10 April 2018
Five Newest Real Estate Stocks Offer Investors Diversity
  • The five most recent real estate stocks to list in Singapore span a wide range of property-related businesses, including REITs, a Real Estate Broker and a Property Developer. The business exposures span Singapore, the United States, Europe and China.
  • The five stocks have generated a 19% average gain and 8% median gain from their respective issue prices. Four of the five stocks listed in 2017 which have all performed better than the MSCI World Real Estate Index.
  • Complementing these listings, the Lion-Phillip S-REIT ETF launched, which tracks the Morningstar® Singapore REIT Yield Focus Index, designed to screen for high-yielding REITs with superior quality and financial health, using a 3-factor proprietary methodology.

Singapore’s five recent real estate listings offer diversity in geographical markets in addition to property segments.

 

These five stocks span a wide range of property-related businesses that include APAC Realty (a Real Estate Broker) and Olive Tree Estates (a comparatively smaller capitalised Property Developer). In addition, the  three most recent Real Estate Investment Trusts (REITs) that have listed span different property types across three different jurisdictions of the United States, Europe and China.

 

In recent years Singapore has strengthened its foundations as a regional REIT hub in addition to emerge as a global hub for the REITs. As RBC Investor & Treasury Services noted in January (click here) REIT expertise in Singapore is evident by innovation currently underway in REITs, as a number of firms are diversifying across property classes, including shifts into dormitories for foreign workers and students, healthcare centres, retirement homes, and data centres.

 

Property Foundations

 

Strong property and infrastructure fundamentals have provided beachheads for Singapore’s listed Real Estate Sector. Back in 2016, Jones Lang LaSalle ranked Singapore as one of the elite ‘Big Six’ established World Cities and elaborated that Singapore often scores highly in city rankings because of its integrated city management, which includes combined land use, economic development and infrastructure planning. Looking forward, the Building and Construction Authority highlight that Singapore’s Real Estate Industry Transformation Map has two broad thrusts, firstly, to embrace innovation and leverage technology and secondly strengthen professionalism and upskill the workforce.

 

Singapore is also the sixth largest real estate investment destination in the Asia-Pacific region, according to data from Real Capital Analytics which was cited at the IPO of APAC Realty. With such foundations, it may be no surprise that Real Estate forms an important segment of the Singapore stock market, with the Sector which includes REITs, representing one-fifth of the weightage of the FTSE ST All-Share Index.  

 

Recent Real Estate Listings

 

The five most recently listed stocks to join Singapore’s Real Estate Sector are tabled below. The five stocks have generated an 18.9% average gain and 7.3% median gain from their respective issue prices. The four of the five REITs that listed in 2017 have all performed better than the MSCI World Real Estate Index. To see more details on each REIT click on the stock name.

 

Name

SGX Code

Issuance Price

9 Apr Closing 

Price

Price

Change

Comparative Performance of MSCI World Real Estate Index 

[SGD]

Listing Date 

Sasseur REIT

CRPU

0.80

0.80

0.0%

1.3%

28-Mar-18

Olive Tree Estates

1H2

0.20

0.22

10.0%

-6.1%

29-Dec-17

Cromwell European REIT EUR

CNNU

0.55

0.59

7.3%

-6.1%

30-Nov-17

Keppel-KBS REIT USD

CMOU

0.88

0.88

0.0%

-7.9%

9-Nov-17

APAC Realty

CLN

0.66

1.17

77.3%

-3.5%

28-Sep-17

Average

 

 

 

18.9%

-4.5%

 

Median

 

 

 

7.3%

 

 

 

Source: Bloomberg & SGX StockFacts (Data as of 10 April 2018) Note Cromwell European REIT quoted in EUR and Keppel-KBS quoted in USD, price change also in these respective currencies.

 

Sasseur REIT 

 

Sasseur REIT is the first Outlet Mall REIT to be listed in Asia. Sasseur REIT has an initial portfolio of four retail outlet mall properties in the People’s Republic of China, with an aggregate net lettable area of 304,573.1 square metres and an appraised value of approximately RMB 7.34 billion (or S$1.5 billion). 

 

The initial portfolio consists of:

§  Sasseur (Chongqing) Outlets. One of the malls with strongest international brands offering in Chongqing that targets middle and upper class consumers with higher disposable incomes via experiential shopping concepts.

§  Sasseur (Bishan) Outlets. This Is A One-Stop Shopping Destination In The Bishan And West Chongqing Areas. Adopting The “Super Outlet” Business Model, At The Time Of Listing This Was The Only Outlet In The Region And Only Shopping Complex Offering High-End Products Targeting Middle To High-End Households.

§  Sasseur (Hefei) Outlets. This Is The Only Outlet Mall Concept In Hefei City And Anhui Province And Features One Of The Largest Cinemas In East China.

§  Sasseur (Kunming) Outlets.  This is the largest outlet mall (in terms of GFA) in the Yunnan Province with a wide array of retail options, including outlet mall shopping, healthcare services, entertainment and recreational facilities to provide a comprehensive lifestyle and entertainment experience.

 

For more details click here

 

Olive Tree Estates

 

Catalist-listed Olive Tree Estates formerly known as Changjiang Fertilizer Holdings, was formed subsequent to the successful reverse takeover (“RTO”) by Chiu Teng 8 Pte Ltd (“CT8”). The RTO has transformed the Company into a property development and investment business. The company commenced trading on 29 December at an issue price S$0.20 per share (click here for the announcement).

 

The company noted in its FY17 report (click here) it will assess opportunities originated by its stakeholders and network of business contacts to principally offer affordable housing solutions in emerging markets which maximize positive impact to local communities.  To this end, the Company has been actively sourcing potential development projects in such countries as Vietnam, Thailand, Cambodia, Indonesia and the United Kingdom, amongst others, to add to its project development pipeline.

 

In addition to growing organically, the Company will also seek to expand its business by entering into joint ventures or strategic alliances with parties and specialists whose competencies and unique skill sets are able to enhance the Company’s real estate solutions.

 

Property developer Chiu Teng Enterprises Pte Ltd maintains 50.7% direct interest in Olive Tree Estates.

 

Cromwell European REIT (EUR)

 

Cromwell European REIT is the first Euro-denominated Singapore REIT with a diversified Pan-European portfolio to list on SGX, offering investors the opportunity to gain exposure to income-producing real estate assets in Europe. It has an initial portfolio of 74 properties across the office and light industrial/logistics sectors in Denmark, France, Germany, Italy and the Netherlands.

 

According to the forecasted and projected financial statements at the time of the IPO, gross revenue for projection years 2018 and 2019 are €123.4 million and €127.0 million respectively. In addition the REIT has a distribution policy to distribute 100% of its annual distributable income for the period from the listing date to the end of projection year 2019.  Thereafter, the REIT will distribute at least 90% of its annual distributable income for each financial year. It has a distribution yield of 7.8% and 8.0% for projection years 2018 and 2019 respectively.

 

For more details click here.

 

Keppel-KBS REIT (USD)

 

Keppel-KBS US REIT is United States-focused REIT, which offers investors the opportunity to gain exposure to a diversified portfolio of income-producing commercial real estate assets in the US. The initial portfolio comprised 11 freehold office properties across seven markets in the United States.

 

The portfolio comprises of strategically located assets in attractive office markets with strong demand and limited supply. The Manager also noted at the IPO that the REIT also maintains a diversified tenant base led by tenants in growth and defensive sectors such as technology, finance and insurance, professional services, medical and healthcare.

 

Sponsors of the REIT are Keppel Capital (asset management arm of Keppel Corporation) and KBS Pacific Advisors which is a commercial real estate investment manager in the US.

 

For more details, click here

 

APAC Realty

 

APAC Realty is a leading real estate services provider which operates a market-leading real estate brokerage in Singapore under the ERA brand.

 

It operates in three main segments, namely

(1) real estate brokerage services; 

(2) franchise arrangements; and 

(3) training, valuation and other ancillary services. 

 

The Company holds the exclusive ERA regional master franchise rights for 17 countries in the Asia-Pacific region, and also holds the master franchise rights for Singapore for Coldwell Banker. APAC Realty's wholly owned entity – ERA Realty – was previously listed on SGX through its holding company Hersing Corporation in 1998. It was delisted and sold for c.S$130 million by former parent Hersing Corporation to private equity fund Northstar Group in 2013.

 

For more details, click here.  

 

LPSR-ETF

 

Complementing these listings, Lion-Phillip S-REIT ETF (LPSR-ETF) launched in October 2017 and closely tracks the Morningstar® Singapore REIT Yield Focus Index, which is designed to screen for high-yielding REITs with superior quality and financial health, using a 3-factor proprietary methodology. For more details, click here.


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