively sets an opening price or price floor to protect the company selling the assets at low bids. Properties remaining in EAGLEHT's portfolio upon approval of the sale would comprise Queen Mary Long Beach, Delta Woodbridge, Hilton Houston Galleria Area and Crowne Plaza Dallas Near Galleria-Addison.

ASEAN Builder's Scoop (25May21) - EAGLEHT Properties Received Qualified Bids

Singapore

Eagle Hospitality Trust is a hospitality stapled group; owns 18 hotels across the U.S..

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Eagle Hospitality Trust (EAGLEHT SP)

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ASEAN Builder's Scoop (28May21) - LREIT issued perps at 4.2%

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ASEAN Builder's Scoop (25May21) - EAGLEHT Properties Received Qualified Bids

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