S-REITs Bi-Weekly Updates (1-15 Jun 22)
Financial markets are battered by fear of elevated inflation and slowdown in economic
growth. Although having corrected, S-REITs outperformed the broader market due to
their defensive characteristics and stable cash flows. Focus on recovery from
reopening plays. BUY ART (Target: S$1.25), FCT (Target: S$2.79), FEHT (Target: S$0.78)
and LREIT (Target: S$0.96). Maintain OVERWEIGHT.
WHAT HAPPENED IN THE LAST TWO WEEKS
• Offer to privatise FHT at S$0.70 in cash. Frasers Property Hospitality Trust Holdings,
wholly-owned subsidiary of sponsor Frasers Property, has proposed to privatise Frasers
Hospitality Trust (FHT) through a trust scheme of arrangement after FHT completed its
strategic review. The offer of S$0.70 per stapled security in cash represents a premium of
43.8% above 12-month VWAP and implied P/NAV of 1.07x.
• Office properties well sought after by foreign investors. A Singapore permanent
resident of Chinese descent has acquired 11,743sf of office space at Suntec City Tower 2
for S$38.8m or S$3,300psf, a record price on a psf basis for an entire floor at Suntec City.
US-based real estate investment manager AEW has acquired 20-storey Westgate Tower
located adjacent to Jurong East MRT station for S$675m or S$2,200psf.
• FSTREI corrected 2.3% in the past two weeks. Yield for 10-year Singapore
government bonds surged 53bp to 3.24% during the first two weeks of June. Fixed
income investors were spooked as US CPI remained elevated at 8.6% in May 22.
FSTREI corrected 2.3%, outperforming the STI which lost 3.9%.
• Top outperformer: Hospitality REITs FHT and CDREIT gained 6.9% and 1.6% due to
recovery in travel and tourism. FHT is currently trading close to the offer price of S$0.70 in
cash to privatise the S-REIT. KORE gained 0.7% despite negative market sentiment.
• Top underperformer: Data centre REITs DCREIT and KDCREIT corrected 14.0% and
6.8% respectively. Logistics REIT FLT corrected 5.9%. SASSR declined 5.5%. Retail
REITs LREIT, FCT, SGREIT lost 3.7%, 3.4% and 2.6% respectively.
