It’s not every day that developments on the Singapore Exchange makes it to the public discourse. But this week it did, thanks to news of Singapore Press Holdings (SGX: T39) being kicked out of Singapore’s benchmark Straits Times Index (STI). This comes a week after SPH was removed from the MSCI Singapore Index.
The STI is often used as a proxy for the broader Singapore stock market, consisting of the 30 largest and most liquid blue chip companies on the Singapore Exchange (SGX). These 30 companies account for more than 70% of the market capitalisation of the entire SGX.
STI constituents are reviewed every quarter, and the index is reconstituted if stocks no longer qualify to remain on the index or are delisted. In this round of review (dated 4 June 2020), SPH was removed and replaced by Mapletree Industrial Trust (SGX: ME8U).
In addition, the next 5 largest and most liquid SGX stocks will make up the STI Reserve List, which is used in the event a STI stock is delisted or some other conditions is fulfilled that warrants the stock’s removal from the index.
After the latest round of review, the 5 members of the STI Reserve List are Keppel DC REIT, Suntec Reit, NetLink NBN Trust, Frasers Logistics & Industrial Trust and Keppel REIT.
All these changes from this round of review will take effect from the start of trading on 22 June 2020, and the next review will be conducted in September 2020.
For this episode of 4 Stocks This Week, we will be looking at 4 members of the STI Reserve List.
Keppel DC REIT (SGX: AJBU)
Listed on 12 December 2014, Keppel DC REIT is the first pure-play data centre REIT listed in Asia on the SGX. Keppel DC REIT’s investment strategy is to principally invest, directly or indirectly, in a diversified portfolio of income-producing real estate assets which are used primarily for data centre purposes, as well as real estate-related assets.
In DollarsAndSense’s S-REIT report card for 2Q2020, Keppel DC REIT retained it’s crown from 1Q2020 as the best-performer, beating out 45 other REITs and property trusts. This feat is made even more impressive, since it follows a solid showing in 2019, by delivering a total return of 60% that year.
Keppel DC REIT held its AGM electronically on 1 June 2020, in which it reported to unitholders about 2020 YTD developments, including its completed acquisitions of the remaining 999-year leasehold land interest at Keppel DC Dublin 1 and Kelsterbach Data Centre in Germany, as well as securing tax transparency treatment for Keppel DC Singapore 4.
As of 1 May 2020, Keppel DC REIT’s AUM was worth $2.8 billion, comprising 18 asserts in 8 countries, namely Singapore, Australia, Ireland, Germany, Netherlands, United Kingdom, Italy, and Malaysia.
With a long weighted average lease expiry (WALE) of 8.6 years, Keppel DC REIT is not expected to be impacted much by the current COVID-19 crisis. As of 31 December 2019, its portfolio occupancy was 94.9%.
Keppel DC REIT closed the week at $2.48, giving it a total market capitalisation of $4.049 billion.
Suntec Real Estate Investment Trust (SGX: T82U)
With a current market capitalisation of $4.5 billion, Suntec REIT holds properties in Singapore’s prime business districts as well as in Australia.
It has a 60.8% interest in Suntec Singapore Convention & Exhibition Centre, a one-third interest in One Raffles Quay, a one-third interest in Marina Bay Financial Centre Towers 1, 2 and the Marina Bay Link Mall as well as a 30.0% interest in 9 Penang Road.
In Australia, it holds a 100% stake in 177 Pacific Highway, an office development in Sydney, a 25% interest in Southgate Complex, an integrated development in Melbourne, as well as a 50% interest in a commercial building to be developed at Olderfleet 477 Collins Street, Melbourne.
In May, Suntec REIT launched $200 million worth of 5-year notes at a fixed coupon of 2.6% per annum, payable semi-annually. The REIT said that proceeds will be used to finance asset enhancement works, refinance existing borrowings, and general corporate purposes.
Suntec REIT will be holding its AGM electronically on 16 June 2020. It closed this week at $1.60, which marks a significant recovery from a low of $1.11 on 23 March 2020.
Frasers Logistics & Commercial (SGX: BUOU)
Formerly known as Frasers Logistics & Industrial Trust (FLT), the REIT now goes by the name of Frasers Logistics & Commercial Trust (FLCT) following a $1.58 billion merger in April 2020 between FLT and Frasers Commercial Trust.
The newly-combined FLCT has a diversified portfolio of about 100 logistics,industrial and commercial properties in Singapore, Australia, Europe, with a combined value of about $5.9 billion (as of 31 December 2019).
In Australia alone, the FLCT has 62 properties across 5 different states, with 29 properties located in Melbourne, 16 in Sydney and 13 in Brisbane. In Germany, FLCT manages 24 properties in cities such as Belin, Munich, Frankfurt and Cologne. It also manages 5 properties in the Netherlands.
The 6 office buildings and business park/space buildings in FLCT’s portfolio are located in Singapore (Alexandra Technopark and China Square Central), Australia and United Kingdom.
FLCT’s last traded price was $1.18.
Keppel REIT (SGX: K71U)
Listed in 2006, Keppel REIT has approximately $7.9 billion worth of assets under management, comprising interests in 9 office assets (completed and under development) strategically located in the central business districts of Singapore, as well as in Australian cities of Sydney, Melbourne, Brisbane and Perth, and the newly-acquired Grade A office building T Tower in South Korea.
Keppel REIT held its AGM electronically this week on 4 June 2020. Unitholders were updated about the high portfolio committed occupancy of 99.1% and relatively long WALE of 4.9 years, as well as the fact that the sale of the wholly-owned Bugis Junction Towers for $547.7 million yielded about $378.4 million in capital gains.
Keppel REIT is managed by Keppel REIT Management Limited, a wholly-owned subsidiary of Keppel Capital Holdings Pte Ltd. It closed this week at $1.16.
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