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

Manulife US REIT (MUST) / Equity Bottom-Up

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 <div class='content-caption'>Trio of US office SREIT</div>
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With up to 75 per cent of employees now able to return to the workplace in Singapore, there has been a noticeable increase in crowds in office areas over the past week. 
This trend is also expected to be similar in the US as companies start to announce plans to bring more employees back to the office. 
According to the Microsoft Annual Work Trend Index Report 2022, 50 per cent of leaders say their company already requires, or plans to require, full-time in-person work in the year ahead. 
Companies such as Apple, JP Morgan, and Twitter are also said to welcome more staff back to office and consider hybrid models.

SGX lists 3 pure-play US office S-Reits - Manulife US Reit, Prime US Reit, and Keppel Pacific Oak US Reit. 
The trio have a combined market capitalisation of S$3.8 billion, average distribution yield of 8.7 per cent and trade at a price-to-book ratio of 0.9 times. 
Manulife US Reit (MUST) has a portfolio of 12 freehold office properties in Arizona, California, Georgia, New Jersey, Oregon, Virginia and Washington DC with a combined asset value of US$2.2 billion as at Dec 31, 2021. 
As at end 2021, MUST recorded a 92.3 per cent occupancy rate against the US Class A average of about 83 per cent, according to JLL's Q4 2021 US Office Outlook. 
Must also noted that 2021 ended on a strong note for the US office segment as transaction volumes increased along with higher leasing activity and strong projections for 12-month rent growth in many markets. 
Over the first few months of 2022, MUST also observed higher numbers, signifying that return-to-office is gathering momentum, alongside H2 2021 portfolio valuations turning positive for the first time since the onset of Covid-19. 
It believes that office space will remain relevant, as firms are signing longer US office leases which averaged 7.1 years in Q1 2021 and lengthened to 7.8 years in Q4 2021 according to JLL. 
Prime US Reit (Prime) has a portfolio of 14 freehold office properties in 13 key US office markets with a total carrying value of US$1.65 billion as at Dec 31, 2021. 
It has a portfolio occupancy rate of 90.3 per cent (at end 2021), which is higher than the average US Class A. 
Prime anticipates an increase in leasing activity as employees cautiously plan for their return to office. 
Its leasing activity in H2 2021 more than doubled that in H1 2021 and rent collections have remained above 99 per cent throughout FY2020 and FY2021. 
Prime attributes its resilience to its industry sector diversification, where no single property contributes more than 11.4 per cent of its cash rental income. 
It continues to have a focus in growth and established STEM (science, technology, engineering and mathematics) and TAMI (technology, advertising, media and information) sectors. 
Keppel Pacific Oak US Reit (KORE) has a portfolio of 15 freehold office buildings and business campuses across 9 key growth markets in the US with a combined asset value of US$1.46 billion. 
KORE has a committed portfolio occupancy of 91.9 per cent. 
Close to 45 per cent of its portfolio by net lettable area comprises tenants from the growing TAMI, medical and healthcare sectors. 
The Reit has observed that the correlation between increasing Covid-19 cases and falling demand for office space has started to diminish. 
KORE quoted the CoStar Office National Report December 2021, where close to 100 million sq ft of office space was leased in Q3 2021, an indicator of stabilisation in the US office market.  REIT Watch is a weekly column on The Business Times,<a href="https://www.businesstimes.com.sg/companies-markets/singapore-office-s-reits-poised-to-benefit-from-positive-rental-momentum-0"> </a><a href="https://www.businesstimes.com.sg/companies-markets/us-office-s-reits-set-for-continued-growth-with-the-return-to-office-0">read </a>the original version.
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    Trio of US office SREIT


With up to 75 per cent of employees now able to return to the workplace in Singapore, there has been a noticeable increase in crowds in office areas over the past week.  
This trend is also expected to be similar in the US as companies start to announce plans to bring more employees back to the office.  
According to the Microsoft Annual Work Trend Index Report 2022, 50 per cent of leaders say their company already requires, or plans to require, full-time in-person work in the year ahead.  
Companies such as Apple, JP Morgan, and Twitter are also said to welcome more staff back to office and consider hybrid models.

SGX lists 3 pure-play US office S-Reits - Manulife US Reit, Prime US Reit, and Keppel Pacific Oak US Reit.  
The trio have a combined market capitalisation of S$3.8 billion, average distribution yield of 8.7 per cent and trade at a price-to-book ratio of 0.9 times.  
Manulife US Reit (MUST) has a portfolio of 12 freehold office properties in Arizona, California, Georgia, New Jersey, Oregon, Virginia and Washington DC with a combined asset value of US$2.2 billion as at Dec 31, 2021.  
As at end 2021, MUST recorded a 92.3 per cent occupancy rate against the US Class A average of about 83 per cent, according to JLL's Q4 2021 US Office Outlook.  
Must also noted that 2021 ended on a strong note for the US office segment as transaction volumes increased along with higher leasing activity and strong projections for 12-month rent growth in many markets.  
Over the first few months of 2022, MUST also observed higher numbers, signifying that return-to-office is gathering momentum, alongside H2 2021 portfolio valuations turning positive for the first time since the onset of Covid-19.  
It believes that office space will remain relevant, as firms are signing longer US office leases which averaged 7.1 years in Q1 2021 and lengthened to 7.8 years in Q4 2021 according to JLL.  
Prime US Reit (Prime) has a portfolio of 14 freehold office properties in 13 key US office markets with a total carrying value of US$1.65 billion as at Dec 31, 2021.  
It has a portfolio occupancy rate of 90.3 per cent (at end 2021), which is higher than the average US Class A.  
Prime anticipates an increase in leasing activity as employees cautiously plan for their return to office.  
Its leasing activity in H2 2021 more than doubled that in H1 2021 and rent collections have remained above 99 per cent throughout FY2020 and FY2021.  
Prime attributes its resilience to its industry sector diversification, where no single property contributes more than 11.4 per cent of its cash rental income.  
It continues to have a focus in growth and established STEM (science, technology, engineering and mathematics) and TAMI (technology, advertising, media and information) sectors.  
Keppel Pacific Oak US Reit (KORE) has a portfolio of 15 freehold office buildings and business campuses across 9 key growth markets in the US with a combined asset value of US$1.46 billion.  
KORE has a committed portfolio occupancy of 91.9 per cent.  
Close to 45 per cent of its portfolio by net lettable area comprises tenants from the growing TAMI, medical and healthcare sectors.  
The Reit has observed that the correlation between increasing Covid-19 cases and falling demand for office space has started to diminish.  
KORE quoted the CoStar Office National Report December 2021, where close to 100 million sq ft of office space was leased in Q3 2021, an indicator of stabilisation in the US office market.   REIT Watch is a weekly column on The Business Times, read the original version.



REIT Watch - US office S-Reits set for continued growth with the return to office