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'>Greener REIT</div>
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According to the UN Environmental Programme, the real estate sector has one of the largest carbon footprints, contributing to 30 per cent of global annual greenhouse gas (GHG) emissions and consumes around 40 per cent of the world's energy.

This explains the increasing focus on climate change issues and responsible investment practices.

SGX and UOB Asset Management have jointly launched the iEdge-UOB Apac Yield Focus Green Reit Index, an index which tracks the performance of 50 higher-yielding Reits in Asia-Pacific (Apac) with positive environmental attributes based on the GRESB assessment framework. 
GRESB is the global leader for ESG research of real assets, covering more than 1,500 property companies, Reits, funds and developers with US$5.7 trillion in assets under management. 
Out of the 50 constituents, nine are S-REITs &amp; Property Trusts: CapitaLand Integrated Commercial Trust, Mapletree Logistics Trust, Mapletree Industrial Trust, Mapletree Commercial Trust, Frasers Logistics &amp; Commercial Trust, Suntec REIT, Keppel REIT, Mapletree North Asia Commercial Trust, and Ascendas India Trust. 
The iEdge-UOB Apac Yield Focus Green Reit Index is the first index globally to go beyond using the overall GRESB score and focus on four key environmental indicators to determine the environmental attributes - energy consumption, water consumption, GHG emissions, and green building certifications. 
The index is expected to be fully investable and tradable, as Apac Reits are included into the index based on minimum size of US$1 billion in free-float market capitalisation, liquidity requirements of at least US$400,000 in median daily average traded value, dividend yield-ranking within market cap quartiles, and a minimum GRESB public disclosure score among others.

After which a green tilt is applied using the GRESB Real Estate Assessment environmental scores.

Reits that have more favourable environmental attributes will be rewarded with a higher weighting factor, compared to Reits that have relative lower environmental scores.

By applying the green portfolio tilt, the iEdge-UOB Apac Yield Focus Green Reit Index constituents emit 7 per cent less GHG, consume 12 per cent less water and 9 per cent less energy than the non-green market-cap weighted version of the index.

Green building certification by floor area is also 13 per cent for certifications obtained at the time of design, construction or renovation, and 10 per cent for operational green building certifications.

All constituent weights are capped at 7 per cent and overall country exposure capped at 40 per cent.

Japan makes up 40 per cent of the index, while Australia, Singapore and Hong Kong are at 36 per cent, 16 per cent and 8 per cent respectively.

The index has a trailing 12-month dividend yield of 4.25 per cent.

The UOB Apac Green Reit ETF, which has filed a prospectus with an expected listing on Nov 23, will track the iEdge-UOB Apac Yield Focus Green Reit Index.

The ETF has a target dividend distribution policy of up to 4 per cent of net asset value per annum on a quarterly basis.  REIT Watch is a weekly column on The Business Times,<a href="https://www.businesstimes.com.sg/companies-markets/retail-and-hospitality-sector-s-reits-outperform-in-october"> </a><a href="https://www.businesstimes.com.sg/companies-markets/nine-s-reits-in-yield-focus-index-based-on-positive-environmental-attributes">read</a><a href="https://www.businesstimes.com.sg/companies-markets/retail-and-hospitality-sector-s-reits-outperform-in-october"> </a>the original version.
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    Greener REIT


According to the UN Environmental Programme, the real estate sector has one of the largest carbon footprints, contributing to 30 per cent of global annual greenhouse gas (GHG) emissions and consumes around 40 per cent of the world's energy.

This explains the increasing focus on climate change issues and responsible investment practices.

SGX and UOB Asset Management have jointly launched the iEdge-UOB Apac Yield Focus Green Reit Index, an index which tracks the performance of 50 higher-yielding Reits in Asia-Pacific (Apac) with positive environmental attributes based on the GRESB assessment framework.  
GRESB is the global leader for ESG research of real assets, covering more than 1,500 property companies, Reits, funds and developers with US$5.7 trillion in assets under management.  
Out of the 50 constituents, nine are S-REITs &amp; Property Trusts: CapitaLand Integrated Commercial Trust, Mapletree Logistics Trust, Mapletree Industrial Trust, Mapletree Commercial Trust, Frasers Logistics &amp; Commercial Trust, Suntec REIT, Keppel REIT, Mapletree North Asia Commercial Trust, and Ascendas India Trust.  
The iEdge-UOB Apac Yield Focus Green Reit Index is the first index globally to go beyond using the overall GRESB score and focus on four key environmental indicators to determine the environmental attributes - energy consumption, water consumption, GHG emissions, and green building certifications.  
The index is expected to be fully investable and tradable, as Apac Reits are included into the index based on minimum size of US$1 billion in free-float market capitalisation, liquidity requirements of at least US$400,000 in median daily average traded value, dividend yield-ranking within market cap quartiles, and a minimum GRESB public disclosure score among others.

After which a green tilt is applied using the GRESB Real Estate Assessment environmental scores.

Reits that have more favourable environmental attributes will be rewarded with a higher weighting factor, compared to Reits that have relative lower environmental scores.

By applying the green portfolio tilt, the iEdge-UOB Apac Yield Focus Green Reit Index constituents emit 7 per cent less GHG, consume 12 per cent less water and 9 per cent less energy than the non-green market-cap weighted version of the index.

Green building certification by floor area is also 13 per cent for certifications obtained at the time of design, construction or renovation, and 10 per cent for operational green building certifications.

All constituent weights are capped at 7 per cent and overall country exposure capped at 40 per cent.

Japan makes up 40 per cent of the index, while Australia, Singapore and Hong Kong are at 36 per cent, 16 per cent and 8 per cent respectively.

The index has a trailing 12-month dividend yield of 4.25 per cent.

The UOB Apac Green Reit ETF, which has filed a prospectus with an expected listing on Nov 23, will track the iEdge-UOB Apac Yield Focus Green Reit Index.

The ETF has a target dividend distribution policy of up to 4 per cent of net asset value per annum on a quarterly basis.   REIT Watch is a weekly column on The Business Times, read the original version.



REIT Watch - Nine S-Reits in Yield Focus index based on positive environmental attributes

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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

Yoma Strategic Holdings / Equity Bottom-Up

Key Singapore Market Moves and Flows in 3Q21

Key Singapore Market Moves and Flows in July

Capitaland Integrated Commercial Trust / Equity Bottom-Up

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 <div class='content-caption'>REIT watch</div>
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ON May 16, Singapore announced tighter measures to combat the increased number of local Covid-19 cases. The four weeks of tightened measures left malls, eateries and offices quieter as the country defaulted to working from home and dining-in at F&amp;B establishments were prohibited.

SGX lists 10 S-Reits with exposure to Singapore's office and/or retail segment. Despite lower footfall in the past four weeks (May 14 to June 10) due to Phase 2 (Heightened Alert) measures, these 10 S-Reits generated average total returns of 6.5 per cent, outperforming the 5.6 per cent average of the overall S-Reits sector and the Straits Times Index's 3.6 per cent total return.

Together, the 10 S-Reits received net inflows of S$43.9 million from institutional investors. Among them, the three highest recipients of institutional net inflows were CapitaLand Integrated Commercial Trust (CICT), Suntec Reit and Frasers Centrepoint Trust (FCT).

CICT, the largest S-Reit, is predominantly Singapore-focused and has a portfolio of 11 retail, eight office and five integrated development assets. Across its portfolio, the trust saw 30.7 per cent decline in shopper traffic (comparing periods of May 10 to 23 and April 26 to May 9) and return of office community fell to 15.0 per cent (in the week ended May 21). 
To support retail tenants and shoppers, CICT provided rental waivers and operational support for retailers to continue online sales through CapitaLand's digital platforms and extended carpark grace periods. As at March 31, the trust maintains committed occupancy rates of 97.1 per cent and 94.8 per cent for its Singapore retail and office assets respectively. 
Suntec Reit's S$11.7 billion portfolio includes retail and office assets in Singapore (four), Australia (five) and the United Kingdom (one).

The Reit believes that while hybrid working arrangements are likely to continue, physical offices will remain relevant as companies value the need to build corporate culture and foster employee collaboration.

Hence it expects revenue from its Singapore office assets to be stable, underpinned by strong rent reversions in the past 11 quarters.

Suntec City Mall, the Reit's largest income contributor, saw uneven retail recovery in Q12021, led by categories such as F&amp;B, wellness, supermarket, homeware, kids' fashion and toys. As at March 31, the Reit maintains committed occupancy rates of 91.5 per cent and 96.1 per cent for its Singapore retail and office assets respectively.

FCT, a pure play on Singapore's suburban retail sector, has a current portfolio of 10 retail malls with total asset under management (AUM) of S$6.4 billion.

The trust noted that these suburban assets, which were among the first to benefit from recovery exiting the circuit breaker in June 2020, are predominantly at well-connected locations, with large catchment serving more than half of Singapore's population, and provides sustainable relevance to shoppers.

FCT maintains a portfolio occupancy rate of 96.1 per cent, as at March 31.

Waterway Point, in which FCT has a 40 per cent interest, announced the securing of its maiden S$589 million green loan in May, which will enjoy a reduction in margin on its second year, if Waterway Point retains its current Green Mark Gold Plus certification status issued by the Building and Construction Authority (BCA).  REIT Watch is a weekly column on The Business Times, <a href="https://www.businesstimes.com.sg/companies-markets/retail-and-office-s-reits-outperform-despite-tighter-covid-19-measures">read</a> the original version.
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    REIT watch


ON May 16, Singapore announced tighter measures to combat the increased number of local Covid-19 cases. The four weeks of tightened measures left malls, eateries and offices quieter as the country defaulted to working from home and dining-in at F&amp;B establishments were prohibited.

SGX lists 10 S-Reits with exposure to Singapore's office and/or retail segment. Despite lower footfall in the past four weeks (May 14 to June 10) due to Phase 2 (Heightened Alert) measures, these 10 S-Reits generated average total returns of 6.5 per cent, outperforming the 5.6 per cent average of the overall S-Reits sector and the Straits Times Index's 3.6 per cent total return.

Together, the 10 S-Reits received net inflows of S$43.9 million from institutional investors. Among them, the three highest recipients of institutional net inflows were CapitaLand Integrated Commercial Trust (CICT), Suntec Reit and Frasers Centrepoint Trust (FCT).

CICT, the largest S-Reit, is predominantly Singapore-focused and has a portfolio of 11 retail, eight office and five integrated development assets. Across its portfolio, the trust saw 30.7 per cent decline in shopper traffic (comparing periods of May 10 to 23 and April 26 to May 9) and return of office community fell to 15.0 per cent (in the week ended May 21).  
To support retail tenants and shoppers, CICT provided rental waivers and operational support for retailers to continue online sales through CapitaLand's digital platforms and extended carpark grace periods. As at March 31, the trust maintains committed occupancy rates of 97.1 per cent and 94.8 per cent for its Singapore retail and office assets respectively.  
Suntec Reit's S$11.7 billion portfolio includes retail and office assets in Singapore (four), Australia (five) and the United Kingdom (one).

The Reit believes that while hybrid working arrangements are likely to continue, physical offices will remain relevant as companies value the need to build corporate culture and foster employee collaboration.

Hence it expects revenue from its Singapore office assets to be stable, underpinned by strong rent reversions in the past 11 quarters.

Suntec City Mall, the Reit's largest income contributor, saw uneven retail recovery in Q12021, led by categories such as F&amp;B, wellness, supermarket, homeware, kids' fashion and toys. As at March 31, the Reit maintains committed occupancy rates of 91.5 per cent and 96.1 per cent for its Singapore retail and office assets respectively.

FCT, a pure play on Singapore's suburban retail sector, has a current portfolio of 10 retail malls with total asset under management (AUM) of S$6.4 billion.

The trust noted that these suburban assets, which were among the first to benefit from recovery exiting the circuit breaker in June 2020, are predominantly at well-connected locations, with large catchment serving more than half of Singapore's population, and provides sustainable relevance to shoppers.

FCT maintains a portfolio occupancy rate of 96.1 per cent, as at March 31.

Waterway Point, in which FCT has a 40 per cent interest, announced the securing of its maiden S$589 million green loan in May, which will enjoy a reduction in margin on its second year, if Waterway Point retains its current Green Mark Gold Plus certification status issued by the Building and Construction Authority (BCA).   REIT Watch is a weekly column on The Business Times, read the original version.



REIT Watch - Retail and office S-Reits outperform despite tighter Covid-19 measures

Singapore

Suntec Real Estate Investment Trust is a commercial real estate investment trust. The Trust invests in income-producing real estate that is primarily used for retail and/or office purposes.

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Suntec REIT (SUN SP)

REIT Watch - Nine S-Reits in Yield Focus index based on positive environmental attributes

According to the UN Environmental Programme, the real estate sector has one of the largest carbon footprints, contributing to...

Singapore Exchange Ltd (SGX)

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)

Key Singapore Market Moves and Flows in 3Q21

In 3Q21, the STI saw its narrowest quarterly trading range since 3Q17, generating a 0.2% decline in total return, while the FTSE APAC Index...

Singapore Exchange Ltd (SGX)

Key Singapore Market Moves and Flows in July

The STI’s 1.2% gain in July brought its price gain over the first seven months to 11.4%, with dividends boosting the total return to 13.2%,...

Singapore Exchange Ltd (SGX)

REIT Watch - Retail and office S-Reits outperform despite tighter Covid-19 measures

ON May 16, Singapore announced tighter measures to combat the increased number of local Covid-19 cases. The four weeks of...

Singapore Exchange Ltd (SGX)

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