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

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Singapore lists 2 actively traded Healthcare related S-Reits – ParkwayLife Reit and First Reit. Healthcare Reits invest in income-producing real estate primarily used for healthcare related purposes including but not limited to hospitals, medical offices, outpatient facilities and nursing facilities. As such, these Reits may be regarded as an option for investors to gain exposure to the growing and resilient healthcare sector.

ParkwayLife Reit is one of the largest listed healthcare Reits in Asia with a portfolio of 56 properties at S$2.29 billion in size. It has 64.6 per cent of its portfolio in hospitals and medical centres, and 35.4 per cent in nursing homes, across Singapore (64.3 per cent), Japan (35.4 per cent), and Malaysia (0.3 per cent).

ParkwayLife Reit reported 2.3 per cent year-on-year higher gross revenue for Q1 2022, arising from the3 properties it acquired last year and higher rent received from Singapore hospitals. The Reit noted that its distribution per unit (DPU) has grown steadily at a rate of 122.8 per cent since its listing.

In its Singapore portfolio (hospitals include Mouth Elizabeth Hospital, Parkway East Hospital, and Gleneagles Hospital), its master lessee Parkway Hospitals Singapore, is a wholly owned subsidiary of IHH Health which is one of the world’s largest healthcare networks with 80 hospitals in 10 countries. Its latest renewal term of 20.4 years runs from Aug 23, 2022 to Dec 31, 2042, with an option to renew for a further 10 years. It has a triple net lease arrangement which means that the Reit does not bear property taxes, property insurance, property operating expenses and is unaffected by inflated-related escalating expenses.

In its Japan portfolio, it owns 52 nursing home properties with a weighted average lease term to expiry of 11.79 years and a diversified tenant base across 28 nursing home operators. Based on its existing lease arrangements, about 95.2 per cent of its Japan portfolio is downside-protected.

First Reit has a portfolio of 31 properties comprising 16 in Indonesia, 3 in Singapore and 12 in Japan with a combined size exceeding S$1.2 billion. Its Reit manager is 60 per cent owned by OUE Limited and 40 per cent owned by OUE Lippo Healthcare (OUELH). As such, the Reit has rights-of-first refusal to a pipeline of properties from PT Lippo Karawaci Tbk and OUELH.

First Reit in its Q1 2022 business update reported 34.9 per cent year-on-year growth in net property and other income and 1.5 per cent growth in DPU paid (0.66 Singapore cents for Q1 2022). Following its maiden entry into Japan with the acquisition of 12 nursing homes, First Reit noted that it has successfully taken the first step of its First Reit 2.0 Growth Strategy to expand into developed markets and diversify geographical risk.

First Reit’s Indonesia hospital operator, PT Siloam International Hospitals Tbk reported stable quarter-on-quarter performance for Q1 2022 despite the impact of the Omicron variant. First Reit’s nursing homes in Japan and Singapore also noted high occupancy rates and the Reit remains confident of the resilient healthcare market in its operating markets.

REIT Watch is a weekly column on The Business Times, <a href="https://www.businesstimes.com.sg/companies-markets/healthcare-s-reits-see-stable-growth-and-resilience">read </a>the original version.
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    REIT Watch 13 Jun


Singapore lists 2 actively traded Healthcare related S-Reits – ParkwayLife Reit and First Reit. Healthcare Reits invest in income-producing real estate primarily used for healthcare related purposes including but not limited to hospitals, medical offices, outpatient facilities and nursing facilities. As such, these Reits may be regarded as an option for investors to gain exposure to the growing and resilient healthcare sector.

ParkwayLife Reit is one of the largest listed healthcare Reits in Asia with a portfolio of 56 properties at S$2.29 billion in size. It has 64.6 per cent of its portfolio in hospitals and medical centres, and 35.4 per cent in nursing homes, across Singapore (64.3 per cent), Japan (35.4 per cent), and Malaysia (0.3 per cent).

ParkwayLife Reit reported 2.3 per cent year-on-year higher gross revenue for Q1 2022, arising from the3 properties it acquired last year and higher rent received from Singapore hospitals. The Reit noted that its distribution per unit (DPU) has grown steadily at a rate of 122.8 per cent since its listing.

In its Singapore portfolio (hospitals include Mouth Elizabeth Hospital, Parkway East Hospital, and Gleneagles Hospital), its master lessee Parkway Hospitals Singapore, is a wholly owned subsidiary of IHH Health which is one of the world’s largest healthcare networks with 80 hospitals in 10 countries. Its latest renewal term of 20.4 years runs from Aug 23, 2022 to Dec 31, 2042, with an option to renew for a further 10 years. It has a triple net lease arrangement which means that the Reit does not bear property taxes, property insurance, property operating expenses and is unaffected by inflated-related escalating expenses.

In its Japan portfolio, it owns 52 nursing home properties with a weighted average lease term to expiry of 11.79 years and a diversified tenant base across 28 nursing home operators. Based on its existing lease arrangements, about 95.2 per cent of its Japan portfolio is downside-protected.

First Reit has a portfolio of 31 properties comprising 16 in Indonesia, 3 in Singapore and 12 in Japan with a combined size exceeding S$1.2 billion. Its Reit manager is 60 per cent owned by OUE Limited and 40 per cent owned by OUE Lippo Healthcare (OUELH). As such, the Reit has rights-of-first refusal to a pipeline of properties from PT Lippo Karawaci Tbk and OUELH.

First Reit in its Q1 2022 business update reported 34.9 per cent year-on-year growth in net property and other income and 1.5 per cent growth in DPU paid (0.66 Singapore cents for Q1 2022). Following its maiden entry into Japan with the acquisition of 12 nursing homes, First Reit noted that it has successfully taken the first step of its First Reit 2.0 Growth Strategy to expand into developed markets and diversify geographical risk.

First Reit’s Indonesia hospital operator, PT Siloam International Hospitals Tbk reported stable quarter-on-quarter performance for Q1 2022 despite the impact of the Omicron variant. First Reit’s nursing homes in Japan and Singapore also noted high occupancy rates and the Reit remains confident of the resilient healthcare market in its operating markets.

REIT Watch is a weekly column on The Business Times, read the original version.



REIT Watch - Healthcare S-Reits see stable growth and resilience

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)

<ul><li><a href="https://www.smartkarma.com/entities/first-real-estate-investment-trust" target="_blank" data-smartkarma-citation="entities:15848" rel="noopener">First REIT (FIRT SP)</a> to divest Siloam Hospitals Surabaya at book value - FIRT enters into a conditional sale and purchase agreement with Siloam International Hospitals and Megapratama Karya Bersama to divest Tata Prima Indah, which owns 100% interest in Siloam Hospitals Surabaya for a divestment consideration of IDR430.0bn (~S$40.9m).</li><li>Kensington Park condo launches S$1.28bn collective sale tender - Kensington Park condominium in Serangoon has been offered for en bloc sale by public tender with a guide price of S$1.28bn. </li><li><a href="https://www.smartkarma.com/entities/megaworld-corp" target="_blank" data-smartkarma-citation="entities:8746" rel="noopener">Megaworld Corp (MEG PM)</a> claims no tax liability with BIR - MEG claimed that it has no outstanding or unpaid taxes that justify an action against the company</li></ul>

First REIT (FIRT SP) to divest Siloam Hospitals Surabaya at book value - FIRT enters into a conditional sale and purchase agreement with Siloam International Hospitals and Megapratama Karya Bersama to divest Tata Prima Indah, which owns 100% interest in Siloam Hospitals Surabaya for a divestment consideration of IDR430.0bn (~S$40.9m).Kensington Park condo launches S$1.28bn collective sale tender - Kensington Park condominium in Serangoon has been offered for en bloc sale by public tender with a guide price of S$1.28bn. Megaworld Corp (MEG PM) claims no tax liability with BIR - MEG claimed that it has no outstanding or unpaid taxes that justify an action against the company

ASEAN Builder's Scoop (19May22) - FIRT Divests Siloam Surabaya at Book

<ul><li><a href="https://www.smartkarma.com/entities/manulife-us-reit" target="_blank" data-smartkarma-citation="entities:567" rel="noopener">Manulife US REIT (MUST) (MUST SP)</a> 1Q22 Business Updates – Slow and bumpy return to office</li><li><a href="https://www.smartkarma.com/entities/first-real-estate-investment-trust" target="_blank" data-smartkarma-citation="entities:15848" rel="noopener">First REIT (FIRT SP)</a> 1Q22 DPU +1.5% YoY; New chapter began with a steady DPU growth and lower gearing</li><li>ABSD of 35% to be imposed on transfers of residential property to living trust</li></ul>

Manulife US REIT (MUST) (MUST SP) 1Q22 Business Updates – Slow and bumpy return to officeFirst REIT (FIRT SP) 1Q22 DPU +1.5% YoY; New chapter began with a steady DPU growth and lower gearingABSD of 35% to be imposed on transfers of residential property to living trust

ASEAN Builder's Scoop (9May22) - MUST Slow and Bumpy Road

<ul><li><a href="https://www.smartkarma.com/entities/daiwa-house-logistics-trust" target="_blank" data-smartkarma-citation="entities:35020" rel="noopener">Daiwa House Logistics Trust (DHLT SP)</a> 4Q21 business updates (26Nov-31Dec21) – Initial results are inline with forecasts</li><li><a href="https://www.smartkarma.com/entities/first-real-estate-investment-trust" target="_blank" data-smartkarma-citation="entities:15848" rel="noopener">First REIT (FIRT SP)</a> 2H21 DPU fell 29.2% YoY; Gradual improvements post completion of restructuring exercises</li><li><a href="https://www.smartkarma.com/entities/oxley-holdings-ltd" target="_blank" data-smartkarma-citation="entities:1097" rel="noopener">Oxley Holdings (OHL SP)</a> 1H22 PATMI -18% YoY; Gearing under control, projects progressing well</li></ul>

Daiwa House Logistics Trust (DHLT SP) 4Q21 business updates (26Nov-31Dec21) – Initial results are inline with forecastsFirst REIT (FIRT SP) 2H21 DPU fell 29.2% YoY; Gradual improvements post completion of restructuring exercisesOxley Holdings (OHL SP) 1H22 PATMI -18% YoY; Gearing under control, projects progressing well

ASEAN Builder's Scoop (11Feb22) - DHLT Initial Results Inline

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In 2021, the benchmark iEdge S-Reit Index generated 6.2 per cent total returns and the S-Reit and property trusts sector as a whole received S$1.4 billion of net retail inflows while institutional investors have seen net outflows of S$1.0 billion.

Throughout the year, 24 S-Reits announced asset acquisitions valued at more than S$15.3 billion and exceeding S$12.7 billion in total purchase price consideration. 
Mapletree Logistics Trust, Ascott Residence Trust and Ascendas India Trust were the most active S-REITs in terms of asset acquisitions last year, totalling purchase consideration of more than S$2.2 billion, S$780 million and S$400 million respectively. 
Recent S-REIT acquisitions announced in the month of December 2021 totalled S$1.2 billion in purchase consideration and were made by Ascott Residence Trust, CapitaLand Integrated Commercial Trust, First REIT and ParkwayLife REIT. 
These Reits acquired assets across a variety of segments including student accommodations, office, retail and nursing homes.

In 2021, Mapletree Logistics Trust (MLT) made several acquisitions in the logistics sector throughout the globe including South Korea, India, Singapore, Australia, Malaysia, China, Vietnam and Japan.

In November 2021, MLT announced the acquisition of logistics assets in China, Vietnam and Japan, valued at more than S$1.4 billion in total - its largest acquisition announcement of the year.

The trust noted that the pandemic has highlighted the importance of logistics and placed a greater emphasis on supply chain resiliency, fuelling demand for modern logistics space.

Hence, it believes that the acquisitions of these modern Grade-A logistics assets will position it well to capture these structural trends.

Ascott Residence Trust (ART) was the first Singapore-listed trust to venture into the student housing segment. In December last year, it announced the acquisition of 4 student accommodation assets in the United States for US$213.0 million (S$291.2 million).

The 4 assets have a total of 1,651 beds, serving more than 100,000 students across 5 universities in 3 states.

With ART's final acquisition announcement for the year, the trust has built a diversified portfolio of 8 student accommodation assets in the US with about 4,400 beds in under a year.

Beh Siew Kim, chief executive officer of the trust's manager noted that student accommodation assets and rental housing properties now make up about 16 per cent of its total portfolio value, surpassing the initial target of 15 per cent.

Ascendas India Trust (AIT) acquired several business parks, an industrial facility and a site for data centre development throughout the year.

In July 2021, it announced the acquisition of a greenfield site for the development of Phase 1 of its first fully-fitted data centre campus in Airoli, a growing data centre hub in Navi Mumbai, India.

The trust noted that Phase 1 of the development will have a built-up area of about 0.33 million sq ft and is scheduled to be ready by Q3 2024. REIT Watch is a weekly column on The Business Times, <a href="https://www.businesstimes.com.sg/companies-markets/wealth-investing/acquisitions-by-s-reits-exceed-s12-billion-in-2021">read </a>the original version.
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    SREIT asset


In 2021, the benchmark iEdge S-Reit Index generated 6.2 per cent total returns and the S-Reit and property trusts sector as a whole received S$1.4 billion of net retail inflows while institutional investors have seen net outflows of S$1.0 billion.

Throughout the year, 24 S-Reits announced asset acquisitions valued at more than S$15.3 billion and exceeding S$12.7 billion in total purchase price consideration.  
Mapletree Logistics Trust, Ascott Residence Trust and Ascendas India Trust were the most active S-REITs in terms of asset acquisitions last year, totalling purchase consideration of more than S$2.2 billion, S$780 million and S$400 million respectively.  
Recent S-REIT acquisitions announced in the month of December 2021 totalled S$1.2 billion in purchase consideration and were made by Ascott Residence Trust, CapitaLand Integrated Commercial Trust, First REIT and ParkwayLife REIT.  
These Reits acquired assets across a variety of segments including student accommodations, office, retail and nursing homes.

In 2021, Mapletree Logistics Trust (MLT) made several acquisitions in the logistics sector throughout the globe including South Korea, India, Singapore, Australia, Malaysia, China, Vietnam and Japan.

In November 2021, MLT announced the acquisition of logistics assets in China, Vietnam and Japan, valued at more than S$1.4 billion in total - its largest acquisition announcement of the year.

The trust noted that the pandemic has highlighted the importance of logistics and placed a greater emphasis on supply chain resiliency, fuelling demand for modern logistics space.

Hence, it believes that the acquisitions of these modern Grade-A logistics assets will position it well to capture these structural trends.

Ascott Residence Trust (ART) was the first Singapore-listed trust to venture into the student housing segment. In December last year, it announced the acquisition of 4 student accommodation assets in the United States for US$213.0 million (S$291.2 million).

The 4 assets have a total of 1,651 beds, serving more than 100,000 students across 5 universities in 3 states.

With ART's final acquisition announcement for the year, the trust has built a diversified portfolio of 8 student accommodation assets in the US with about 4,400 beds in under a year.

Beh Siew Kim, chief executive officer of the trust's manager noted that student accommodation assets and rental housing properties now make up about 16 per cent of its total portfolio value, surpassing the initial target of 15 per cent.

Ascendas India Trust (AIT) acquired several business parks, an industrial facility and a site for data centre development throughout the year.

In July 2021, it announced the acquisition of a greenfield site for the development of Phase 1 of its first fully-fitted data centre campus in Airoli, a growing data centre hub in Navi Mumbai, India.

The trust noted that Phase 1 of the development will have a built-up area of about 0.33 million sq ft and is scheduled to be ready by Q3 2024.  REIT Watch is a weekly column on The Business Times, read the original version.



REIT Watch - Acquisitions by S-Reits exceed S$12 billion in 2021

Singapore

First Real Estate Investment Trust is a healthcare real estate investment trust. The Trust invests in and owns a diversified portfolio of healthcare and healthcare-related real-estate assets in Asia.

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First REIT (FIRT SP)

REIT Watch - Healthcare S-Reits see stable growth and resilience

Singapore lists 2 actively traded Healthcare related S-Reits – ParkwayLife Reit and First Reit. Healthcare Reits invest in...

Singapore Exchange Ltd (SGX)

ASEAN Builder's Scoop (19May22) - FIRT Divests Siloam Surabaya at Book

MEG claims no tax liability; PSH targets THB16.3bn sales in FY22; MYR3bn Straits City Penang revealed; KL office rents under pressure

SCCM Asia Research

ASEAN Builder's Scoop (9May22) - MUST Slow and Bumpy Road

FIRT new chapter began with steady growth; ABSD 35% imposed to Living Trust; Piccadilly Grand 77% sold; BS previews Liv @ MB; YLLG Apr22 presales...

SCCM Asia Research

ASEAN Builder's Scoop (11Feb22) - DHLT Initial Results Inline

DHLT initial results inline; FIRT gradual improvements post restructuring; OHL gearing under control; Quarz Capital thinks MAGIC offer value...

SCCM Asia Research

REIT Watch - Acquisitions by S-Reits exceed S$12 billion in 2021

In 2021, the benchmark iEdge S-Reit Index generated 6.2 per cent total returns and the S-Reit and property trusts sector as a...

Singapore Exchange Ltd (SGX)

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