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.

Asia’s leading multi-asset exchange

SGX Market Strategist, Equity & Fixed Income, Singapore Exchange Ltd (SGX)

Geoff Howie

SGX Market Strategist, Equity & Fixed Income

Equity Bottom-Up

Cromwell European REIT / Equity Bottom-Up

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<ul>
<li>
Of the REITs listed on SGX, the three with 100% of assets located in Europe are Cromwell European REIT, IREIT Global and Elite Commercial REIT, with the trio focused on commercial and/or industrial property segments. Recently, the trio unveiled their business updates for the three months ended 30 September 2020. 
	 </li>
	<li>
Despite COVID-19 and the current weak economic backdrop, the trio of REITs reported overall portfolio occupancy rates remained stable or improved as at 30 September 2020 – CEREIT reported its overall portfolio occupancy rate has held at 94% over last six months, while IREIT and CEREIT achieved 96.3% and 100% portfolio occupancy rates as at 30 September 2020. 
	 </li>
	<li>As of 30 September 2020, the trio averaged an aggregate leverage ratio of 37.1%, versus 35.3% as at 30 June 2020. They averaged an interest cover of 7.2 times, unchanged from the previous period. </li>
</ul>
 

Of the REITs listed on SGX, the three with 100% of their assets located in Europe are <a href="https://www.sgx.com/securities/equities/CNNU">Cromwell European REIT</a> (CEREIT), <a href="https://www.sgx.com/securities/equities/UD1U">IREIT Global</a> (IREIT) and <a href="https://www.sgx.com/securities/equities/MXNU">Elite Commercial REIT</a> (ECR), with the trio focused on commercial and/or industrial property segments. Recently, the trio unveiled their business updates for the three months ended 30 September 2020. Refer to the <a href="https://api2.sgx.com/sites/default/files/2020-12/SGX%20Research%20-%20SREIT%20%26%20Property%20Trusts%20Chartbook%20-%20December%202020.pdf">SGX Research SREITs &amp; Property Trusts Chartbook - December 2020</a> for more information on the Singapore REITs sector.

 

Performance Highlights

Cromwell European REIT

<ul>
<li>14.3% jump in net property income QoQ and a 5.8% growth in indicative DPU over the same period</li>
	<li>14.1% positive rent reversion for new leases and renewals in the light industrial / logistics segment in 3Q 2020</li>
	<li>Portfolio occupancy stable, remaining above 94% over the last six months despite COVID-19</li>
	<li>Strong €100.8 million cash position, supplemented by total committed undrawn facilities of €235 million</li>
</ul>
 

IREIT Global

<ul>
<li>Notwithstanding the current weak economic backdrop, IREIT’s overall portfolio occupancy improved for a second consecutive quarter to 96.3% as at 30 September 2020 as a result of positive leasing activity at the Spanish portfolio</li>
	<li>Over 98% of IREIT’s total rental income has been collected since March 2020, reflecting resilience in the portfolio, with 0.8% of the total income coming from given rental rebates for an agreed period</li>
	<li>In 3Q2020, the Manager had successfully extended approximately 95.0% of leases (by gross rental income as at 30 Jun 2020) expiring in 2020</li>
	<li>On 22 Oct 2020, IREIT completed its acquisition of the balance 60% interest in its Spanish portfolio from Tikehau Capital, gaining further scale and diversification</li>
</ul>
 

Elite Commercial REIT

<ul>
<li>As of 30 September 2020, the portfolio is 100% occupied, with a weighted average lease expiry of 7.5 years</li>
	<li>In terms of rent collection, the Group received in advance 99.6% of the three-month rent for the period spanning October 2020 to December 2020 in accordance with the lease agreements</li>
	<li>The Group expects to provide a stable income to investors as over 99.0% of rental income is derived from full repairing and insuring (triple net) leases from the UK Government
	<ul>
<li>Rated AA and Aa2 by S&amp;P and Moody’s respectively, the UK Government has one of the lowest debt-to-GDP ratios amongst the G7 countries</li>
		<li>The COVID-19 situation does not trigger force majeure or termination clauses of the Group’s leases with the UK Government</li>
	</ul>
</li>
</ul>
<table class="table table-striped"><tbody>
<tr>
<td>
			CROMWELL EUROPEAN REIT (€ '000)
			</td>
			<td>
			3Q20
			</td>
			<td>
			2Q20
			</td>
			<td>
			% Change
			</td>
		</tr>
<tr>
<td>
			Gross revenue
			</td>
			<td>
			46,092
			</td>
			<td>
			45,154
			</td>
			<td>
			2.1
			</td>
		</tr>
<tr>
<td>
			Net property income
			</td>
			<td>
			30,593
			</td>
			<td>
			26,765
			</td>
			<td>
			14.3
			</td>
		</tr>
<tr>
<td>
			Distribution income
			</td>
			<td>
			22,549
			</td>
			<td>
			21,309
			</td>
			<td>
			5.8
			</td>
		</tr>
</tbody></table>
<table class="table table-striped"><tbody>
<tr>
<td>
			ELITE COMMERCIAL REIT* (£ '000)
			</td>
			<td>
			3Q20 Actual
			</td>
			<td>
			3Q20 Forecast
			</td>
			<td>
			% Change
			</td>
		</tr>
<tr>
<td>
			Revenue
			</td>
			<td>
			5,820
			</td>
			<td>
			5,851
			</td>
			<td>
			-0.5
			</td>
		</tr>
<tr>
<td>
			Profit before tax
			</td>
			<td>
			4,163
			</td>
			<td>
			4,146
			</td>
			<td>
			0.4
			</td>
		</tr>
<tr>
<td>
			Profit after tax~
			</td>
			<td>
			3,255
			</td>
			<td>
			3,449
			</td>
			<td>
			-5.6
			</td>
		</tr>
<tr>
<td>
			Distribution income
			</td>
			<td>
			4,108
			</td>
			<td>
			4,052
			</td>
			<td>
			1.4
			</td>
		</tr>
</tbody></table>
 Source: Company data 
*ECR was listed in Feb 2020

~With the recent  increase of UK corporate tax rate from 17% to 19% in 3Q 2020, the profit after tax is calculated after an additional provision of deferred tax expenses of £276,000 as compared to Forecast. This additional provision of deferred tax expenses has no impact on income available for distribution to unitholders.

 

Debt Profiles

As of 30 September 2020, the trio averaged an aggregate leverage ratio of 37.1%, versus 35.3% as at 30 June 2020. They averaged an interest cover of 7.2 times, unchanged from 30 June 2020.

<table class="table table-striped"><tbody>
<tr>
<td>
			Name
			</td>
			<td>
			Aggregate Leverage Ratio (%) as at 30 September 2020
			</td>
			<td>
			Aggregate Leverage Ratio (%) as at 30 June 2020
			</td>
			<td>
			Interest Coverage Ratio (x) as at 30 September 2020
			</td>
			<td>
			Interest Coverage Ratio (x) as at 30 June 2020
			</td>
		</tr>
<tr>
<td>
			CROMWELL EUROPEAN REIT
			</td>
			<td>
			38.8
			</td>
			<td>
			34.4
			</td>
			<td>
			6.8
			</td>
			<td>
			6.7
			</td>
		</tr>
<tr>
<td>
			IREIT GLOBAL
			</td>
			<td>
			39.4
			</td>
			<td>
			39.0
			</td>
			<td>
			7.2
			</td>
			<td>
			7.4
			</td>
		</tr>
<tr>
<td>
			ELITE COMMERCIAL REIT
			</td>
			<td>
			33.1
			</td>
			<td>
			32.6
			</td>
			<td>
			7.6
			</td>
			<td>
			7.4
			</td>
		</tr>
<tr>
<td>
			Average
			</td>
			<td>
			37.1
			</td>
			<td>
			35.3
			</td>
			<td>
			7.2
			</td>
			<td>
			7.2
			</td>
		</tr>
</tbody></table>
 Source: Company data

 

Outlook 
Cromwell European REIT

<ul>
<li>
Highly diversified portfolio

	<ul>
<li>€2.1 billion portfolio of 95 properties</li>
		<li>Diversification across countries, cities, tenant customers and end-industries</li>
		<li>High quality tenant-customer base with 91% government, MNC and large corporates</li>
	</ul>
</li>
	<li>
Active investment and asset management strategy
	<ul>
<li>Managed growth via accretive acquisitions of high-quality assets in strategic, “on-theme” cities and markets</li>
		<li>Focus on logistics assets in Germany and neighbouring countries</li>
		<li>Active asset management and capital recycling strategy</li>
	</ul>
</li>
	<li>
Financial flexibility and liquidity
	<ul>
<li>BBB- investment grade credit rating by Fitch Ratings</li>
		<li>€1.5 billion EMTN programme established</li>
		<li>Predictable cash flows, €235 million RCF available and access to wide banking and finance network</li>
		<li>Low net gearing of 35.9% and high interest cover of 6.8x</li>
	</ul>
</li>
	<li>
Clearer outlook for the rest of 2020
	<ul>
<li>Resilient portfolio with stable occupancy</li>
		<li>Recurring income from leasing, CPI and rent reversions, underpinned by 5.0 year WALE</li>
		<li>Strong 3Q 2020 results provide greater visibility and underpins outlook for FY 2020</li>
	</ul>
</li>
	<li>
Aligned and supportive Sponsor
	<ul>
<li>Cromwell has strong alignment of interest with CEREIT unitholders with a 30% stake</li>
		<li>Cromwell has 17 offices throughout Europe, providing on-the-ground local market knowledge and expertise</li>
	</ul>
</li>
	<li>
Strong governance and ESG focus
	<ul>
<li>Strong governance with prominent, majority independent board members</li>
		<li>Transparent risk-based approach to investments with local expertise</li>
		<li>ESG embedded in culture</li>
	</ul>
</li>
</ul>
 

Click <a href="https://links.sgx.com/1.0.0/corporate-announcements/O4H0SVXUE6XA7MLW/638458_CEREIT_3Q2020_BusinessUpdate_MediaRelease_10Nov_2020.pdf">here</a> for the full results release.

 

IREIT Global 

<ul>
<li>The resurgence of the COVID-19 virus in Europe has resulted in the imposition of new lockdown measures by governments to mitigate the spread of the virus infection</li>
	<li>However, the measures are expected to be less severe than those in the earlier lockdowns and financial aid will be given to support companies</li>
	<li>Interest rates are also expected to remain accommodative for longer periods</li>
	<li>Overall take-up in office space has declined and vacancy rate has increased as the COVID-19 pandemic has dampened the local economy and labour market</li>
	<li>However, office rents are not expected to be significantly affected due to still healthy vacancy rates, low supply of quality product offerings and potential delays in deliveries of new office supply in Europe</li>
	<li>Low mortgage rates and the attractiveness of real estate as a higher yielding asset class are also likely to provide some support on the investment markets</li>
	<li>The Manager will continue to monitor the financial health of IREIT’s tenants and work closely with them to ensure high tenant retention and occupancy within the portfolio</li>
	<li>The Manager will also explore new growth opportunities to further diversify and build scale to IREIT’s portfolio so as to provide sustainable long-term returns to unitholders</li>
	<li>The repayment of the €32.0 million loan using proceeds from IREIT’s rights issue has reduced IREIT’s aggregate leverage significantly, providing it with additional debt headroom and flexibility to explore various financing options for future growth plans and capital needs</li>
</ul>
 

Click <a href="https://links.sgx.com/1.0.0/corporate-announcements/0FXWIEZA63IW2NTI/638574_IREIT%203Q2020%20Business%20Update.pdf">here</a> for the full results release.

 

Elite Commercial REIT 

<ul>
<li>The UK government announced that it will do “whatever it takes” to mitigate the economic impact of COVID-19, and has been instrumental in protecting jobs and livelihoods</li>
	<li>The Bank of England base rate has been cut to 0.1%, a series of grants and loans have been announced for business and consumers, and the furlough scheme has been extended to the end of June 2021
	<ul>
<li>The 2Q UK GDP figures show by far the largest decline in economic activity on record, with the economy shrinking by 20% QoQ and the UK is now entering a technical recession</li>
		<li>However, monthly GDP data shows some positive signs of recovery</li>
		<li>Business survey data are also encouraging, with the Composite PMI in July rising to 57.0, up from 47.7 in June and the highest reading in five years</li>
		<li>Nonetheless, the economy is unlikely to return to its pre-COVID-19 size until the end of 2021</li>
	</ul>
</li>
	<li>The Brexit negotiations continue against the background of the economic challenges – a “no deal” outcome appears even more likely at the end of the transition period on 31 December 2020</li>
</ul>
 

Click <a href="https://links.sgx.com/1.0.0/corporate-announcements/30RI0X10NU5KJMCZ/638356_Elite%20Commercial%20Reit-3Q20%20MDA-Final.pdf">here</a> for the full results release.
</body></html>





Of the REITs listed on SGX, the three with 100% of assets located in Europe are Cromwell European REIT, IREIT Global and Elite Commercial REIT, with the trio focused on commercial and/or industrial property segments. Recently, the trio unveiled their business updates for the three months ended 30 September 2020. 
	 
	
Despite COVID-19 and the current weak economic backdrop, the trio of REITs reported overall portfolio occupancy rates remained stable or improved as at 30 September 2020 – CEREIT reported its overall portfolio occupancy rate has held at 94% over last six months, while IREIT and CEREIT achieved 96.3% and 100% portfolio occupancy rates as at 30 September 2020. 
	 
	As of 30 September 2020, the trio averaged an aggregate leverage ratio of 37.1%, versus 35.3% as at 30 June 2020. They averaged an interest cover of 7.2 times, unchanged from the previous period. 

 

Of the REITs listed on SGX, the three with 100% of their assets located in Europe are Cromwell European REIT (CEREIT), IREIT Global (IREIT) and Elite Commercial REIT (ECR), with the trio focused on commercial and/or industrial property segments. Recently, the trio unveiled their business updates for the three months ended 30 September 2020. Refer to the SGX Research SREITs &amp; Property Trusts Chartbook - December 2020 for more information on the Singapore REITs sector.

 

Performance Highlights

Cromwell European REIT


14.3% jump in net property income QoQ and a 5.8% growth in indicative DPU over the same period
	14.1% positive rent reversion for new leases and renewals in the light industrial / logistics segment in 3Q 2020
	Portfolio occupancy stable, remaining above 94% over the last six months despite COVID-19
	Strong €100.8 million cash position, supplemented by total committed undrawn facilities of €235 million

 

IREIT Global


Notwithstanding the current weak economic backdrop, IREIT’s overall portfolio occupancy improved for a second consecutive quarter to 96.3% as at 30 September 2020 as a result of positive leasing activity at the Spanish portfolio
	Over 98% of IREIT’s total rental income has been collected since March 2020, reflecting resilience in the portfolio, with 0.8% of the total income coming from given rental rebates for an agreed period
	In 3Q2020, the Manager had successfully extended approximately 95.0% of leases (by gross rental income as at 30 Jun 2020) expiring in 2020
	On 22 Oct 2020, IREIT completed its acquisition of the balance 60% interest in its Spanish portfolio from Tikehau Capital, gaining further scale and diversification

 

Elite Commercial REIT


As of 30 September 2020, the portfolio is 100% occupied, with a weighted average lease expiry of 7.5 years
	In terms of rent collection, the Group received in advance 99.6% of the three-month rent for the period spanning October 2020 to December 2020 in accordance with the lease agreements
	The Group expects to provide a stable income to investors as over 99.0% of rental income is derived from full repairing and insuring (triple net) leases from the UK Government
	
Rated AA and Aa2 by S&amp;P and Moody’s respectively, the UK Government has one of the lowest debt-to-GDP ratios amongst the G7 countries
		The COVID-19 situation does not trigger force majeure or termination clauses of the Group’s leases with the UK Government
	





			CROMWELL EUROPEAN REIT (€ '000)
			
			
			3Q20
			
			
			2Q20
			
			
			% Change
			
		


			Gross revenue
			
			
			46,092
			
			
			45,154
			
			
			2.1
			
		


			Net property income
			
			
			30,593
			
			
			26,765
			
			
			14.3
			
		


			Distribution income
			
			
			22,549
			
			
			21,309
			
			
			5.8
			
		




			ELITE COMMERCIAL REIT* (£ '000)
			
			
			3Q20 Actual
			
			
			3Q20 Forecast
			
			
			% Change
			
		


			Revenue
			
			
			5,820
			
			
			5,851
			
			
			-0.5
			
		


			Profit before tax
			
			
			4,163
			
			
			4,146
			
			
			0.4
			
		


			Profit after tax~
			
			
			3,255
			
			
			3,449
			
			
			-5.6
			
		


			Distribution income
			
			
			4,108
			
			
			4,052
			
			
			1.4
			
		

 Source: Company data 
*ECR was listed in Feb 2020

~With the recent  increase of UK corporate tax rate from 17% to 19% in 3Q 2020, the profit after tax is calculated after an additional provision of deferred tax expenses of £276,000 as compared to Forecast. This additional provision of deferred tax expenses has no impact on income available for distribution to unitholders.

 

Debt Profiles

As of 30 September 2020, the trio averaged an aggregate leverage ratio of 37.1%, versus 35.3% as at 30 June 2020. They averaged an interest cover of 7.2 times, unchanged from 30 June 2020.




			Name
			
			
			Aggregate Leverage Ratio (%) as at 30 September 2020
			
			
			Aggregate Leverage Ratio (%) as at 30 June 2020
			
			
			Interest Coverage Ratio (x) as at 30 September 2020
			
			
			Interest Coverage Ratio (x) as at 30 June 2020
			
		


			CROMWELL EUROPEAN REIT
			
			
			38.8
			
			
			34.4
			
			
			6.8
			
			
			6.7
			
		


			IREIT GLOBAL
			
			
			39.4
			
			
			39.0
			
			
			7.2
			
			
			7.4
			
		


			ELITE COMMERCIAL REIT
			
			
			33.1
			
			
			32.6
			
			
			7.6
			
			
			7.4
			
		


			Average
			
			
			37.1
			
			
			35.3
			
			
			7.2
			
			
			7.2
			
		

 Source: Company data

 

Outlook 
Cromwell European REIT



Highly diversified portfolio

	
€2.1 billion portfolio of 95 properties
		Diversification across countries, cities, tenant customers and end-industries
		High quality tenant-customer base with 91% government, MNC and large corporates
	

	
Active investment and asset management strategy
	
Managed growth via accretive acquisitions of high-quality assets in strategic, “on-theme” cities and markets
		Focus on logistics assets in Germany and neighbouring countries
		Active asset management and capital recycling strategy
	

	
Financial flexibility and liquidity
	
BBB- investment grade credit rating by Fitch Ratings
		€1.5 billion EMTN programme established
		Predictable cash flows, €235 million RCF available and access to wide banking and finance network
		Low net gearing of 35.9% and high interest cover of 6.8x
	

	
Clearer outlook for the rest of 2020
	
Resilient portfolio with stable occupancy
		Recurring income from leasing, CPI and rent reversions, underpinned by 5.0 year WALE
		Strong 3Q 2020 results provide greater visibility and underpins outlook for FY 2020
	

	
Aligned and supportive Sponsor
	
Cromwell has strong alignment of interest with CEREIT unitholders with a 30% stake
		Cromwell has 17 offices throughout Europe, providing on-the-ground local market knowledge and expertise
	

	
Strong governance and ESG focus
	
Strong governance with prominent, majority independent board members
		Transparent risk-based approach to investments with local expertise
		ESG embedded in culture
	


 

Click here for the full results release.

 

IREIT Global 


The resurgence of the COVID-19 virus in Europe has resulted in the imposition of new lockdown measures by governments to mitigate the spread of the virus infection
	However, the measures are expected to be less severe than those in the earlier lockdowns and financial aid will be given to support companies
	Interest rates are also expected to remain accommodative for longer periods
	Overall take-up in office space has declined and vacancy rate has increased as the COVID-19 pandemic has dampened the local economy and labour market
	However, office rents are not expected to be significantly affected due to still healthy vacancy rates, low supply of quality product offerings and potential delays in deliveries of new office supply in Europe
	Low mortgage rates and the attractiveness of real estate as a higher yielding asset class are also likely to provide some support on the investment markets
	The Manager will continue to monitor the financial health of IREIT’s tenants and work closely with them to ensure high tenant retention and occupancy within the portfolio
	The Manager will also explore new growth opportunities to further diversify and build scale to IREIT’s portfolio so as to provide sustainable long-term returns to unitholders
	The repayment of the €32.0 million loan using proceeds from IREIT’s rights issue has reduced IREIT’s aggregate leverage significantly, providing it with additional debt headroom and flexibility to explore various financing options for future growth plans and capital needs

 

Click here for the full results release.

 

Elite Commercial REIT 


The UK government announced that it will do “whatever it takes” to mitigate the economic impact of COVID-19, and has been instrumental in protecting jobs and livelihoods
	The Bank of England base rate has been cut to 0.1%, a series of grants and loans have been announced for business and consumers, and the furlough scheme has been extended to the end of June 2021
	
The 2Q UK GDP figures show by far the largest decline in economic activity on record, with the economy shrinking by 20% QoQ and the UK is now entering a technical recession
		However, monthly GDP data shows some positive signs of recovery
		Business survey data are also encouraging, with the Composite PMI in July rising to 57.0, up from 47.7 in June and the highest reading in five years
		Nonetheless, the economy is unlikely to return to its pre-COVID-19 size until the end of 2021
	

	The Brexit negotiations continue against the background of the economic challenges – a “no deal” outcome appears even more likely at the end of the transition period on 31 December 2020

 

Click here for the full results release.



Quarterly Business Updates of SGX’s Three European REITs