新加坡REITs：在黑暗中保持樂觀

1、Singapore Industrial REITsPositivity in the midst of gloomAsia Pacific Equity Research31 January 2020Industrial REITs are our preferred sector within the S-REIT universe. We believe industrial REITs are in a virtuous cycle, whereby their low cost of capital enables accretive acquisitions that result

2、 in higher share prices and greater accretion thereafter. We are also positive on their e-commerce and datacenter exposure, with the sector relatively immune in the midst of the coronavirus pandemic threat. Top picks: AREIT and MINT.In a virtuous cycle. With flattish rents across the different secto

3、rs, we believe industrial REITs are best placed to deliver DPU growth via acquisitions compared to other sectors, as their trading yields are at or lower than target property cap rates. This was the basis of our initial bullish thesis on the sector (link). As yields have compressed by 10- 50bps sinc

4、e then, this thesis has been strengthened further. Hence, we believe industrial REITs are on the cusp of following KDCREITs virtuous cycle, where investors are too fearful to stay on the sidelines. We anticipate that AREIT/MINT/MLT will replicate KDCREITs experience, with their yields approaching th

5、e low- to mid-4% level from mid-4% to low-5% yields, as implied by our new PTs (6-14% higher, as we assume a lower cost of capital and/or acquisitions). Index inclusion is an added kicker for MLT/MINT, as discussed in our report REITifyng the Singapore index.Best positioned to ride through pandemic

6、threat. As discussed in our report Time to bottom fish?, we believe industrial REITs are best placed to handle the coronavirus threat, as their earnings are more resilient due to their long WALEs and exposure to e-commerce and datacenters, structural growth industries. Industrial REITs should also s

7、till deliver DPU growth from announced acquisitions and the impact of the virtuous cycle.Time for AREIT to catch up. AREIT has lagged other industrial REITs due to the impact of the recent rights issue and concerns over the expansion into the U.S. In our view, the 40-50bps yield differential between

8、 MLT/MINT and AREIT is too wide. Given their smaller size, MLT and MINT have the potential to deliver faster DPU. However, this is balanced against AREITs larger scale and diversified portfolio, and AREITs historically trading at a 50-60bps tighter yield than MLT and MINT. With gearing at c.35% post

9、-rights-issue, we expect the lack of overhang from any equity-raising and positive news flow from acquisitions as AREIT deploys its c.S$500m debt headroom (gearing back up to 38-39%) to help close the yield gap. In addition, while selectU.S. markets face supply headwinds and an impact from the reduc

10、tion in avg. space per employer, as highlighted in our recent live call on the U.S. office market (link), we are positive on AREITs U.S. exposure, which is leveraged to growth in the technology and biomedical industries.Singapore REITsMervin Song, CFA AC(65) 6882-7829 HYPERLINK mailto:mervin.song me

11、rvin.songBloomberg JPMA MSONG J.P. Morgan Securities Singapore Private LimitedTerence M Khi AC(65) 6882-1518 HYPERLINK mailto:terence.ml.khi terence.ml.khiBloomberg JPMA TKHI J.P. Morgan Securities Singapore Private LimitedCusson Leung, CFA(852) 2800-8526 HYPERLINK mailto:cusson.leung cusson.leungJ.

12、P. Morgan Securities (Asia Pacific) LimitedAjay Mirchandani(65) 6882-2419 HYPERLINK mailto:ajay.mirchandani ajay.mirchandaniJ.P. Morgan Securities Singapore Private LimitedTable 1: JPM industrial REIT coverageNew PTPrevious REITRating(S$)PT (S$) AREITOW3.65 3.45KDCREITOW2.45 2.15MINTOW3.10 2.80 MLTO

13、W2.051.85Source: J.P. Morgan estimates.See page 23 for analyst certification and important disclosures, including non-US analyst disclosures.J.P. Morgan does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may have a confl

14、ict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision. HYPERLINK / Equity Ratings and Price TargetsCompanyTickerMkt Cap ($ mn)Price CCYPrice Rat Curing PrevCur Price TargetEndPrev End DateDa

15、teAscendas REITAREIT SP8,297SGD3.12OWn/c3.65Dec-203.45n/cKeppel DC REITKDCREIT SP2,711SGD2.26OWn/c2.45Dec-202.15n/cMapletree Industrial TrustMINT SP4,480SGD2.77OWn/c3.10Dec-202.80n/cMapletree Logistics TrustMLT SP4,925SGD1.85OWn/c2.05Dec-201.85n/cSource: Company data, Bloomberg, J.P. Morgan estimate

16、s. n/c = no change. All prices as of 30 Jan 20.Industrial REITsAREIT Time to catch up. AREIT shares have lagged the STI and industrial REIT peers due largely to concerns about potential expansion into the U.S. and disappointment when the U.S. expansion occurred, funded with a rights issue.However, w

17、ith gearing of c.35% post-rights-issue, we believe any overhang from another equity-raising or negative perception over expansion into a new geography is no longer present. Combined with expected utilization of c.S$500m debt headroom, we expect this positive news flow to act a re-rating catalyst for

18、 the stock. This should help close the 40-50bps yield differential between AREIT and MLT/MINT. We reiterate our OW rating with a higher PT of S$3.65 (previously S$3.45).MINT Catching the datacenter wave. The market has reacted positively to MINTs expansion into the datacenter market, with its yield

19、compressing by c.200bps from 6.3% at the start of 2019 to c.4.6% currently, given exposure to the datacenter/cloud, which is in the midst of structural growth. With MINT now trading at a 4.6% yield and further acquisitions of datacenters at high 5-6.5% NPI yields, resulting in robust DPU accretion,

20、we believe MINT is on the cusp of replicating the success that KDCREIT, a pure-play datacenter REIT, has experienced. KDCREIT shares have increased more than 50% over the last 1.5 years, as it was in a similar situation to MINT currently, where its low cost of capital enabled it to make highly accre

21、tive acquisitions, triggering a share price rally and yield compression that made further acquisitions more accretive. Thus, we maintain our OW rating and raise our PT to S$3.10 from S$2.80, as we impute a lower cost of capital assumption to capture our belief that MINT is now in a virtuous cycle.ML

22、T A winning combination. We believe MLT has three attractive characteristics that should result in the continuation of 2019s 46% rally: (1) being in virtuous cycle, with its low cost of capital enabling DPU-accretive acquisitions; (2) potential inclusion in MSCI Singapore; and (3) exposure to the gr

23、owing e- commerce/logistics sector. To better reflect our view that MLTs strong ability to deliver DPU-accretive acquisitions should trigger a share price re-rating and growing investor interest in logistics/e-commerce exposure, we incorporate a lower cost of capital. As a consequence, we lift our P

24、T to S$2.05 from S$1.85. Maintain OW.KDCREIT Twin drivers of AEI and acquisitions. KDCREIT continues to build on its twin growth drivers of AEI and acquisitions, with S$714m of acquisitions announced in 2H19 and S$144m of upgrades completing in 2020. KDCREIT continues to offer the brightest growth p

25、rospects, in our view, with FY20E/21E DPU to rise 12%/14%. With KDCREIT leveraging its cost-of-capital advantage, we see further upside from third-party acquisitions, coupled with organic growth via upgrades. Maintain OW with a higher PT of S$2.45 (vs. S$2.15 previously), as we adjust our FY20E/21E

26、DPU by -1.5%/+3.0% on AEIs and a slight delay to Intellicentre 3, and we also assume a forward S$200m acquisition. Maintain OW.Table 2: Industrial S-REITs peer compBbg codePrice Mkt cap 29-Jan(US$m)(S$)PT (S$)Pot. upsideJPMratingBV P/B(S$)(x)ADTV3M DPS growth 3Y DPS Yield(US$m) FY19E FY20E FY21ECAGR

27、 FY19E FY20E FY21EAscendas REITAREIT8,2683.113.6517.4%OW2.13 1.4628.90.3%-2.6%6.8%1.4%5.0%4.9%5.2%Keppel DC REITKDCREIT2,6632.222.4510.4%OW1.05 %12.0%13.9%9.9%3.4%3.8%4.4%Mapletree Industrial TrustMINT4,4792.773.1011.9%OW1.51 1.8310.73.6%3.5%5.8%4.3%4.4%4.6%4.8%Mapletree Logistics TrustMLT

28、5,0781.822.0512.6%OW1.17 1.5613.84.2%2.6%6.6%4.5%4.4%4.5%4.8%Total / Wtd. avg.20,4891.652.5%1.9%7.5%3.9%4.5%4.6%4.9%Source: J.P. Morgan estimates, Company data, Bloomberg.Rally expected to continueIndustrial REITs were among our two preferred sectors in our assumption of coverage report (link), give

29、n their ability to deliver DPU growth via acquisitions and exposure to e-commerce and datacenters, industries in structural growth. Our conversations with investors suggest to us that investors have accepted our rationale for industrial REITs trading at premium valuations and why historical average

30、yields and P/B multiples are not as relevant, given the change in asset composition over the past few years.Industrial REITs have been the best-performing sector since Oct-19, and we expect them to continue to trade at a premium, given their exposure to structural growth, superior ability to complet

31、e DPU-accretive acquisitions and changes in portfolio position. We believe these factors should result in an extension of industrial REITs “winning streak” vs. other sectors. We reiterate our OW call on the sector. Our two preferred picks with the industrial space are AREIT and MINT.Figure 1: Indust

32、rial REITs have been the best-performing sector since Oct-19115.0110.0105.0100.095.0Oct-19Nov-19Dec-19Jan-20 DevelopersOfficeIndustrialRetailHospitalitySource: J.P. Morgan estimates, Bloomberg. Developers (CCT, CIT, UOL and FPL), Office (CCT, KREIT and SUN), Industrial (AREIT, KDCREIT, MINT and MLT)

33、, Retail (CT, CRCT, FCT and MCT) and Hospitality (ART, CDREIT and FEHT). Past results are not an indicator of future performance.In a virtuous cycleYields have continue to compress, making acquisitions even more accretive Industrial REITs have rallied around 10% on average since Oct-19, with forward

34、 yields compressing 10-50bps. This makes potential acquisitions even more accretive than they would have been three months ago. Thus, we believe industrial REITs arenow in a virtuous cycle, where DPU-accretive acquisitions result in a share price rally that makes further acquisitions even more accre

35、tive. In addition, with theirsuperior cost of capital, industrial REITs should increasingly be able to fund more of their acquisitions with equity, rather than debt. This would provide additional debt headroom to pursue acquisitions without having to rely solely on equity-raisings. We anticipate tha

36、t this may accelerate the pace of acquisitions and provide positive news flow to sustain the share price rally over 2020.Table 3: Compression in industrial REIT yields since Oct-19REITDividend yield 10-Oct-19Dividend yield 29-Jan-20Change in yield1FY2FY1FY2FY1FY2FYAREIT5.0%5.2%4.9%5.2%-0.1%0.0%MINT5

37、.0%5.2%4.6%4.8%-0.4%-0.4%MLT5.0%5.1%4.5%4.8%-0.5%-0.3%KDCREIT4.0%4.4%3.8%4.4%-0.2%0.0%Source: Bloomberg, J.P. Morgan estimates.Table 4: Results in potentially higher DPU accretionREITCurrent trading yieldTrading yield after 3%placement discountAsset yields for potentialacquisitionsAREIT4.9%5.1%5.5-7

38、.0%MINT4.6%4.7%5.5-7.0%MLT4.5%4.6%5.5-7.0%KDCREIT3.8%4.0%5.5-7.0%Source: Bloomberg, J.P. Morgan estimates.MLT and MINT on the cusp of replicating KDCREITs highly virtuous cycle The virtuous cycle is best illustrated by KDCREIT over the last few years, as its yield has compressed from 6.8% at IPO to

39、c.3.8% currently. At this stage, it is in astrong position to complete DPU-accretive acquisitions by relying solely on equity,given that acquisition targets have yields of 6% or higher.With MLT and MINT now trading at 4.5-4.6% yields and in a sweet spot in terms market cap (S$6-7bn), large enough to

40、 attract investor attention, but not too big for acquisitions to make a material impact on DPU, we anticipate that they will progressively be in a virtuous cycle similar to KDCREITs.View through the lens of historical valuation range is less relevant now Consequently, we believe historical yield and

41、 P/B multiple ranges, or even implied NPI/NOI yields, will increasingly be less relevant. Furthermore, we expect investors to focus on pegging the Singapore industrial REITs to overseas listed peers.Therefore, investors who are cautious or have neutral ratings on industrial REITs or who adopt the “e

42、xpensive valuation” angle are likely to continue to miss the rally, in our view. We believe investors will find it difficult to turn down an industrial REIT offering new shares to fund an accretive acquisition, as seen in 2019.Table 5: Level of oversubscription for industrial REIT equity-raisings in

43、 2019Date announcedREITEquity raised(S$m)Announced pro formaDPU accretionLevel of oversubscription11-Feb-19MINT201.00.7-3.1%2.2x oversubscription. Upsized16-Sep-19KDCREIT235.49.4-12.4%from S$175m to S$201m. 9.3x oversubscription.17-Sep-19MINT400.03.5%6.3x oversubscription. Upsized from S$350m to S$4

44、00m.22-Oct-19MLT250.01.0%13x oversubscription.Source: Company reports.Global M&A a re-rating catalystAnother factor that makes historical P/B and yield metrics less relevant for industrial REITs, especially datacenter plays, are the rising valuation multiples due to M&A transactions. For example, we

45、 believe a key driver of the surge in KDCREITs share price (KDCREIT, the top-performing S-REIT YTD, has risen 7.7% vs. S-REITs+2.4%) is the recent A$3bn transaction for AirTrunk in Australia (link) at a FY20E EV/EBITDA multiple of 30 x. While this is more reflective of M&A valuations for a pure-play

46、 datacenter company, we believe KDCREIT offers comparative value at 19x EV/EBITDA vs. U.S. peers at 23x.Table 6: Datacenter peer compsMktPriceDiv. yieldDPU growthFFO yieldEV/EBITDAADTVCty REIT/companyTickercap(US$m)LCY29-Jan(LC)JPMrtgFY19E(%)FY20E(%)FY19E(%)FY20E(%)FY19E(%)FY20E(%)FY19E(x)FY20E(x)Ge

47、aring20D(US$m)YTDSGKeppel DC REITKDCREIT SP2,663SGD2.22OW3.4%3.8%4.0%12.3%3.9%3.8%21.418.531.4%88.2%SGMapletree Industrial TrustMINT SP4,479SGD2.77OW4.4%4.6%3.6%3.5%4.4%4.5%25.624.230.3%126.5%USCyrusOne Inc.CONE US6,974USD61.61N3.1%3.4%4.3%9.4%5.8%6.4%23.922.047.5%69-5.8%USDigital Realty Trust Inc.D

48、LR US27,789USD127.63N3.4%3.5%6.9%4.6%5.1%5.0%22.723.446.7%1946.6%USEquinix Inc.EQIX US51,396USD602.68OW1.6%1.8%7.9%8.0%3.7%4.2%25.022.456.0%2233.3%USQTS Realty Trust Inc.QTS US3,330USD57.18OW3.1%3.3%7.3%6.8%4.5%4.9%24.022.047.0%285.4%USCoreSite Realty CorpCOR US5,711USD117.86UW4.1%4.5%16.2%9.8%4.3%4

49、.5%24.923.861.0%375.1%CNGDS HoldingsGDS US8,065USD53.04OW-33.123.561.3%652.8%AUNEXTDC LtdNXT AU1,743AUD7.48N-%9.215.0%CN21Vianet Group Inc.VNET US1,086USD9.66NR-9.38.329.2%4.733.2%NLInterXion Holding NVINXN US6,930USD90.46NR0.0%-3.0%3.5%23.220.557.0%90.37.9%USUSA95,2002.5%2.6%7.8%7.2%4.4

50、%4.6%24.222.752.6%1854%SGSingapore7,1424.0%4.3%3.8%6.8%4.2%4.3%24.022.130.7%107%CNChina9,151-30.321.757.5%586%NLNetherlands6,9300.0%-3.0%3.5%23.220.557.0%908%AUAustralia1,743-%915%Source: Company data, Bloomberg, J.P. Morgan estimates. Past results are not an indicator of future performa

51、nce.What can halt the “unstoppable” industrial REITs?We believe this “unstoppable train” arising from the virtuous cycle of low-cost capital that results in DPU-accretive acquisitions that trigger further share price rallies, translating into better accretion for subsequent acquisitions will stop wh

52、en the REITs market capitalizations are too large, making it progressively more difficult to find a sufficient quantum of acquisitions to drive DPU accretion. This risk is low to moderate for MINT, MLT and KDCREIT over the next two to three years, in our view, given their market caps of only $3-7bn.

53、Another risk that could halt the virtuous circle is the acquisition of portfolios and buildings that face major problems. Given that the majority of acquisitions made by industrial REITs are located overseas with long WALEs, we do not foresee any major vacancy issues, if at all, until three to five

54、years time, when more leases come up for renewal. A significant steepening of the yield curve, which is not our base case in 2020, is also a risk. Finally, should the coronavirus become a global pandemic with the knock-on effects of slower global growth, that would likely place downward pressure on

55、rents and occupancy.Industrial REITs the most resilient sector in pandemic threatIn Time to bottom fish?, we espoused a strategy of first targeting sectors or REITs where stock prices have corrected and/or there would be a minimal impact on earnings if there were a slowdown in tourism or activities

56、over a five- to six-month period (it took six months for RevPAR to recover during the SARS/H1N1 episodes).Industrial REITs best fit this criteria, in our view, as their earnings are relatively immune due to their: (1) relatively long WALEs; (2) exposure to growing the e- commerce (potential benefici

57、ary of people not going out) and datacenter industries; and (3) limited direct impact from tourism.While there may be disruptions to global supply chains and manufacturing activities arising from factories being closed in China over the next few weeks, and potentially months, we expect most tenants

58、to fulfill their rental obligations.Furthermore, our bullish thesis on industrial REITs is not predicated on strong organic rental growth, but rather on DPU growth coming from acquisitions. Our base case remains that rents across the various industrial categories should be flattish ahead, with poten

59、tial pockets of pressure on rents and occupancy.Additional catalyst from potential indexationBeyond our view that the virtuous cycle should sustain the re-rating of industrial REIT share prices and that investors should be attracted to exposure to e-commerce and datacenter structural growth industri

60、es, we believe the potential inclusion and anticipated inclusion of MLT into MSCI Singapore and MINT into STI and MSCI Singapore, respectively, should act re-rating catalysts (see REITifying the Singapore Index for an in-depth discussion).There is potential for MLT to be included in the MSCIs quarte