S-REITs Monthly Update (Dec 23)
There are healthy signs that inflationary pressure has abated. Maintain OVERWEIGHT. BUY CDREIT (Target: S$1.41), FCT (Target: S$2.42), FEHT (Target: S$0.76), KREIT (Target: S$1.06), LREIT (Target: S$0.80) and MINT (Target: S$2.69).
WHAT HAPPENED IN DECEMBER
• Visa-free travel between Singapore and China. Singapore and China have announced a 30-day mutual visa exemption arrangement during the 19th Joint Council for Bilateral Cooperation meeting held in Beijing. The Chinese no longer need to apply for a visa when they visit Singapore and can stay for up to 30 days without a visa. The changes will take effect in early-24. According to Singapore Tourism Board, the average length of stay for Chinese visitors is 5.2 days during 10M23.
• MUST has commenced execution of its Recapitalisation Plan after obtaining approvals from unitholders during its EGM held on 14 Dec 23. All its 12 lenders have obtained the necessary approvals for the restructuring of existing facilities and waiver of breach of financial covenants and have entered into the Master Restructuring Agreement. MUST has also completed the divestment of Park Place at Chandler, Arizona to sponsor Manulife Insurance for US$98.7m on 15 Dec 23.
• CLAS is divesting three hotels in Osaka, Japan to an unrelated third party for a total of ¥10.7b (S$99.8m), which is 15% above book value. CLAS will recognise a net gain of ¥1.1b (S$10.1m). These properties are situated outside the prime districts in Osaka. CLAS’ serviced residences have performed strongly following Japan’s full reopening of its borders. RevPAU for its serviced residences was 198% higher yoy in 3Q23, exceeding pre-COVID-19 levels by 17% on a same-store basis.
• FSTREI surged 8.9% in December, outperforming the STI’s healthy 5.4% gain. US CPI eased 0.1ppt mom to 3.1% in Nov 23, indicating continued disinflation. Yield for 10- year Singapore government bonds receded 26bp mom to 2.71% in December.
• Top outperformer: US REITs PRIME, MUST, KORE and UHU gained massively by 95.1%, 53.8%, 47.1% and 20.2% respectively. Blue chip S-REITs MPACT and CICT also rallied 14.6% and 13.2% respectively. China-based CLCT gained 14.8%.
• Top underperformer: ELITE declined 3.6% after announcing 214-for-1,000 preferential offering at an issue price of £0.27 per unit.
