IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

IPOs and Catalysts/Events

Uncompromised, Independent, Conflict-Free Research

Global Equity Research Ltd

Global Equity Research was started in 2017 by a group of experienced research professionals. It was founded on a passionate belief in the importance and the need for uncompromised, independent, conflict-free research. We aim to provide differentiated and actionable primary and bottom up fundamental research.

Equity Capital Markets

Daiwa House Logistics Trust / Equity Capital Markets

<ul>
<li>
<a href="https://www.smartkarma.com/entities/daiwa-house-logistics-trust" target="_blank" data-smartkarma-citation="entities:35020:1" rel="noopener">Daiwa House Logistics Trust (DHLT SP)</a> has launched an SGX IPO to raise gross proceeds of S$464 million ($343 million) at an IPO price of S$0.80 per unit. </li>
<li>In <a href="https://www.smartkarma.com/insights/daiwa-house-logistics-trust-ipo-the-flow-of-things" target="_blank" data-smartkarma-citation="insights:60978" rel="noopener">Daiwa House Logistics Trust IPO: The Flow of Things</a>, we outlined its attractive value proposition.  </li>
<li>Our valuation analysis suggests that the IPO price of S$0.80 per unit is reasonable.</li>
</ul>



Daiwa House Logistics Trust (DHLT SP) has launched an SGX IPO to raise gross proceeds of S$464 million ($343 million) at an IPO price of S$0.80 per unit. 
In Daiwa House Logistics Trust IPO: The Flow of Things, we outlined its attractive value proposition.  
Our valuation analysis suggests that the IPO price of S$0.80 per unit is reasonable.


Daiwa House Logistics Trust IPO: Valuation Insights

<ul>
<li>
<a href="https://www.smartkarma.com/entities/daiwa-house-logistics-trust" target="_blank" data-smartkarma-citation="entities:35020:1" rel="noopener">Daiwa House Logistics Trust (DHLT SP)</a> has launched an SGX IPO to raise gross proceeds of S$464 million ($343 million) at an IPO price of S$0.80 per unit. </li>
<li>DHLT offers an attractive value proposition consisting of a blue-chip tenant base, a staggered lease expiry profile, manageable tenant concentration risk, a growth pipeline and low capex.</li>
<li>DHLT offers exposure to the only Japan pure-play REIT listed in Singapore.</li>
</ul>



Daiwa House Logistics Trust (DHLT SP) has launched an SGX IPO to raise gross proceeds of S$464 million ($343 million) at an IPO price of S$0.80 per unit. 
DHLT offers an attractive value proposition consisting of a blue-chip tenant base, a staggered lease expiry profile, manageable tenant concentration risk, a growth pipeline and low capex.
DHLT offers exposure to the only Japan pure-play REIT listed in Singapore.


Daiwa House Logistics Trust IPO: The Flow of Things

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.

Equity Bottom-Up

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 <div class='content-caption'>SREIT that have kicked off the reporting season</div>
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Five S-REITs have kicked off this quarter’s reporting season with the release of financial results for the quarter or business updates, before the market opened last Friday. The five are SPH REIT, AIMS APAC REIT, Ascendas REIT, Sabana REIT, Suntec REIT. 
These five S-Reits have reported increased distributions per unit (DPU) and improved operating metrics amid a cautiously optimistic outlook for the year end.

SPH Reit kicks off with improved full-year results led by gradual market recovery in both of its markets in Singapore and Australia. It noted that tenant sales in its Australia portfolio have recovered to pre-Covid levels despite a seven-day lockdown in July. 
It announced fiscal 2021 DPU at 5.4 cents, increasing 98 per cent year on year and 3.6 per cent away from its previous fiscal year 2019 DPU (pre-Covid).

AIMS Apac Reit announced 4.75 cents in DPU to be distributed for first half FY2022, an 18.8 per cent increase from a year ago, buoyed by higher net property income which rose 19.4 per cent to S$47.7 million year on year.

The Reit recently announced its proposed acquisition of Woolworths Headquarters in New South Wales, Australia, which will be its largest asset across its entire portfolio. 
Ascendas Reit in its business update observed improved portfolio occupancy rates of 91.7 per cent and positive rental reversions, with the completion of Grab's headquarters at one-north, Singapore.

It noted improved occupancy levels across its Singapore and Australia properties while lower to flat levels in its United States and United Kingdom/Europe properties.

Last Friday, Ascendas Reit announced the proposed acquisition of 11 last mile logistics properties in Kansas City, US for S$207.8 million, marking its first entry into the US logistics market and complementing the Reit's existing portfolio.

The Kansas portfolio is 92.6 per cent occupied by 27 customers from industries including third-party logistics, wholesale distribution, manufacturing and healthcare.

The 11 properties were reported to have strong retention rates, with current tenants in place for an average of 12.5 years.

Sabana Reit's business updates reported improved portfolio occupancy rates of 85.3 per cent, its highest level since early 2018 when the Reit's refreshed strategy was first announced.

The Reit also updated that it has renewed leases with positive rental reversion of 7.8 per cent, which is the sixth time it has achieved positive reversion over the past seven quarters.

The removal of its syariah compliance was completed on Oct 21.

Suntec Reit inked 22 per cent higher distributable income from operations and announced 2.232 cents in third quarter 2021 DPU to unitholders which is 20.8 per cent higher year on year.

The Reit expects the return of Singapore's workforce to increase over time and positive rent reversion for its office portfolio for full year 2021.

In its local retail portfolio, it observed improved footfall during the first two weeks of Covid 'Stabilisation Phase' in October compared to earlier periods and expects mall occupancy to be on track to remain around 95 per cent by end 2021. REIT Watch is a weekly column on The Business Times,<a href="https://www.businesstimes.com.sg/companies-markets/improved-operating-metrics-and-dpus-as-s-reits-kick-off-reporting"> read </a>the original version.
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    SREIT that have kicked off the reporting season


Five S-REITs have kicked off this quarter’s reporting season with the release of financial results for the quarter or business updates, before the market opened last Friday. The five are SPH REIT, AIMS APAC REIT, Ascendas REIT, Sabana REIT, Suntec REIT.  
These five S-Reits have reported increased distributions per unit (DPU) and improved operating metrics amid a cautiously optimistic outlook for the year end.

SPH Reit kicks off with improved full-year results led by gradual market recovery in both of its markets in Singapore and Australia. It noted that tenant sales in its Australia portfolio have recovered to pre-Covid levels despite a seven-day lockdown in July.  
It announced fiscal 2021 DPU at 5.4 cents, increasing 98 per cent year on year and 3.6 per cent away from its previous fiscal year 2019 DPU (pre-Covid).

AIMS Apac Reit announced 4.75 cents in DPU to be distributed for first half FY2022, an 18.8 per cent increase from a year ago, buoyed by higher net property income which rose 19.4 per cent to S$47.7 million year on year.

The Reit recently announced its proposed acquisition of Woolworths Headquarters in New South Wales, Australia, which will be its largest asset across its entire portfolio.  
Ascendas Reit in its business update observed improved portfolio occupancy rates of 91.7 per cent and positive rental reversions, with the completion of Grab's headquarters at one-north, Singapore.

It noted improved occupancy levels across its Singapore and Australia properties while lower to flat levels in its United States and United Kingdom/Europe properties.

Last Friday, Ascendas Reit announced the proposed acquisition of 11 last mile logistics properties in Kansas City, US for S$207.8 million, marking its first entry into the US logistics market and complementing the Reit's existing portfolio.

The Kansas portfolio is 92.6 per cent occupied by 27 customers from industries including third-party logistics, wholesale distribution, manufacturing and healthcare.

The 11 properties were reported to have strong retention rates, with current tenants in place for an average of 12.5 years.

Sabana Reit's business updates reported improved portfolio occupancy rates of 85.3 per cent, its highest level since early 2018 when the Reit's refreshed strategy was first announced.

The Reit also updated that it has renewed leases with positive rental reversion of 7.8 per cent, which is the sixth time it has achieved positive reversion over the past seven quarters.

The removal of its syariah compliance was completed on Oct 21.

Suntec Reit inked 22 per cent higher distributable income from operations and announced 2.232 cents in third quarter 2021 DPU to unitholders which is 20.8 per cent higher year on year.

The Reit expects the return of Singapore's workforce to increase over time and positive rent reversion for its office portfolio for full year 2021.

In its local retail portfolio, it observed improved footfall during the first two weeks of Covid 'Stabilisation Phase' in October compared to earlier periods and expects mall occupancy to be on track to remain around 95 per cent by end 2021.  REIT Watch is a weekly column on The Business Times, read the original version.



REIT Watch - Improved operating metrics and DPUs as S-Reits kick off reporting

Event-Driven

<a href="https://www.smartkarma.com/entities/esr-reit" target="_blank" data-smartkarma-citation="entities:10934:1" rel="noopener">ESR-REIT (EREIT SP)</a> announced the proposed merger with <a href="https://www.smartkarma.com/entities/ara-logos-logistics-trust" target="_blank" data-smartkarma-citation="entities:937:1" rel="noopener">ARA LOGOS (ALLT SP)</a> by way of a trust scheme of arrangement. Under the scheme consideration, each ALLT unitholder will receive S$0.095 in cash and 1.6765 new EREIT units at an issue price of S$0.510. The total consideration implies a gross exchange ratio of 1.863x and a total scheme consideration of S$0.950 per ALLT unit, which is a 1.6% premium to the ALLT last close price of S$0.935 per unit (on 14 October). The merger was widely anticipated to avoid conflicts of interest arising from the proposed acquisition of ARA Asset Management by <a href="https://www.smartkarma.com/entities/esr-cayman-ltd" target="_blank" data-smartkarma-citation="entities:27983:1" rel="noopener">ESR Cayman (1821 HK)</a> for a total consideration of US$5.2 billion, which was announced on 5 August 2021. ESR Cayman which owns 67% of EREIT’s manager would also own 100% of ALLT’s manager on completion of the acquisition resulting in overlapping investment mandates.A key issue is on pricing particularly the EREIT issue price of S$0.510 which is based on EREIT’s 52-week high. Notably, at the last close EREIT price of S$0.465, implies a scheme consideration of S$0.875 per ALLT unit, which is a -6.5% discount to the ALLT last close price of S$0.935 per unit (on 14 October). <div class="content-highlight">As the cash consideration represents just 10% of the total scheme consideration, ALLT unitholders have greater exposure to any post-merger share price gains driven by the enlarged REIT’s higher free float, lower cost of capital, cost savings and higher growth potential. While short-term pricing concerns will linger, we note that the scheme consideration even at the last close EREIT price seems reasonable. Consequently, we believe that the merger will get the nod from both sets of unitholders.</div>

ESR-REIT (EREIT SP) announced the proposed merger with ARA LOGOS (ALLT SP) by way of a trust scheme of arrangement. Under the scheme consideration, each ALLT unitholder will receive S$0.095 in cash and 1.6765 new EREIT units at an issue price of S$0.510. The total consideration implies a gross exchange ratio of 1.863x and a total scheme consideration of S$0.950 per ALLT unit, which is a 1.6% premium to the ALLT last close price of S$0.935 per unit (on 14 October). The merger was widely anticipated to avoid conflicts of interest arising from the proposed acquisition of ARA Asset Management by ESR Cayman (1821 HK) for a total consideration of US$5.2 billion, which was announced on 5 August 2021. ESR Cayman which owns 67% of EREIT’s manager would also own 100% of ALLT’s manager on completion of the acquisition resulting in overlapping investment mandates.A key issue is on pricing particularly the EREIT issue price of S$0.510 which is based on EREIT’s 52-week high. Notably, at the last close EREIT price of S$0.465, implies a scheme consideration of S$0.875 per ALLT unit, which is a -6.5% discount to the ALLT last close price of S$0.935 per unit (on 14 October). As the cash consideration represents just 10% of the total scheme consideration, ALLT unitholders have greater exposure to any post-merger share price gains driven by the enlarged REIT’s higher free float, lower cost of capital, cost savings and higher growth potential. While short-term pricing concerns will linger, we note that the scheme consideration even at the last close EREIT price seems reasonable. Consequently, we believe that the merger will get the nod from both sets of unitholders.

ESR-REIT’s Proposed Merger with ARA LOGOS

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 <div class='content-caption'>Top 5 S-REITs with largest yoy increase in DPU for 1H2021</div>
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As the earnings season conclude, REITs and Property Trusts listed in Singapore have announced financial results or published business updates for the period ending 30 June 2021. Of the S-REITs which declared distributions for the first half of calendar year 2021, average change in distribution per unit (DPU) increased by 36 per cent year-on-year (y-o-y).

The five S-REITs with the highest y-o-y DPU increments for the period Jan to Jun 2021 are: SPH REIT (228 per cent), Sabana Shari'ah Compliant Industrial REIT (215 per cent), Starhill Global REIT (196 per cent), Ascott Residence Trust (95 per cent) and CapitaLand Integrated Commercial Trust (75 per cent).

SPH REIT declared a DPU of 1.38 Singapore cents for Q3 FY2021 ended 31 May, bringing its DPU for the period of Dec 2020 to May 2021 to 2.62 Singapore cents - a 228 per cent increase y-o-y. In its latest business update for 3Q FY2021, the REIT noted gradual recovery with improvements in gross revenue of 22.2 per cent y-o-y to S$209.6 million. This was led by recovery in performance across all assets while supported by additional quarter of contribution from Westfield Marion compared to the same period last year and a decrease in rent reliefs to Singapore and Australia eligible tenants.

Sabana Shari'ah Compliant Industrial REIT (Sabana REIT) reported DPU of 1.48 Singapore cents for 1H 2021, representing a 215 per cent y-o-y increase. This was mainly due to the temporary retainment of 55.0 per cent of its distributable income in 1H 2020 to conserve capital. The REIT also reported a 14.1 per cent y-o-y increase in gross revenue, mainly due to higher contribution from New Tech Park, 23 Serangoon North Avenue 5 and 10 Changi South Street 2 on higher occupancy. During the period, Sabana REIT announced the removal of its Shari’ah compliance requirement in order to accommodate the changing profile of tenants and enhance its flexibility for the next phase of growth.

Starhill Global REIT (SGREIT) reported 2H FY2020/2021 DPU of 2.07 Singapore cents, representing a y-o-y increase of 196 per cent, mainly due to the release of retained income for working capital requirements. SGREIT noted that gross revenue for the period increased 10.5 per cent y-o-y, resulting in a 20.2 per cent increase in its net property income (NPI). This was mainly attributed to lower rental assistance for eligible tenants affected by the COVID-19 pandemic and the appreciation of the Australian dollar against the Singapore dollar.

Ascott Residence Trust (ART) raised its DPU for 1H 2021 by 95 per cent y-o-y, attributable to active portfolio optimisation. The trust noted that distributable income for 1H 2021 included a one-off partial distribution of divestment gains of S$20 million to share divestment gains with unitholders, replace income loss from divested assets and mitigate the impact of COVID-19 on distributions.

CapitaLand Integrated Commercial Trust (CICT) announced a DPU of 5.18 Singapore cents for 1H 2021, representing a 75 per cent increase y-o-y. The REIT reported a 103 per cent and 118 per cent y-o-y increase in gross revenue and NPI respectively. In 1H 2021, CICT granted S$18.9 million of rental waivers for tenants affected by COVID-19, particularly during Singapore’s first Phase 2 (Heightened Alert) from 16 May to 13 June 2021. For more research and information on Singapore’s REIT sector, visit <a href="https://www.sgx.com/research-education/sectors">sgx.com/research-education/sectors</a> for the monthly SREITs &amp; Property Trusts Chartbook
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    Top 5 S-REITs with largest yoy increase in DPU for 1H2021


As the earnings season conclude, REITs and Property Trusts listed in Singapore have announced financial results or published business updates for the period ending 30 June 2021. Of the S-REITs which declared distributions for the first half of calendar year 2021, average change in distribution per unit (DPU) increased by 36 per cent year-on-year (y-o-y).

The five S-REITs with the highest y-o-y DPU increments for the period Jan to Jun 2021 are: SPH REIT (228 per cent), Sabana Shari'ah Compliant Industrial REIT (215 per cent), Starhill Global REIT (196 per cent), Ascott Residence Trust (95 per cent) and CapitaLand Integrated Commercial Trust (75 per cent).

SPH REIT declared a DPU of 1.38 Singapore cents for Q3 FY2021 ended 31 May, bringing its DPU for the period of Dec 2020 to May 2021 to 2.62 Singapore cents - a 228 per cent increase y-o-y. In its latest business update for 3Q FY2021, the REIT noted gradual recovery with improvements in gross revenue of 22.2 per cent y-o-y to S$209.6 million. This was led by recovery in performance across all assets while supported by additional quarter of contribution from Westfield Marion compared to the same period last year and a decrease in rent reliefs to Singapore and Australia eligible tenants.

Sabana Shari'ah Compliant Industrial REIT (Sabana REIT) reported DPU of 1.48 Singapore cents for 1H 2021, representing a 215 per cent y-o-y increase. This was mainly due to the temporary retainment of 55.0 per cent of its distributable income in 1H 2020 to conserve capital. The REIT also reported a 14.1 per cent y-o-y increase in gross revenue, mainly due to higher contribution from New Tech Park, 23 Serangoon North Avenue 5 and 10 Changi South Street 2 on higher occupancy. During the period, Sabana REIT announced the removal of its Shari’ah compliance requirement in order to accommodate the changing profile of tenants and enhance its flexibility for the next phase of growth.

Starhill Global REIT (SGREIT) reported 2H FY2020/2021 DPU of 2.07 Singapore cents, representing a y-o-y increase of 196 per cent, mainly due to the release of retained income for working capital requirements. SGREIT noted that gross revenue for the period increased 10.5 per cent y-o-y, resulting in a 20.2 per cent increase in its net property income (NPI). This was mainly attributed to lower rental assistance for eligible tenants affected by the COVID-19 pandemic and the appreciation of the Australian dollar against the Singapore dollar.

Ascott Residence Trust (ART) raised its DPU for 1H 2021 by 95 per cent y-o-y, attributable to active portfolio optimisation. The trust noted that distributable income for 1H 2021 included a one-off partial distribution of divestment gains of S$20 million to share divestment gains with unitholders, replace income loss from divested assets and mitigate the impact of COVID-19 on distributions.

CapitaLand Integrated Commercial Trust (CICT) announced a DPU of 5.18 Singapore cents for 1H 2021, representing a 75 per cent increase y-o-y. The REIT reported a 103 per cent and 118 per cent y-o-y increase in gross revenue and NPI respectively. In 1H 2021, CICT granted S$18.9 million of rental waivers for tenants affected by COVID-19, particularly during Singapore’s first Phase 2 (Heightened Alert) from 16 May to 13 June 2021.  For more research and information on Singapore’s REIT sector, visit sgx.com/research-education/sectors for the monthly SREITs &amp; Property Trusts Chartbook



REIT Watch - S-REITs release retained earnings, 1H2021 DPU up 36%

Singapore

Sabana Industrial Real Estate Investment Trust is a real estate investment trust. The Trust focuses on investments in income-producing real estate used for industrial purposes in Asia, as well as real estate-related assets, in line with Sabana investment principles.

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Sabana Industrial REIT (SSREIT SP)

Daiwa House Logistics Trust IPO: Valuation Insights

Our valuation analysis suggests that the IPO price of S$0.80 per unit is reasonable. Bookbuilding will end on 18 Nov, with an expected listing date...

Arun George

Daiwa House Logistics Trust IPO: The Flow of Things

DHLT has launched an SGX IPO to raise gross proceeds of S$464 million ($343 million). Overall, we believe that DHLT offers an attractive value...

Arun George

REIT Watch - Improved operating metrics and DPUs as S-Reits kick off reporting

Five S-REITs have kicked off this quarter’s reporting season with the release of financial results for the quarter or business...

Singapore Exchange Ltd (SGX)

ESR-REIT’s Proposed Merger with ARA LOGOS

A key issue is on pricing particularly the EREIT issue price of S$0.510, based on EREIT’s 52-week high. While short-term pricing concerns will...

Arun George

REIT Watch - S-REITs release retained earnings, 1H2021 DPU up 36%

As the earnings season conclude, REITs and Property Trusts listed in Singapore have announced financial results or published...

Singapore Exchange Ltd (SGX)

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