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>Accor signs agreement to manage 8 on Claymore Serviced Residences, adding to its portfolio of 28 properties</h3><p>Accor has signed a management agreement to operate 8 on Claymore Serviced Residences located in the Orchard Road area. Accor is scheduled to commence operations around end-2021. According to the management agreement, the property will undergo a soft refurbishment for all rooms and public areas by mid-2022. The 85-room property will feature a range of modern accommodation, from executive studios to two- and three-bedroom apartments, each with fully equipped kitchens and in-room laundry facilities. This property will join Accor’s portfolio of 28 properties in Singapore including the Raffles, Fairmont, Sofitel, Swissôtel, Novotel, Mercure and ibis brands.</p>

Singapore  Accor signs agreement to manage 8 on Claymore Serviced Residences, adding to its portfolio of 28 propertiesAccor has signed a management agreement to operate 8 on Claymore Serviced Residences located in the Orchard Road area. Accor is scheduled to commence operations around end-2021. According to the management agreement, the property will undergo a soft refurbishment for all rooms and public areas by mid-2022. The 85-room property will feature a range of modern accommodation, from executive studios to two- and three-bedroom apartments, each with fully equipped kitchens and in-room laundry facilities. This property will join Accor’s portfolio of 28 properties in Singapore including the Raffles, Fairmont, Sofitel, Swissôtel, Novotel, Mercure and ibis brands.

<h2>Singapore  </h2><h3><a href="https://www.smartkarma.com/entities/ireit-global" target="_blank" data-smartkarma-citation="entities:10596" rel="noopener">IREIT Global (IREIT SP)</a> master tenant vacating Darmstadt Campus on 29Nov22</h3><p>An IREIT tenant intends to vacate a property that accounts for about 11% of total GRI. This will be when the lease expires on 29Nov22. As such, the manager does not expect any material impact on DPU for FY21 and FY22. GMG Generalmietgesellschaft is the sole tenant at Darmstadt Campus. The space to be vacated there constitutes 7.9% of IREIT's total portfolio lettable area as at 30Sep. GMG, a unit of Deutsche Telekom AG, is also a tenant in Bonn Campus and Munster Campus. Its Darmstadt Campus lease is independent and separate from these other 2 leases. It will now start marketing the Darmstadt Campus and is exploring a multi-let approach to broaden the tenant mix at the property and reduce the reliance on any one single tenant. With the 1-year notice period, there is adequate time to re-let the property to new tenants, as the property is in a prime office location and within a short walking distance to Darmstadt's main railway station.</p>

Singapore  IREIT Global (IREIT SP) master tenant vacating Darmstadt Campus on 29Nov22An IREIT tenant intends to vacate a property that accounts for about 11% of total GRI. This will be when the lease expires on 29Nov22. As such, the manager does not expect any material impact on DPU for FY21 and FY22. GMG Generalmietgesellschaft is the sole tenant at Darmstadt Campus. The space to be vacated there constitutes 7.9% of IREIT's total portfolio lettable area as at 30Sep. GMG, a unit of Deutsche Telekom AG, is also a tenant in Bonn Campus and Munster Campus. Its Darmstadt Campus lease is independent and separate from these other 2 leases. It will now start marketing the Darmstadt Campus and is exploring a multi-let approach to broaden the tenant mix at the property and reduce the reliance on any one single tenant. With the 1-year notice period, there is adequate time to re-let the property to new tenants, as the property is in a prime office location and within a short walking distance to Darmstadt's main railway station.

<h2>Singapore</h2><p>SREITs results in a glance (see detailed spreadsheet and calendar attached)</p><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/236/273/original/image_54776601321634694560432.png?1634694565" class="editor-image img-responsive" data-smartkarma-image-id="236273"></figure><ul><li><h3></h3><a href="https://www.smartkarma.com/entities/ascendas-real-estate-investment-trust" target="_blank" data-smartkarma-citation="entities:39" rel="noopener">Ascendas Real Estate Investment Trust (AREIT SP)</a> 3Q21 Business Updates; Robust reversions while on virtuous cycle of inorganic growth (BUY; TP S$3.55/unit)</li><li>3Q21 revenue, NPI and DPU were undisclosed. AREIT has completed the development of the Grab Headquarters, with a total development cost of S$184.6m. Divestment of two Australian logistics properties has also been completed at a price of S$104.5m (AUD101.6m)</li></ul>

SingaporeSREITs results in a glance (see detailed spreadsheet and calendar attached)Ascendas Real Estate Investment Trust (AREIT SP) 3Q21 Business Updates; Robust reversions while on virtuous cycle of inorganic growth (BUY; TP S$3.55/unit)3Q21 revenue, NPI and DPU were undisclosed. AREIT has completed the development of the Grab Headquarters, with a total development cost of S$184.6m. Divestment of two Australian logistics properties has also been completed at a price of S$104.5m (AUD101.6m)

<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> shares debut at S$2.95/share; Total RE AUM at S$119bn</h3><p>CLI made its trading debut at S$2.95/share (US$11.4bn market cap) on the Singapore Exchange under the trading name CapitaLandInvest. CLI takes over from CapitaLand Limited, which ceased trading at S$4.00 and will delist from the SGX on 21Sep. For every 100 CapitaLand shares owned, shareholders received 100 shares of CLI, S$95.10 in cash and 15.5 units of CapitaLand Integrated Commercial Trust. The total implied consideration was S$4.102/share, with CLI shares valued at S$2.823 each. CLI's listing comes after CapitaLand Limited restructured business to form two distinct entities – CLI, the listed real estate investment management business; and CapitaLand Development, the privatised property development arm. The former had about S$119bn of RE AUM as at 30Jun21, of which more than 80% are located in Asia. Its real estate funds under management stood at about S$83bn, spanning six listed real estate investment trusts and business trusts and over 20 private funds.</p>

SingaporeCapitaland (CAPL SP) shares debut at S$2.95/share; Total RE AUM at S$119bnCLI made its trading debut at S$2.95/share (US$11.4bn market cap) on the Singapore Exchange under the trading name CapitaLandInvest. CLI takes over from CapitaLand Limited, which ceased trading at S$4.00 and will delist from the SGX on 21Sep. For every 100 CapitaLand shares owned, shareholders received 100 shares of CLI, S$95.10 in cash and 15.5 units of CapitaLand Integrated Commercial Trust. The total implied consideration was S$4.102/share, with CLI shares valued at S$2.823 each. CLI's listing comes after CapitaLand Limited restructured business to form two distinct entities – CLI, the listed real estate investment management business; and CapitaLand Development, the privatised property development arm. The former had about S$119bn of RE AUM as at 30Jun21, of which more than 80% are located in Asia. Its real estate funds under management stood at about S$83bn, spanning six listed real estate investment trusts and business trusts and over 20 private funds.

<h2>Singapore</h2>
<h3>
<a href="https://www.smartkarma.com/entities/starhill-global-reit" target="_blank" data-smartkarma-citation="entities:10791" rel="noopener">Starhill Global REIT (SGREIT SP)</a> – Starting FY22E on a high note (BUY; TP S$0.71/Unit)</h3>
<p>2H21 Revenue/NPI have recovered to 90%/88% of 2H19’s. Recent resurgence of Covid-19 cases could weigh against rental reversions and demand further rental assistance. However, SGREIT’s resilient occupancy and master lease structure should offer DPU support. Reiterate BUY with higher TP $0.71/unit, as we rollover our valuations to FY22E. Faster than expected reopening of SG economy and tourism revival would be potential re-rating catalyst in FY22E.</p>
<ul>
<li>Positive surprise with rental rebates reversals and lower expenses. 2H21 revenue and NPI increased 10.5% and 20.2% YoY to S$92.9m and S$69.8m, respectively, mainly due to lower rental assistance and stronger AUD. FY21 revenue and NPI grew 0.3% and 2.0% YoY to S$181.3m and S$134.7m, respectively. S$3.2m of rental rebates reversals from Ngee Ann City and AUS assets were offset by higher rental rebates given to Wisma Atria tenants in 2H21. Overall, rental assistance amounted to c.S$9.6m in FY21 (vs. S$17m in FY20). Combined with adjustment to reflect timing difference of property tax refunds in SG, the absence of S$3.7m one-off capital allowance claim in 2H20, and release of S$4.6m deferred FY20 DI, 2H21 DPU was 195.7% higher at S$2.07c, bringing FY21 DPU 33.4% YoY higher to S$3.95c. The S$7.7m retained FY20 DI has been fully been released with S$0.14c in 1H21 and S$0.21c in 2H21. Excluding the deferred FY20 DI, DPU increased 77.1% and 8.8% YoY in 2H21 and FY21, respectively. FY21 revenue, NPI and DPU exceeded our full-year forecasts by 3.7%, 5.4%, and 12.1%, respectively</li>
<li>Sales has yet to recover to pre-Covid level but occupancies offer silver linings. Pressure at WA (Retail) persists with lower occupancy, lower rent and higher OpEx in 2H21. FY21 rent reversion for Retail came in at -11% vs. Office at -6%. Nonetheless, we take comfort in the resilient portfolio occupancy at 96.7% and committed SG Retail occupancy at 99.3%, supported by new tenant demand. With 15.1% of GRI is due for expiry in FY22E (of which, 11.6% are Retail leases and 3.6% are Office leases), mgmt. expects rent reversion, particularly for Retail’s, to be slight negative, alongside further rental rebates and lease restructuring in view of the renewed movement restrictions in SG and AUS</li>
<li>Reiterate BUY with higher TP of S$0.71/unit, as we roll over our valuations to FY22E. 36.1% gearing level would provide SGREIT financial flexibility in executing its long[1]term strategy to diversify into assets that generate stable cash flows and offers attractive yields. Mgmt. targets to acquire offi ce properties in key gateway cities in SG, AUS and JP, thus bringing revenue mix of Retail vs. Office to 50:50 (currently at 86:14) over the next 3-5 years. Potential launches of travel bubble, further easing of safe distancing measures, and greater proportion of workers returning to office should expedite SGREIT’s recovery in FY22E.</li>
</ul>

Singapore

Starhill Global REIT (SGREIT SP) – Starting FY22E on a high note (BUY; TP S$0.71/Unit)
2H21 Revenue/NPI have recovered to 90%/88% of 2H19’s. Recent resurgence of Covid-19 cases could weigh against rental reversions and demand further rental assistance. However, SGREIT’s resilient occupancy and master lease structure should offer DPU support. Reiterate BUY with higher TP $0.71/unit, as we rollover our valuations to FY22E. Faster than expected reopening of SG economy and tourism revival would be potential re-rating catalyst in FY22E.

Positive surprise with rental rebates reversals and lower expenses. 2H21 revenue and NPI increased 10.5% and 20.2% YoY to S$92.9m and S$69.8m, respectively, mainly due to lower rental assistance and stronger AUD. FY21 revenue and NPI grew 0.3% and 2.0% YoY to S$181.3m and S$134.7m, respectively. S$3.2m of rental rebates reversals from Ngee Ann City and AUS assets were offset by higher rental rebates given to Wisma Atria tenants in 2H21. Overall, rental assistance amounted to c.S$9.6m in FY21 (vs. S$17m in FY20). Combined with adjustment to reflect timing difference of property tax refunds in SG, the absence of S$3.7m one-off capital allowance claim in 2H20, and release of S$4.6m deferred FY20 DI, 2H21 DPU was 195.7% higher at S$2.07c, bringing FY21 DPU 33.4% YoY higher to S$3.95c. The S$7.7m retained FY20 DI has been fully been released with S$0.14c in 1H21 and S$0.21c in 2H21. Excluding the deferred FY20 DI, DPU increased 77.1% and 8.8% YoY in 2H21 and FY21, respectively. FY21 revenue, NPI and DPU exceeded our full-year forecasts by 3.7%, 5.4%, and 12.1%, respectively
Sales has yet to recover to pre-Covid level but occupancies offer silver linings. Pressure at WA (Retail) persists with lower occupancy, lower rent and higher OpEx in 2H21. FY21 rent reversion for Retail came in at -11% vs. Office at -6%. Nonetheless, we take comfort in the resilient portfolio occupancy at 96.7% and committed SG Retail occupancy at 99.3%, supported by new tenant demand. With 15.1% of GRI is due for expiry in FY22E (of which, 11.6% are Retail leases and 3.6% are Office leases), mgmt. expects rent reversion, particularly for Retail’s, to be slight negative, alongside further rental rebates and lease restructuring in view of the renewed movement restrictions in SG and AUS
Reiterate BUY with higher TP of S$0.71/unit, as we roll over our valuations to FY22E. 36.1% gearing level would provide SGREIT financial flexibility in executing its long[1]term strategy to diversify into assets that generate stable cash flows and offers attractive yields. Mgmt. targets to acquire offi ce properties in key gateway cities in SG, AUS and JP, thus bringing revenue mix of Retail vs. Office to 50:50 (currently at 86:14) over the next 3-5 years. Potential launches of travel bubble, further easing of safe distancing measures, and greater proportion of workers returning to office should expedite SGREIT’s recovery in FY22E.


ASEAN Builder's Scoop (06Aug21) - SGREIT Starting FY22E on a High Note

Philippines

Robinsons Land Corporation (RLC) is a leading Philippine real estate company engaged in the development and operation of shopping malls, hotels, office buildings, and residential properties. The company's portfolio includes lifestyle commercial centers, residential condominiums and housing, and industrial facilities. RLC is headquartered in Quezon City, Philippines, and was incorporated on June 4, 1980.

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Robinsons Land (RLC PM)

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AREIT robust reversions, on virtuous growth cycle; IWG opens 16th Co-working centre; Ann Siang House pivots to rental business; SWB revised FY21...

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CLI debuts with S$119bn RE AUM; RLC developing 2 office towers in Bridgetowne; More townships for MEG in Luzon, Palawan; SIME reopens all sales...

SCCM Asia Research

ASEAN Builder's Scoop (06Aug21) - SGREIT Starting FY22E on a High Note

SGREIT starting FY22E on a high note; Rising online sales trend continues; Mapletree issues fixed-for-life perps at 3.7%; Low base boosts RLC's...

SCCM Asia Research

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