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I will be posting this in all REITs stock in which I have some interests. But please hor, due diligence please, do not take this as the final and only positive statement and cheong to take up positions.....if you are lazy to read through the entire article, just focus on the highlighted parts....
Why is the Singapore REIT market going so strong after two years of COVID-19?
SINGAPORE: Singapore real estate investment trusts or S-REITs have emerged as a resilient segment of the local stock exchange in the past two years.
Traditionally a key pillar of the portfolios of individual investors in Singapore, the iEdge S-REIT Index, regarded as the S-REIT benchmark, reported a total return of 5.2 per cent since the start of 2020 to Nov 17.
This was despite S-REITs raising new equity from unitholders, creating additional units and leading to potential dilution risk. In the past 23 months, S-REITs raised a total of S$8 billion through placements and rights issues led by mega-issuances from Ascendas Real Estate Investment Trust and Frasers Commercial Trust.
Most S-REITs largely maintained their dividends, compensating for the fall in unit prices in this period.
Global financial markets including S-REITs initially crashed when COVID-19 became a pandemic, with investors panicking and selling liquid financial assets. For investors daring and savvy enough to put money to work during the trough in end-March 2020, total returns from capital gains have been a whopping 57 per cent.
Despite headlines on troubles in the retail space and how work-from-home has made offices redundant, occupancies measured by leases have remained high for S-REITs holding shopping malls and offices in Singapore, with little problems in rental collection, even if fewer are using these spaces.
In the hardest hit hotel sector, the fall in physical property asset value was contained to less than 10 per cent at a portfolio level among the S-REITs tracked by OCBC, a good outcome despite the pandemic curbing travel.
Hospitality REITs will likely need time to recover and could do better in a 24-month timeframe as borders reopen further.
S-REITs today generate a significant volume of trading activity for the stock exchange - about one-fourth of the daily turnover before COVID-19. Primary equity markets in Singapore also skew towards S-REITs.
S-REITs, at S$110 billion, represents 12 per cent of Singapore& rsquo s whole equity market by market cap & ndash a figure that is 6 per cent for Australia and only 2 per cent for Japan, the other two top REIT markets in the Asia-Pacific with large domestic economies.
WHY S-REITS STILL ATTRACT SO MANY INVESTORS
The top-performing Singapore stock in the past 23 months goes to iFAST Corporation, an investment products distribution platform, which generated total returns of 771 per cent during this time, superseding the Bloomberg Bitcoin Galaxy Index at 750 per cent.
This is lower than the 1,131 per cent on the Bloomberg Galaxy Crypto Index tracking cryptocurrencies.
Still, S-REITs and the Singapore commercial property market continue to attract significant investor attention.
Investors in Singapore are very familiar with the nuts and bolts of running a property, and understand how policies like stamp duties, urban planning, zoning, tenancy and ownership rules influence whether and when investors should buy an investment property and what to look out for in assessing a property& rsquo s attractiveness.
Many like the idea of owning a passive, stable and recurring income stream. S-REITs generate fairly stable revenue, with the iEdge S-REIT Index reporting revenue per unit of S$132.5 in 2019.
Though it dropped 6.3 per cent in 2020, analysts expect a rebound to S$135.6 this year.
S-REITs are a good source of income. Qualifying S-REITs are encouraged to pay gains to unitholders instead of hoarding profits as they not taxed on dividends distributed to unitholders.
The key challenge is share dilution when S-REITs need to raise to acquire new properties.
Past transactions that have stirred market discussions include K-REIT Asia& rsquo s (now known as Keppel REIT) 87.5 per cent interest in Ocean Financial Centre in 2011, Ascott Residence Trust& rsquo s acquisition of Ascott Orchard Singapore, Citadines City Centre Frankfurt and Citadines Michel Hamburg in 2017 and Lippo Malls Indonesia Retail Trust& rsquo s acquisition of Puri Mall in 2021.
S-REITs are also regulated as a collective investment scheme under the Securities and Futures Act, where there is a 50 per cent cap on the leverage limit for S-REITs to keep credit risks in check. As listed entities, S-REITs also follow SGX rules on the disclosure of information and the right for minority investors to vote on major matters.
S-REITS MORE ACCESSIBLE THAN EVER
Until S-REITs were launched in July 2002, the commercial property market was inaccessible to most individual retail investors, with ticket sizes of each standalone commercial property in the millions and billions of dollars.
Today, all it takes is S$230 at last Wednesday& rsquo s prices for an individual investor to buy into CapitaLand Integrated Commercial Trust (& ldquo CICT& rdquo ), Singapore& rsquo s largest REIT, and enjoy a portion of CICT& rsquo s rental income from shopping malls and offices.
Few investment opportunities provide such stability for 4 to 7 per cent dividend yield per year. It& rsquo s little wonder such investment classes with a dividend income and the potential for capital gains appeal to investors with a neutral risk profile at Singapore& rsquo s median age of 42.
Singapore has maintained an encouraging ecosystem for the development of S-REITs. Regulatory uncertainty is minimised as regulators routinely seek industry feedback from REIT managers, investors and lawyers before introducing new rules.
The market has grown to include fund managers who invest in S-REITs as their specialty, REIT exchange traded funds and REIT derivatives.
Bank lenders and bond investors in Singapore are highly familiar with S-REITs, together providing a pool of liquidity that allows the S-REIT market to grow bigger. Brokerages are also prepared to lend individual investors buying larger amounts of REIT units.
WILL GAINS IN S-REITS CONTINUE?
The bigger question is whether we will continue to see capital gains in the coming 12 to 24 months as interest rates rise.
In a world where stock market prices are affected by sentiments, Reddit fads and breaking news, S-REITs continue to see strong investor demand because their valuation is backed by commercial properties where asset value has seen a continued upward trend.
Indeed, S-REIT indices are not a good representation of the underlying economy. They are weighted towards larger S-REITs, rather than each S-REIT& rsquo s contribution to the Singapore economy.
The iEdge S-REIT& rsquo s top five components make up 43.3 per cent of the index which have an outsized influence on total returns.
Three are large-cap industrial REITs with industrial properties in Singapore and countries across Asia-Pacific, Europe and the United States & ndash in a world where logistics, data centres, business parks and manufacturing facilities have been resilient through the pandemic.
The remaining two are large-cap commercial REITs owning quality assets with tenants largely staying put despite the economic downturn, with occupancies remaining above 90 per cent.
Beyond the broad index, S-REITs that hold hotels and shopping malls located in the city centre have been dragged by the pandemic. With the city centre hollowed out as we work from home and international travelers non-existent, these S-REITs have underperformed Industrial REITs.
Furthermore, the S-REIT industry has been kept buoyant by an inflow of capital. The broad money supply in Singapore has surged by 10.9 per cent year-on-year as of September. With interest rates on cash near-zero, all that money needs to go somewhere.
The S-REITs market is unlikely to cool anytime soon. There is momentum. Thirteen out of the 80 IPOs with primary share offering in Singapore since 2016 were S-REITs raising S$5.6 billion collectively at an average offer size of S$430 million.
Outside of S-REITs, a further S$2.7 billion was raised for two listings, Kakao Corp, the Internet company global depository receipt listing and NetLink NBN Trust, a business trust which holds infrastructure assets.
The remaining 65 had an average offer size of S$28 million & ndash small cap listings with limited liquidity.
Tellingly, the two upcoming IPOs in Singapore - Daiwa House Logistics Trust and Digital Core REIT - are both S-REITs.
The equity analyst community is still optimistic and forecasting a rise in S-REIT dividends in the next 12 to 24 months.
Driven by the growth and resiliency of industrial assets, particularly logistics warehouse and data centres, the Big Three industrial REITs of Ascendas Real Estate Investment Trust, Mapletree Logistics Trust and Mapletree Industrial Trust also recorded average total returns of 15.6 per cent in the past 23 months.
DON& rsquo T DISMISS SGX
Looking ahead, Singapore investors should not be so quick to dismiss the SGX, given the current slew of corporate restructuring exercises with the potential for capital gains, which may not be immediately apparent to new individual investors in the market.
Buying S-REITs is likely to remain a cornerstone investment strategy for many individual investors. The more pertinent decision points remain how much S-REITs should feature as a percentage of one& rsquo s investment portfolio and which specific ones to invest in.
Still, until a next financial crisis with significant liquidity stress, we are unlikely to repeat the kind of capital gains seen from March 2020 to date in S-REITs.
A lot of the negatives has since been priced in, with the broad iEdge S-REIT Index trading at 1.1 times the price-to-book value, indicating that the market cap of the S-REITs as a broad basket is now higher than the value of the underlying properties.
TAKE NOTE.............OUE REIT JUST A BIG SPIKE IN VOLUME & PRICE.
IT IS TRADING AT THE SUPPORT LINE OF 0.44............MAY BE QUITE REWARDING
IT IS TRADING AT THE SUPPORT LINE OF 0.44............MAY BE QUITE REWARDING
OUE C-Reit' s amount available for distribution slips 7.5% in Q3 to S$30.2m
OUE Commercial Reit' s (OUE C-Reit) amount available for distribution was S$30.2 million for the third quarter ended Sep 30, down 7.5 per cent year on year, the real estate investment trust (Reit) said in a Singapore Exchange business update on Tuesday after market close.
Revenue was down 17.5 per cent at S$58.5 million, while net property income for the quarter fell 17.1 per cent to S$46.2 million. The Reit attributed this mainly to the deconsolidation of OUE Bayfront' s performance, after the divestment of its 50 per cent stake in the property.
Despite slower leasing momentum due to tightened Covid-19 curbs, OUE C-Reit' s commercial segment' s committed occupancy edged up 0.3 percentage points to 92 per cent as of Sep 30, with improved office occupancies in both Singapore and Shanghai.
About S$1.1 million in rental rebates was provided in Q3, lower than in previous quarters. The Reit' s manager said that with the further extension of Covid-19 curbs into Q4, it will " continue to monitor the situation closely and provide support where necessary" .
In the hospitality segment, revenue per available room was S$92, down 9.6 per cent from the previous quarter.
" Despite potential demand risks as occupiers assess their longer-term space requirements, the limited supply pipeline is expected to support a positive medium-term outlook for Grade A office rents," said the Reit.
Its Hilton Singapore Orchard property is expected to relaunch in Q1 2022 and " will be well-positioned to capture the nascent recovery in the hospitality segment" with the opening of Vaccinated Travel Lanes, it added.
Beyond the quarter, the Reit secured its first S$540 million sustainability-linked loan in October. The refinancing of existing borrowings with this new facility will extend the Reit' s pro forma average term of debt to 3.3 years, with no debt due until December 2022.
" OUE C-Reit' s recent inclusion in the FTSE EPRA Nareit Global Real Estate Index has also enhanced its visibility and investability among global investors," said the Reit manager' s chief executive officer Tan Shu Lin. The Reit was included in September.
I think very few people here have this.....vested
OUE C-Reit' s amount available for distribution slips 7.5% in Q3 to S$30.2m
OUE Commercial Reit' s (OUE C-Reit) amount available for distribution was S$30.2 million for the third quarter ended Sep 30, down 7.5 per cent year on year, the real estate investment trust (Reit) said in a Singapore Exchange business update on Tuesday after market close.
Revenue was down 17.5 per cent at S$58.5 million, while net property income for the quarter fell 17.1 per cent to S$46.2 million. The Reit attributed this mainly to the deconsolidation of OUE Bayfront' s performance, after the divestment of its 50 per cent stake in the property.
Despite slower leasing momentum due to tightened Covid-19 curbs, OUE C-Reit' s commercial segment' s committed occupancy edged up 0.3 percentage points to 92 per cent as of Sep 30, with improved office occupancies in both Singapore and Shanghai.
About S$1.1 million in rental rebates was provided in Q3, lower than in previous quarters. The Reit' s manager said that with the further extension of Covid-19 curbs into Q4, it will " continue to monitor the situation closely and provide support where necessary" .
In the hospitality segment, revenue per available room was S$92, down 9.6 per cent from the previous quarter.
" Despite potential demand risks as occupiers assess their longer-term space requirements, the limited supply pipeline is expected to support a positive medium-term outlook for Grade A office rents," said the Reit.
Its Hilton Singapore Orchard property is expected to relaunch in Q1 2022 and " will be well-positioned to capture the nascent recovery in the hospitality segment" with the opening of Vaccinated Travel Lanes, it added.
Beyond the quarter, the Reit secured its first S$540 million sustainability-linked loan in October. The refinancing of existing borrowings with this new facility will extend the Reit' s pro forma average term of debt to 3.3 years, with no debt due until December 2022.
" OUE C-Reit' s recent inclusion in the FTSE EPRA Nareit Global Real Estate Index has also enhanced its visibility and investability among global investors," said the Reit manager' s chief executive officer Tan Shu Lin. The Reit was included in September.
OUE C-Reit to join FTSE Russell' s Global Developed Index series
OUE Commercial Reit (OUE C-Reit) OUE Com Reit: TS0U +2.44% will be included in the FTSE EPRA Nareit Global Developed Index with effect from Sept 20 this year, announced its manager on Thursday morning.
Designed to track the performance of listed real estate companies and Reits worldwide, the index incorporates Reits as well as real estate holding and development companies.
The index series is a widely followed global benchmark which was jointly developed by FTSE Russell with the EPRA (European Public Real Estate Association) and the Nareit (National Association of Real Estate Investment Trusts).
According to the index' s factsheet as at July 30, 2021, there are 17 Singapore Reits and property trusts in the FTSE EPRA Nareit Global Index.
Tan Shu Lin, chief executive of the manager, said OUE C-Reit' s inclusion on the index represents a significant milestone which will further enhance the Reit' s visibility and investability among global investors.
" Our commitment to driving long-term sustainable growth for unitholders, including the transformational merger with OUE Hospitality Trust back in 2019 to create one of the largest diversified Singapore Reits, has enabled this achievement. We will continue to capitalise on value-enhancing opportunities as they arise for the benefit of unitholders," she said.
Units of OUE C-Reit ended flat on Wednesday at 41 Singapore cents.
OUE C-Reit bumps up H1 DPU to 1.23 Singapore cents after earlier retention
OUE Commercial Real Estate Investment Trust (OUE C-Reit) will make a first-half distribution per unit (DPU) of 1.23 Singapore cents, after having held back on a payout the year before.
Distributable income was up by 3 per cent year on year to S$67.2 million for the six months to June 30, the manager said on Thursday.
Meanwhile, the trust' s payouts will be ramped up from the previous DPU of one cent, as S$10.8 million had been retained in the year before " to preserve financial flexibility in view of uncertainties posed by the Covid-19 situation" .
Net property income dipped by 3.1 per cent to S$109.0 million on the divestment of a half-stake in OUE Bayfront, which is now recognised within the Reit' s share of joint-venture results.
Meanwhile, revenue fell by 6 per cent to S$133.5 million, as the OUE Bayfront divestment dragged down contributions from the commercial portfolio. Income from the hospitality segment was stable at the minimum rent under master lease arrangements.
OUE C-Reit holds the Mandarin Orchard Singapore and Crowne Plaza Changi Airport hotels, as well as a commercial building in Shanghai and four others in Singapore.
Committed occupancy for the commercial properties was 91.7 per cent as at end-June, with portfolio weighted average lease expiry of 3.6 years by gross rental income. The aggregate leverage stood at 38.0 per cent, with an average term of debt of 2.9 years.
The DPU of 1.23 cents will be paid out on Sept 10, with books closing on Aug 6.
OUE C-Reit bumps up H1 DPU to 1.23 Singapore cents after earlier retention
OUE Commercial Real Estate Investment Trust (OUE C-Reit) will make a first-half distribution per unit (DPU) of 1.23 Singapore cents, after having held back on a payout the year before.Distributable income was up by 3 per cent year on year to S$67.2 million for the six months to June 30, the manager said on Thursday.
Meanwhile, the trust' s payouts will be ramped up from the previous DPU of one cent, as S$10.8 million had been retained in the year before " to preserve financial flexibility in view of uncertainties posed by the Covid-19 situation" .
Net property income dipped by 3.1 per cent to S$109.0 million on the divestment of a half-stake in OUE Bayfront, which is now recognised within the Reit' s share of joint-venture results.
Meanwhile, revenue fell by 6 per cent to S$133.5 million, as the OUE Bayfront divestment dragged down contributions from the commercial portfolio. Income from the hospitality segment was stable at the minimum rent under master lease arrangements.
OUE C-Reit holds the Mandarin Orchard Singapore and Crowne Plaza Changi Airport hotels, as well as a commercial building in Shanghai and four others in Singapore.
Committed occupancy for the commercial properties was 91.7 per cent as at end-June, with portfolio weighted average lease expiry of 3.6 years by gross rental income. The aggregate leverage stood at 38.0 per cent, with an average term of debt of 2.9 years.
The DPU of 1.23 cents will be paid out on Sept 10, with books closing on Aug 6.
Units closed flat on Thursday at S$0.43, before the results were announced.
DBS - Ideas of the Day
Trending Sectors
Singapore Office REITs
Downtown office vacancies rise as rents stabilise
* We have observed a divergence in office fundamentals with offices in the downtown region seeing lower demand compared to those on the city fringes
- Data from Knight Frank revealed that vacancies at Raffles Place and Marina Bay had inched up in 1Q21
- Conversely, vacancies at Orchard, Shenton Way, and the general city fringes dropped during the same quarter
- Overall, net demand for Grade A CBD office space has turned positive in 1H21 at 68,000 sqft according to Cushman & Wakefield
* Positively, preliminary data from JLL has also shown that rents have stabilised with Grade A CBD office space seeing a 1.2% q-o-q rise in 2Q21
* REITs such as MCT with a larger exposure to offices outside the downtown region could benefit from the decentralisation trend
* Other Office REITs with a large portfolio located in the downtown region including KREIT, Suntec REIT and OUE Commercial REIT could see recoveries play out over a longer period
Trending Sectors
Singapore Office REITs
Downtown office vacancies rise as rents stabilise
* We have observed a divergence in office fundamentals with offices in the downtown region seeing lower demand compared to those on the city fringes
- Data from Knight Frank revealed that vacancies at Raffles Place and Marina Bay had inched up in 1Q21
- Conversely, vacancies at Orchard, Shenton Way, and the general city fringes dropped during the same quarter
- Overall, net demand for Grade A CBD office space has turned positive in 1H21 at 68,000 sqft according to Cushman & Wakefield
* Positively, preliminary data from JLL has also shown that rents have stabilised with Grade A CBD office space seeing a 1.2% q-o-q rise in 2Q21
* REITs such as MCT with a larger exposure to offices outside the downtown region could benefit from the decentralisation trend
* Other Office REITs with a large portfolio located in the downtown region including KREIT, Suntec REIT and OUE Commercial REIT could see recoveries play out over a longer period
OUE C-Reit prices S$150 million offering of 3.95% notes due 2026
OUE Commercial Real Estate Investment Trust (OUE C-Reit) has priced an offering of S$150 million of 3.95 per cent notes due 2026, to be guaranteed by Reit trustee DBS Trustee.
Net proceeds from the issuance will be used to refinance existing borrowings and working capital requirements, the manager said in a bourse filing on Tuesday night.
CIMB Singapore, DBS, OCBC and Standard Chartered were named joint lead managers and bookrunners for the notes offering, which will be issued under OUE C-Reit' s S$2 billion multi-currency debt scheme, the manager added.
The notes will mature on June 2, 2026, with the interest to be paid semi-annually. The issuer can redeem all notes - at its option - on any interest payment date, among other redemption scenarios.
They constitute direct, unconditional, unsubordinated and unsecured obligations of the issuer and will rank pari passu with all of its other unsecured obligations, besides the subordinated obligations and priorities created by law.
OUE Commercial Reit' s Q1 net property income dips due to rental rebates
OUE Commercial Reit (OUE C-Reit) on Tuesday posted a 1.6 per cent drop in its first-quarter net property income to S$61.1 million, due to provision for rental rebates to some retail tenants, partially offset by lower property operating expenses.
Lower interest expense pushed up its amount available for distribution by 2.7 per cent to S$37.1 million. For the three months ended March 31, 2021, revenue fell 3.9 per cent to S$74.7 million. It did not announce its distribution per unit for the quarter.
Tan Shu Lin, chief executive of the manager, said: " While we provided rental rebates to selected retail tenants who continued to face challenges due to restrictions on short-term visitors and operating capacity, the quantum for the first half of 2021 is expected to be lower compared to the prior half-year.
" With more employees returning to the workplace recently due to the easing of Covid-19 safe-management measures, we are encouraged by the improvement in both traffic and tenant sales at One Raffles Place Shopping Mall and will continue to monitor the situation closely."
For Q1, the office and retail segment reported revenue and net property income of S$57.8 million (down 5 per cent), and S$45.7 million (down 3 per cent), respectively. In all, S$2.6 million of rental rebates were extended to retail tenants in the quarter, as challenges remain for businesses dependent on short-term visitors and office-based employees.
In its business update, the Reit manager also noted that its Singapore office properties continued to achieve positive rental reversions between 0.8 per cent and 7.2 per cent in Q1, and a committed occupancy of 93.7 per cent as at end-March 2021.
However, in Shanghai, Lippo Plaza' s committed office occupancy fell 3.3 percentage points from the previous quarter to 83.2 per cent due to intense leasing competition amid increasing supply.
At Mandarin Gallery in Singapore, the committed occupancy improved 0.5 percentage points from Q4 last year to 91.6 per cent including short-term leases, the committed occupancy was 97.1 per cent. In view of headwinds facing the prime retail segment, the manager plans to continue adopting flexible leasing strategies to sustain its occupancy.
Its hospitality segment generated a revenue of S$16.9 million in Q1 - which is also the minimum rent under the master lease arrangements of the hotel properties in its portfolio. Net property income was 3 per cent higher year on year at S$15.4 million, due to lower property operating expenses.
The Reit had announced the divestment of a 50-per-cent interest in OUE Bayfront in Q1, achieving an agreed value which was 7.3 per cent and 26.1 per cent above its end-2020 book value and purchase consideration for the property at listing, respectively.
Of the net divestment proceeds of about S$262.6 million, S$155 million will be used to redeem convertible perpetual preferred units to optimise OUE C-Reit' s capital structure another S$15 million will be set aside to share divestment gains with unitholders, it said.
The balance will be applied towards other " value-enhancing options" to drive returns for unitholders," it added.
OUE C-Reit' s aggregate leverage as at March 31, 2021 was 40.4 per cent, on total debt of about S$2.34 billion.
As part of the divestment of 50 per cent of OUE Bayfront, the loan attributable to the property, due in 2022, was refinanced ahead of expiry with a new five-year facility. As a result, OUE C-Reit' s term of debt increased to 2.8 years as at end-March 2021, from 2.3 years in the previous quarter.
OUE C-Reit to redeem S$155m in convertible units
OUE Commercial Real Estate Investment Trust (OUE C-Reit) will redeem some S$155 million of convertible perpetual preferred units (CPPUs) on June 1, the manager has said.
It released an irrevocable redemption notice on Monday for the convertible securities, which had been issued as part of the payment for a stake in downtown office building One Raffles Place.
The decision comes as part of the manager' s capital management strategy " to continually review and optimise OUE C-Reit' s capital structure for sustainability over the longer term" , the board said in a bourse filing.
Some 220 million CPPUs will remain outstanding after the redemption, which is being made in cash and funded by proceeds from the partial divestment of OUE Bayfront.
The reduction in outstanding units will let the manager mitigate dilution in distribution per unit, should any of the CPPUs be converted into OUE C-Reit, it said.
There will also be a special preferred distribution of one per cent a year to the CPPU holder, pro-rated for the January-to-March quarter.
The manager added that its audit and risk committee took the interests of the trust and its minority unitholders into account, and approved the redemption.
OUE C-Reit bought an effective 67.95 per cent stake in One Raffles Place from its sponsor OUE Ltd in 2015, for about S$1.1 billion.
As part of the acquisition, it issued the CPPUs to Clifford Development Pte Ltd. Both the Reit' s manager and Clifford Development are wholly owned by mainboard-listed OUE, which also has a 48 per cent interest in OUE C-Reit.
Any news on the incoming dividend payout ?
Happy Lunar New Year to everyone here.. May Niu year brings good health not forgetting HUAT all the way to the banks..😁
Today $0.365. Hopes it does not go downstream like its pals Lippo and 1st reit.
OUE C-Reit seals S$1.27b deal with Allianz entity to divest 50% of OUE Bayfront
THE manager of OUE Commercial Real Estate Investment Trust (OUE C-Reit) has agreed to divest a 50 per cent stake in the Reit' s OUE Bayfront property based on an agreed value of S$1.27 billion, or S$3,170 per square foot, to a special purpose vehicle (SPV) managed by Allianz Real Estate.
This comes after The Business Times in November 2020 reported both parties were in exclusive due diligence with a view to buying a partial stake in the building, which OUE C-Reit' s manager later on confirmed but said there was no certainty any transaction would materialise at the time.
OUE Bayfront comprises an 18-storey Grade A office asset, a conserved tower building and an overhead pedestrian link bridge with retail units. It was independently valued at S$1.18 billion by Cushman & Wakefield as at end-2020.
The S$1.27 billion value commands a 7.6 per cent premium over this valuation and exceeds the property' s purchase consideration of S$1 billion by 26.1 per cent.
After taking into account the estimated divestment fee and other divestment-related expenses, OUE C-Reit is expecting to net about S$262.6 million of proceeds.
In a late night filing on Monday, OUE C-Reit' s manager said this will provide it the financial flexibility to pare down debt, undertake accretive acquisitions of higher-yielding assets or asset enhancement initiatives, and redeem outstanding convertible perpetual preferred units. It may also use the net proceeds to commence a distribution per unit accretive unit buy-back programme to enhance long-term returns to unitholders, or to distribute as capital gains.
Assuming the estimated net proceeds from the divestment are used to repay loans, the Reit' s aggregate leverage is expected to improve from 40.3 per cent as at end-September 2020 to 33.6 per cent on a pro forma basis.
A limited liability partnership known as BPH Propco has been formed between the Reit and Allianz' s SPV Acre Angsana, with DBS Trustee as trustee of the Reit. The OUE Bayfront property' s sale will be conducted through BPH Propco, which OUE C-Reit and Allianz will each hold a 50 per cent interest in.
The Reit manager and OUE Commercial Property Management will be respectively appointed as asset manager and property manager to BPH Propco.
DBS Trustee has also agreed to guarantee a minimum net property income (NPI) of S$50 million and S$52.5 million for the first and second year, respectively, following completion of the divestment and subject to an aggregate cap of S$6 million.
Based on the OUE Bayfront property' s annualised NPI of S$45.8 million for the nine months ended Sept 30, 2020 and the agreed value, the estimated net property yield is 3.6 per cent per annum.
Post completion of the divestment, the manager says OUE C-Reit will continue to be underpinned by the resilient office segment, which contributes 57.8 per cent to the Reit' s total portfolio rental revenue on a pro forma basis. Singapore properties continue to anchor the portfolio, comprising about 90.4 per cent of total assets, it added.
" This acquisition presents us with a unique opportunity to add a marquee prime office asset into our portfolio. We are confident that the OUE Bayfront property, with its high-quality offering and strategic location, will continue to enjoy strong demand from occupiers seeking prime office space in Singapore," said Danny Phuan, Asia Pacific head of acquisitions for Allianz.
Allianz has separately announced the agreed transaction value for the 50 per cent interest in OUE Bayfront is S$634 million subject to closing, which is expected to happen at end-February 2021.
The real estate company issued a press statement on Tuesday confirming previous market speculations that the acquisition is on behalf of the National Pension Service of Korea, in addition to the Allianz group of companies.
JLL acted as adviser on the sale, said the real estate consultancy in a media statement on the same day. Its head of capital markets for Singapore, Lim Ting, sees the transaction as " indicative of deeper investor confidence in the long-term prospects for quality assets in the Singapore office market" .
Cannot move up ?
coco66 ( Date: 27-Nov-2020 21:14) Posted:
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OUE comm in talks to sell a stake of their best asset LOL
https://www.google.com.sg/amp/s/www.reitsweek.com/2020/11/oue-commercial-reit-in-talks-with-allianz-real-estate-entity-for-stake-in-bayfront-asset.html/amp
https://www.google.com.sg/amp/s/www.reitsweek.com/2020/11/oue-commercial-reit-in-talks-with-allianz-real-estate-entity-for-stake-in-bayfront-asset.html/amp
In case anyone is interested or will find useful --> I found an office designer (interior designer) youtube channel talking about the office scene or landscape in singapore and what type of trend is it moving towards:
https://www.youtube.com/watch?v=ravfkSxPn84
highlight, copy then paste the link in your browser. You cant click from Sharejunction directly.
Cheers!
https://www.youtube.com/watch?v=ravfkSxPn84
highlight, copy then paste the link in your browser. You cant click from Sharejunction directly.
Cheers!
https://sg.yahoo.com/finance/news/singapore-third-quarter-office-rents-041602231.html
Singapore third-quarter office rents see biggest fall in 11 years
drwealthz ( Date: 09-Oct-2020 09:59) Posted:
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Hey guys thought I' ll just share my analysis for OUE commercial:
Sell at 0.345 to cut loss and put the proceeds somewhere else to recoup through dividends or capital gain:
Why:
They don' t have any historical record of recovering their prices after each fall
They have falling dpu through the years plus a decrease in demand for offices down the road. Albeit just a slight decrease = still a decrease which they must face as an obstacle during their road to recovery
If covid persists, the hotels and mall in Orchard will be shit
The only thing tt can save OUE is a cure or vaccine but that' s like betting on a miracle compared to the normal / practical trajectory of things above
Their debt is quite high. When their hotels become shit and demand for office drop, likely they will issue more rights or sell a building.
If they sell, revenue and distribution will drop. And share price will also drop.
If they issue rights, price also drop
(Remarks: the longer WFH stays, the stronger the trend will form. At that time, even a single drop in demand for office space (by any company who sees that WFH works for them or not needing a big/prime CBD office) is still a drop which means a decrease in revenue (as an analogy). Lawrance has given hints that phase 3 will not be offices opening fully. It will likely be 50-50.
Finally, OUE managment is under the Riady family who also runs lippo
In any analysis, look at 1) business / business conditions, 2) management, 3) cashflow)
Sell at 0.345 to cut loss and put the proceeds somewhere else to recoup through dividends or capital gain:
Why:
They don' t have any historical record of recovering their prices after each fall
They have falling dpu through the years plus a decrease in demand for offices down the road. Albeit just a slight decrease = still a decrease which they must face as an obstacle during their road to recovery
If covid persists, the hotels and mall in Orchard will be shit
The only thing tt can save OUE is a cure or vaccine but that' s like betting on a miracle compared to the normal / practical trajectory of things above
Their debt is quite high. When their hotels become shit and demand for office drop, likely they will issue more rights or sell a building.
If they sell, revenue and distribution will drop. And share price will also drop.
If they issue rights, price also drop
(Remarks: the longer WFH stays, the stronger the trend will form. At that time, even a single drop in demand for office space (by any company who sees that WFH works for them or not needing a big/prime CBD office) is still a drop which means a decrease in revenue (as an analogy). Lawrance has given hints that phase 3 will not be offices opening fully. It will likely be 50-50.
Finally, OUE managment is under the Riady family who also runs lippo
In any analysis, look at 1) business / business conditions, 2) management, 3) cashflow)