Index Rebal Trades & Special Situations, Quiddity Advisors

Janaghan Jeyakumar, CFA

Index Rebal Trades & Special Situations

Quiddity Advisors

Pan-Asia Catalysts/Events

Event-Driven

Japan Rental Housing Investment / Event-Driven

<ul>
<li>Midsize residential JREIT <a href="https://www.smartkarma.com/entities/japan-rental-housing-investment" target="_blank" data-smartkarma-citation="entities:20653:1" rel="noopener">Daiwa Securities Living (8986 JP)</a> ("DSLIC") launched a follow-on equity offering to partially fund their recently-announced acquisitions.</li>
<li>The primary offer quantity will be 139,047 units and there will also be an over-allotment quantity of 6,953 units.</li>
<li>In this insight, we take a closer look at the details of this offering and the historical performance of DSLIC's previous follow-on equity offerings.</li>
</ul>


Midsize residential JREIT Daiwa Securities Living (8986 JP) ("DSLIC") launched a follow-on equity offering to partially fund their recently-announced acquisitions.
The primary offer quantity will be 139,047 units and there will also be an over-allotment quantity of 6,953 units.
In this insight, we take a closer look at the details of this offering and the historical performance of DSLIC's previous follow-on equity offerings.


Daiwa Securities Living (8986 JP): Historical Post-Offering Performance Does Not Look Good At All

<ul>
<li>Yesterday after the close, <a href="https://www.smartkarma.com/entities/comforia-residential-reit-inc" target="_blank" data-smartkarma-citation="entities:8200:1" rel="noopener">Comforia Residential REIT (3282 JP)</a> ("CRR") announced a follow-on equity offering to fund part of their recently announced property acquisition. </li>
<li>The primary offer quantity is 22,960 units. In addition, there will also be an over-allotment quantity of 1,140 units. The total size of this offering could be roughly ¥7.4bn (~US$64mn). </li>
<li>Below, we take a look at the attractiveness of CRR's latest offering with greater emphasis on the potential for strong post-offering secondary market performance.</li>
</ul>


Yesterday after the close, Comforia Residential REIT (3282 JP) ("CRR") announced a follow-on equity offering to fund part of their recently announced property acquisition. 
The primary offer quantity is 22,960 units. In addition, there will also be an over-allotment quantity of 1,140 units. The total size of this offering could be roughly ¥7.4bn (~US$64mn). 
Below, we take a look at the attractiveness of CRR's latest offering with greater emphasis on the potential for strong post-offering secondary market performance.


Comforia Residential REIT (3282 JP):  Offering Could Trigger Outperformance Vs Comps

On Friday after market-close, midsize residential JREIT <a href="https://www.smartkarma.com/entities/japan-rental-housing-investment" target="_blank" data-smartkarma-citation="entities:20653:1" rel="noopener">Daiwa Securities Living (8986 JP)</a> (formerly known as "Japan Rental Housing Investment") launched a follow-on equity offerings to partially fund their recent acquisitions. <div>
The primary offer quantity is 70,476 units. In addition, there will also be an over-allotment quantity of 3,524 units. The total size of this offering could be roughly ¥8.5bn (~US$77mn). 
While such offerings are mostly of interest to primary market investors, we also see such offerings as catalysts for strong secondary market performance making these events worth tracking for secondary market investors too. We have previously discussed the historical pre- and post-offering performance of JREITs in <a href="https://www.smartkarma.com/insights/j-reit-offering-primer-get-ready-for-offering-season-2021" target="_blank" data-smartkarma-citation="insights:46416" rel="noopener">J-REIT Offering Primer: Get Ready for Offering Season 2021</a>. On average, J-REITs have historically outperformed the TSEREIT Index in the wake of follow-on equity offerings, with win rates exceeding 80%.
Below is a look at the details of Daiwa Securities Living (DSLIC)'s latest offering and an evaluation of its potential to trigger outperformance against the TSEREIT Index.  
</div>

On Friday after market-close, midsize residential JREIT Daiwa Securities Living (8986 JP) (formerly known as "Japan Rental Housing Investment") launched a follow-on equity offerings to partially fund their recent acquisitions. 
The primary offer quantity is 70,476 units. In addition, there will also be an over-allotment quantity of 3,524 units. The total size of this offering could be roughly ¥8.5bn (~US$77mn). 
While such offerings are mostly of interest to primary market investors, we also see such offerings as catalysts for strong secondary market performance making these events worth tracking for secondary market investors too. We have previously discussed the historical pre- and post-offering performance of JREITs in J-REIT Offering Primer: Get Ready for Offering Season 2021. On average, J-REITs have historically outperformed the TSEREIT Index in the wake of follow-on equity offerings, with win rates exceeding 80%.
Below is a look at the details of Daiwa Securities Living (DSLIC)'s latest offering and an evaluation of its potential to trigger outperformance against the TSEREIT Index.  


Daiwa Securities Living (8986 JP): Offering Could Trigger Outperformance Vs TSEREIT Index

Equity Capital Markets

Samty Residential Investment / Equity Capital Markets

Today after market-close, small-cap residential JREIT <a href="https://www.smartkarma.com/entities/samty-residential-investment" target="_blank" data-smartkarma-citation="entities:31049:1" rel="noopener">Samty Residential Investment (3459 JP)</a> launched a follow-on equity offering (<a href="https://www.samty-residential.com/file/news-4cc7711e97dee5986a62fe2ec3ff5b9eca89d0f2.pdf" target="_blank" rel="noopener">J-only</a>) to fund part of their recent property acquisition.The primary public offer quantity is 57,868 units and there is an over-allotment quantity of 2,893 units. The total size of the public offering could be approximately ¥7.9bn (~US$70mn).In addition to the public offering portion, there will be a third party allocation of 70,339 units which will be allocated for their Sponsor Group <a href="https://www.smartkarma.com/entities/samty-co-ltd" target="_blank" data-smartkarma-citation="entities:18956:1" rel="noopener">Samty Co Ltd (3244 JP)</a> and Daiwa Securities with whom they have a Sponsor Support Agreement. This portion could collectively amount to another ¥9.1bn (~US$83mn). The Offer Price will be determined between 19th July and 27th July 2021 (typically it has been the first day of this window for most JREIT offerings) and the business day following the offer price determination day ("Pricing Date") will be the Application Period. More below the fold.

Today after market-close, small-cap residential JREIT Samty Residential Investment (3459 JP) launched a follow-on equity offering (J-only) to fund part of their recent property acquisition.The primary public offer quantity is 57,868 units and there is an over-allotment quantity of 2,893 units. The total size of the public offering could be approximately ¥7.9bn (~US$70mn).In addition to the public offering portion, there will be a third party allocation of 70,339 units which will be allocated for their Sponsor Group Samty Co Ltd (3244 JP) and Daiwa Securities with whom they have a Sponsor Support Agreement. This portion could collectively amount to another ¥9.1bn (~US$83mn). The Offer Price will be determined between 19th July and 27th July 2021 (typically it has been the first day of this window for most JREIT offerings) and the business day following the offer price determination day ("Pricing Date") will be the Application Period. More below the fold.

JREIT Offering: Samty Residential (3459 JP) - Take It (Vs Comps)

Alpha-Centric ESG Research

Kyle Rudden

Announcements keep on coming from <a href="https://www.smartkarma.com/entities/singapore-exchange-ltd" target="_blank" data-smartkarma-citation="entities:1047:1" rel="noopener">Singapore Exchange (SGX SP)</a> and its SGX FIRST sustainable investing platform. Weeks after launching Climate Impact X – SGX's carbon exchange joint venture with DBS, Standard Chartered, and Temasek – the exchange announced (on 14 June) the launch of the <a href="https://www.smartkarma.com/entities/sgx-nikkei-esg-reit-index-futures" target="_blank" data-smartkarma-citation="entities:33480:1" rel="noopener">SGX Nikkei ESG-REIT Index Futures (JRTA INDEX)</a> contract.For SGX, the launch further solidifies its position as Asia's leading financial exchange for all things sustainable investing and finance (and of course, REITs). For investors, the ESG-REIT Index futures contract expands the menu of products for REIT-related ESG investing. That is far more significant than it sounds; Real Estate is a sleeping ESG giant of sorts, and investment products are lacking.Therein lies the second of two goals for this Insight. The first is, rather obviously, to delve into the SGX Nikkei ESG-REIT product – the underlying index and futures contract. The second is to take it as an opportunity to broach an important, but often underrated, topic – the relationships between ESG and the Real Estate sector, including REITs. Much of it positive, or at least potentially so.Think about it. One billion buildings in the world already, and expected to double by 2060.

Announcements keep on coming from Singapore Exchange (SGX SP) and its SGX FIRST sustainable investing platform. Weeks after launching Climate Impact X – SGX's carbon exchange joint venture with DBS, Standard Chartered, and Temasek – the exchange announced (on 14 June) the launch of the SGX Nikkei ESG-REIT Index Futures (JRTA INDEX) contract.For SGX, the launch further solidifies its position as Asia's leading financial exchange for all things sustainable investing and finance (and of course, REITs). For investors, the ESG-REIT Index futures contract expands the menu of products for REIT-related ESG investing. That is far more significant than it sounds; Real Estate is a sleeping ESG giant of sorts, and investment products are lacking.Therein lies the second of two goals for this Insight. The first is, rather obviously, to delve into the SGX Nikkei ESG-REIT product – the underlying index and futures contract. The second is to take it as an opportunity to broach an important, but often underrated, topic – the relationships between ESG and the Real Estate sector, including REITs. Much of it positive, or at least potentially so.Think about it. One billion buildings in the world already, and expected to double by 2060.

SGX Nikkei ESG-REIT Index Futures Launch Is an Ideal Backdrop for an Important Topic: ESG and REITs

Japan

Comforia Residential REIT, Inc. is a real estate investment trust (REIT). The company invests in leasing city apartments mainly in Tokyo area.

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Comforia Residential REIT (3282 JP)

Daiwa Securities Living (8986 JP): Historical Post-Offering Performance Does Not Look Good At All

The historical track record of DSLIC's secondary market performance in the wake of follow-on equity offerings is not attractive. I see this as an...

Janaghan Jeyakumar, CFA