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)

<h2>Singapore</h2><h3><a href="https://www.smartkarma.com/entities/capitaland-ltd" target="_blank" data-smartkarma-citation="entities:55" rel="noopener">Capitaland (CAPL SP)</a> 3Q21 Business Updates – A good start with key metrics growing robustly</h3><ul><li>9M21 revenue came in at S$1.6bn with Fee income Related Business (FRB) making up 40% of total revenue and Real-estate investment business making up the remaining 60%. 9M21 FRB rose by 19% YoY to S$656m, with fund management rising by 35% YoY to S$292m, followed by property management rising by 2.6% YoY to S$236m and lodging management rising by 23% to S$128m, respectively     </li></ul>

SingaporeCapitaland (CAPL SP) 3Q21 Business Updates – A good start with key metrics growing robustly9M21 revenue came in at S$1.6bn with Fee income Related Business (FRB) making up 40% of total revenue and Real-estate investment business making up the remaining 60%. 9M21 FRB rose by 19% YoY to S$656m, with fund management rising by 35% YoY to S$292m, followed by property management rising by 2.6% YoY to S$236m and lodging management rising by 23% to S$128m, respectively     

External broker reports(aggregated public sources), KGI Securities Singapore

KGI Securities

External broker reports(aggregated public sources)

Equity Bottom-Up

Manulife US REIT (MUST) / Equity Bottom-Up

<p></p><ul><li><strong>Upgrade to Outperform. </strong>US office properties are likely to see improving demand as more employees return, even if it is on a part time basis. Improving fundamentals may finally lift investor confidence in the sector.</li><li>MUST provides an excellent proxy to ride on the “return to office” theme in the US, while offering an attractive 7.4% forward dividend yield.</li></ul><div class="content-highlight"><em>Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.</em></div>

Upgrade to Outperform. US office properties are likely to see improving demand as more employees return, even if it is on a part time basis. Improving fundamentals may finally lift investor confidence in the sector.MUST provides an excellent proxy to ride on the “return to office” theme in the US, while offering an attractive 7.4% forward dividend yield.Content is external broker report sourced from online content aggregator through publicly available sources and is displayed below for general informational purposes only. Refer full disclaimer below.

Smartkarma Research Team, Smartkarma

Smartkarma Research

Smartkarma Research Team

Smartkarma

Smartkarma unites the fragmented investment industry, connecting institutional investors, independent research providers, and corporates within a single network.

Research Reinvented

<p>For our next Smartkarma Corporate Webinar, we are glad to welcome <a href="https://www.smartkarma.com/entities/manulife-us-reit/overview" target="_blank" rel="noopener">Manulife US REIT (MUST SP)</a>’s CFO, Robert Wong, and Chief IR and Capital Markets Officer, <a href="https://www.smartkarma.com/profiles/carol-fong-69a19943-1750-44db-a68b-1d4ada8be675" target="_blank" rel="noopener">Carol Fong</a>.</p>
<p>MUST is the first pure-play U.S. office REIT listed in Singapore, offering investors the opportunity to have a piece of U.S. real estate in their portfolio. The trust has tripled its AUM in the last 5 years.</p>
<p>In this Webinar, Carol will share a short company presentation on MUST’s journey and its strategy moving ahead in a post-COVID-19 world. Afterwards, she and Robert will engage in a fireside chat with Smartkarma Insight Provider, <a href="https://www.smartkarma.com/profiles/angus-mackintosh" target="_blank" rel="noopener">Angus Mackintosh</a>. This will be followed by a live Q&amp;A session.</p>
<h3>The Corporate Webinar will be hosted on Tuesday, 29 June 2021, 17:00 SGT.</h3>
<div class="content-highlight">
<h2><a href="https://share.hsforms.com/1H9pFZOB-RF2J00kbvMmxcw2c5gj?zoom_webinar_id=87218260193" target="_blank" rel="noopener">Register for the Webinar here</a></h2>
</div>
<p>Corporate Webinars by <a href="https://www.smartkarma.com/home/corporate-solutions/" target="_blank" rel="noopener">Smartkarma Corporate Solutions</a> feature discussions with IROs and Executives, discussing their companies, the challenges they face, and the opportunities in their sectors and markets.</p>

For our next Smartkarma Corporate Webinar, we are glad to welcome Manulife US REIT (MUST SP)’s CFO, Robert Wong, and Chief IR and Capital Markets Officer, Carol Fong.
MUST is the first pure-play U.S. office REIT listed in Singapore, offering investors the opportunity to have a piece of U.S. real estate in their portfolio. The trust has tripled its AUM in the last 5 years.
In this Webinar, Carol will share a short company presentation on MUST’s journey and its strategy moving ahead in a post-COVID-19 world. Afterwards, she and Robert will engage in a fireside chat with Smartkarma Insight Provider, Angus Mackintosh. This will be followed by a live Q&amp;A session.
The Corporate Webinar will be hosted on Tuesday, 29 June 2021, 17:00 SGT.

Register for the Webinar here

Corporate Webinars by Smartkarma Corporate Solutions feature discussions with IROs and Executives, discussing their companies, the challenges they face, and the opportunities in their sectors and markets.

Smartkarma Corporate Webinar | Manulife US REIT (MUST SP): US Real Estate During and After COVID-19

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)

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.

<figure>
      <img src='https://api2.sgx.com/sites/default/files/2021-06/Capture_19.PNG' alt='8 SREIT with exposes to US assets' />
    </figure>
    <div class='content-caption'>8 SREIT with exposes to US assets</div>
<!DOCTYPE html PUBLIC "-//W3C//DTD HTML 4.0 Transitional//EN" "http://www.w3.org/TR/REC-html40/loose.dtd">
<html><body>
<p>SGX lists eight actively traded S-Reits with properties in the United States (US). Five out of the eight S-Reits have pure exposure to the US and among them are three US office S-Reits.<br><br>
The US Centres for Disease Control and Prevention (CDC) on May 13 announced that fully vaccinated individuals do not need to wear masks outdoors and can avoid wearing masks indoors in most places, and updated that life can begin to return to normal despite caution issued by the World Health Organization (WHO).</p>

<p>Nonetheless, US Office S-Reits remain sanguine about companies' return-to-office plans and are adapting to agile and "new normal" arrangements as the US continues to push for normalcy and re-opening of sectors and industries.<br><br>
The three US Office S-Reits trade at an average price-to-book ratio of 0.98 times and average 7.8 per cent in distribution yield. All of the three have average committed occupancy rates of over 90 per cent, above the average Class A US office average of 84 per cent, and have weighted average lease expiry (WALE) that range from 4.3 to 5.3 years.<br><br>
Manulife US Reit (MUST), which has an occupancy rate of 92 per cent, has observed more tenants gradually returning to the office with May 2021's portfolio physical occupancy at 20.0 per cent, versus 13.3 per cent seen in Jan 2021. The Reit notes that offices continue to remain relevant as companies adopt a hybrid model and the majority of employers do require the same if not more office space post Covid-19, driven by the demand for rising headcount and social distancing needs.</p>

<p>MUST sees post-Covid-19 themes such as the acceleration of population and company migration to magnet cities, growing tech sector, strong demand for health care, and fast developing knowledge economy to provide uplift for the Reit. MUST has a focus to target magnet cities which are defined as having attributes such as growing tech tenants, population growth, business friendly and lower costs of living.</p>

<p>Prime US Reit (Prime) sees interest in its assets pick up as tenants make longer-term leasing decisions, despite the current low physical occupancy. Its current portfolio occupancy rate is at 91.7 per cent. Some of its tenants which include Goldman Sachs and Wells Fargo have also made plans for employees to return to the office by July 2021.</p>

<p>In securing new leases, Prime notes that its new tenants are largely from diverse established and technology sectors. The Reit observes that the US office transaction market has shown signs of activity in recent weeks and it is actively exploring acquisition opportunities in its target markets.</p>

<p>Keppel Pacific Oak US Reit (KORE) has a 91.6 per cent portfolio committed occupancy rate and believes that the rollout of vaccines and removal of restrictions is raising confidence and optimism. LaSalle Network's Office Re-Entry Index shows that 70 per cent of CEOs, human resources and finance leaders are planning for employees to return to the office by fall 2021.</p>

<p>KORE has a focus in markets with exposure to technology hubs and tech-tenancy. Its recent leasing activities are driven mainly by demand from professional services, finance and insurance, and technology. Over 37 per cent of its current portfolio by net lettable area comprises tenants from technology and medical and healthcare. <br><br><strong><em>REIT Watch is a weekly column on The Business Times, <a href="https://www.businesstimes.com.sg/companies-markets/us-office-s-reits-half-empty-or-half-full">read</a> the original version.</em></strong></p>
</body></html>



      
    
    8 SREIT with exposes to US assets


SGX lists eight actively traded S-Reits with properties in the United States (US). Five out of the eight S-Reits have pure exposure to the US and among them are three US office S-Reits.  
The US Centres for Disease Control and Prevention (CDC) on May 13 announced that fully vaccinated individuals do not need to wear masks outdoors and can avoid wearing masks indoors in most places, and updated that life can begin to return to normal despite caution issued by the World Health Organization (WHO).

Nonetheless, US Office S-Reits remain sanguine about companies' return-to-office plans and are adapting to agile and "new normal" arrangements as the US continues to push for normalcy and re-opening of sectors and industries.  
The three US Office S-Reits trade at an average price-to-book ratio of 0.98 times and average 7.8 per cent in distribution yield. All of the three have average committed occupancy rates of over 90 per cent, above the average Class A US office average of 84 per cent, and have weighted average lease expiry (WALE) that range from 4.3 to 5.3 years.  
Manulife US Reit (MUST), which has an occupancy rate of 92 per cent, has observed more tenants gradually returning to the office with May 2021's portfolio physical occupancy at 20.0 per cent, versus 13.3 per cent seen in Jan 2021. The Reit notes that offices continue to remain relevant as companies adopt a hybrid model and the majority of employers do require the same if not more office space post Covid-19, driven by the demand for rising headcount and social distancing needs.

MUST sees post-Covid-19 themes such as the acceleration of population and company migration to magnet cities, growing tech sector, strong demand for health care, and fast developing knowledge economy to provide uplift for the Reit. MUST has a focus to target magnet cities which are defined as having attributes such as growing tech tenants, population growth, business friendly and lower costs of living.

Prime US Reit (Prime) sees interest in its assets pick up as tenants make longer-term leasing decisions, despite the current low physical occupancy. Its current portfolio occupancy rate is at 91.7 per cent. Some of its tenants which include Goldman Sachs and Wells Fargo have also made plans for employees to return to the office by July 2021.

In securing new leases, Prime notes that its new tenants are largely from diverse established and technology sectors. The Reit observes that the US office transaction market has shown signs of activity in recent weeks and it is actively exploring acquisition opportunities in its target markets.

Keppel Pacific Oak US Reit (KORE) has a 91.6 per cent portfolio committed occupancy rate and believes that the rollout of vaccines and removal of restrictions is raising confidence and optimism. LaSalle Network's Office Re-Entry Index shows that 70 per cent of CEOs, human resources and finance leaders are planning for employees to return to the office by fall 2021.

KORE has a focus in markets with exposure to technology hubs and tech-tenancy. Its recent leasing activities are driven mainly by demand from professional services, finance and insurance, and technology. Over 37 per cent of its current portfolio by net lettable area comprises tenants from technology and medical and healthcare.   REIT Watch is a weekly column on The Business Times, read the original version.



REIT Watch - US office S-Reits - half empty or half full?

ARA US Hospitality Trust / Equity Bottom-Up

<figure>
      <img src='https://api2.sgx.com/sites/default/files/2021-05/Capture_12.PNG' alt='REIT watch' />
    </figure>
    <div class='content-caption'>REIT watch</div>
<!DOCTYPE html PUBLIC "-//W3C//DTD HTML 4.0 Transitional//EN" "http://www.w3.org/TR/REC-html40/loose.dtd">
<html><body>
<p>WITHIN Singapore's Reits &amp; Property Trusts (S-Reits) that are listed for trading, there are five (ARA US Hospitality Trust, Manulife US Reit, Prime US Reit, United Hampshire US Reit, Keppel Pacific Oak US Reit) with 100 per cent of assets located in the US and three (IReit Global, Cromwell European Reit, Elite Commercial Reit) with 100 per cent of their assets in Europe.</p>

<p>These eight S-Reits have an average distribution yield of 7.5 per cent and generated positive average total returns of 8.9 per cent in the 2021 year-to-date till May 12.</p>

<p>In the past week, Cromwell European Reit (CE Reit), Manulife US Reit (MUST) and United Hampshire US Reit (UHU Reit) published their business/operational updates for the first quarter of 2021. Common outlook expectations revolved around the recovery of economic activities in 2021 as vaccination roll-outs progress, restrictions ease, daily activities resume and employment data rebound.</p>

<p>With most of Europe still under tight restrictions during the quarter, GDP for the eurozone economy fell by 0.6 per cent quarter-on-quarter, based on preliminary data released by Europe's statistics office Eurostat. CE Reit noted that, barring a further deterioration of the current Covid-19 situation, the eurozone's 2021 GDP growth is projected at 4.1 per cent (according to Oxford Economics).<br><br>
CE Reit's gross revenue and net property income (NPI) declined marginally by 0.1 per cent and 0.4 per cent, respectively for Q1 FY2021. This was attributed to prolonged Covid-19 lockdowns in most of CE Reit's countries of operations. However, the Reit believes that there will be higher demand for light industrial /logistics space as e-commerce continues to expand in 2021, supplemented by further demand coming from the reconfiguration and expansion of supply chains so as to be better prepared for future disruptions and consumer demand shocks. In March 2021, CE Reit completed the acquisition of 11 modern logistics assets in Czech Republic and Slovakia. The Reit aims to increase exposure to logistics to 50 per cent of portfolio asset under management (AUM), up from the current 38 per cent.<br><br>
In contrast to Europe's GDP contraction in the Q1 2021, the US reported a quarter-on-quarter GDP growth of 1.6 per cent. Both MUST and UHU Reit noted that the GDP rebound indicates momentum coupled with improving unemployment rate, fast-paced vaccination roll-out and two rounds of federal stimulus payments.</p>

<p>In its Q1 FY2021 operational update, MUST reported strong lease renewals (93.6 per cent of leases by NLA) but minimal new leases as prospective tenants continue to stay cautious. Looking forward, MUST expects post Covid-19 themes such as the acceleration of population and company migration, growing technology sector, strong demand for healthcare and fast developing knowledge economy to provide uplift to the Reit. MUST intends to target cities that are business-friendly, have growing technology and healthcare industries as well as robust population growth.</p>

<p>Compared to IPO forecasts, UHU Reit's Q1 FY2021 distributable income was up 1.3 per cent while gross revenue and NPI were down 1.9 per cent and 1.8 per cent respectively. UHU Reit noted that, according to the National Retail Federation (NRF), US retail sales are expected to grow between 6.5 per cent and 8.2 per cent in 2021, underpinned by healthy consumer fundamentals, pent-up demand and widespread vaccination. This was evident in the new and renewal leases signed this quarter, most of which were food &amp; beverage and consumer services tenants.</p>

<p>The Reit also expects trends such as increase in consumer awareness of the benefits of self-storage, an increasingly mobile population and the decluttering of homes to create more efficient workspaces to continue even as the country transitions to a post-Covid environment.<br><br><strong><em>REIT Watch is a weekly column on The Business Times,<a href="https://www.businesstimes.com.sg/companies-markets/china-poised-to-drive-economic-growth"> </a><a href="https://www.businesstimes.com.sg/companies-markets/western-s-reits-sanguine-on-post-covid-outlook">read</a><a href="https://www.businesstimes.com.sg/companies-markets/bulk-of-s-reits-in-key-global-real-estate-indices"> </a>the original version.</em></strong></p>
</body></html>



      
    
    REIT watch


WITHIN Singapore's Reits &amp; Property Trusts (S-Reits) that are listed for trading, there are five (ARA US Hospitality Trust, Manulife US Reit, Prime US Reit, United Hampshire US Reit, Keppel Pacific Oak US Reit) with 100 per cent of assets located in the US and three (IReit Global, Cromwell European Reit, Elite Commercial Reit) with 100 per cent of their assets in Europe.

These eight S-Reits have an average distribution yield of 7.5 per cent and generated positive average total returns of 8.9 per cent in the 2021 year-to-date till May 12.

In the past week, Cromwell European Reit (CE Reit), Manulife US Reit (MUST) and United Hampshire US Reit (UHU Reit) published their business/operational updates for the first quarter of 2021. Common outlook expectations revolved around the recovery of economic activities in 2021 as vaccination roll-outs progress, restrictions ease, daily activities resume and employment data rebound.

With most of Europe still under tight restrictions during the quarter, GDP for the eurozone economy fell by 0.6 per cent quarter-on-quarter, based on preliminary data released by Europe's statistics office Eurostat. CE Reit noted that, barring a further deterioration of the current Covid-19 situation, the eurozone's 2021 GDP growth is projected at 4.1 per cent (according to Oxford Economics).  
CE Reit's gross revenue and net property income (NPI) declined marginally by 0.1 per cent and 0.4 per cent, respectively for Q1 FY2021. This was attributed to prolonged Covid-19 lockdowns in most of CE Reit's countries of operations. However, the Reit believes that there will be higher demand for light industrial /logistics space as e-commerce continues to expand in 2021, supplemented by further demand coming from the reconfiguration and expansion of supply chains so as to be better prepared for future disruptions and consumer demand shocks. In March 2021, CE Reit completed the acquisition of 11 modern logistics assets in Czech Republic and Slovakia. The Reit aims to increase exposure to logistics to 50 per cent of portfolio asset under management (AUM), up from the current 38 per cent.  
In contrast to Europe's GDP contraction in the Q1 2021, the US reported a quarter-on-quarter GDP growth of 1.6 per cent. Both MUST and UHU Reit noted that the GDP rebound indicates momentum coupled with improving unemployment rate, fast-paced vaccination roll-out and two rounds of federal stimulus payments.

In its Q1 FY2021 operational update, MUST reported strong lease renewals (93.6 per cent of leases by NLA) but minimal new leases as prospective tenants continue to stay cautious. Looking forward, MUST expects post Covid-19 themes such as the acceleration of population and company migration, growing technology sector, strong demand for healthcare and fast developing knowledge economy to provide uplift to the Reit. MUST intends to target cities that are business-friendly, have growing technology and healthcare industries as well as robust population growth.

Compared to IPO forecasts, UHU Reit's Q1 FY2021 distributable income was up 1.3 per cent while gross revenue and NPI were down 1.9 per cent and 1.8 per cent respectively. UHU Reit noted that, according to the National Retail Federation (NRF), US retail sales are expected to grow between 6.5 per cent and 8.2 per cent in 2021, underpinned by healthy consumer fundamentals, pent-up demand and widespread vaccination. This was evident in the new and renewal leases signed this quarter, most of which were food &amp; beverage and consumer services tenants.

The Reit also expects trends such as increase in consumer awareness of the benefits of self-storage, an increasingly mobile population and the decluttering of homes to create more efficient workspaces to continue even as the country transitions to a post-Covid environment.  REIT Watch is a weekly column on The Business Times, read the original version.



REIT Watch - Western S-Reits sanguine on post-Covid outlook

Singapore

Manulife US REIT is a Singapore listed REIT established with the investment strategy principally to invest, directly or indirectly, in a portfolio of income-producing office real estate in key markets in the United States, as well as real estate-related assets.

Price Gauge
52-week Range	0.00 - 0.00
Market Cap (USDm)	0.00
P/E	0.00
Dividend (Yield)	0.00

Manulife US REIT (MUST) (MUST SP)

ASEAN Builder's Scoop (3Nov21)

CLI 3Q21 results a good start; OUECT declining QoQ reversions; MUST green shoots of recovery; HOBEE buys Melbourne site; ALLHC expands Cavite...

SCCM Asia Research

Manulife US REIT (MUST SP)

Upgrade to Outperform. US office properties are likely to see improving demand as more employees return, even if it is on a part time basis....

KGI Securities

Smartkarma Corporate Webinar | Manulife US REIT (MUST SP): US Real Estate During and After COVID-19

On 29 June, 5pm SGT, join us for a Corporate Webinar with Manulife US REIT’s CFO, Robert Wong, and Chief IR and Capital Markets Officer, Carol...

Smartkarma Research

REIT Watch - US office S-Reits - half empty or half full?

SGX lists eight actively traded S-Reits with properties in the United States (US). Five out of the eight S-Reits have pure...

Singapore Exchange Ltd (SGX)

REIT Watch - Western S-Reits sanguine on post-Covid outlook

WITHIN Singapore's Reits & Property Trusts (S-Reits) that are listed for trading, there are five (ARA US Hospitality Trust,...

Singapore Exchange Ltd (SGX)

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)