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INSIDE INSIGHTS

ESR Cayman increases AA Reit interest by 4%

FOR the five trading sessions spanning Nov 1 to 7, the Straits Times Index (STI) gained 1.7 per cent while the Nikkei 225 Index, Hang Seng Index and S&P/ASX 200 Index averaged a 1.4 per cent gain.

This has brought the STI's 2019 total return through to Oct 31, to 11.0 per cent.

Share buybacks

With earnings squarely in focus, there were just three primary-listed stocks conducting share buybacks over the five sessions ended Nov 7 with a total consideration of S$4.0 million.

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This followed on from S$15.2 million in buyback consideration for the month of October.

As at Nov 7, Keppel Reit Management had bought back a total of 30,937,600 units of Keppel Reit representing 0.9088 per cent of its issued units as of the April 23 start date for the current mandate.

The previous year's mandate saw Keppel Reit Management buy back 1.004 per cent of the units of Keppel Reit.

Director and substantial shareholder transactions

Similar to the preceding week, the five sessions spanning Nov 1 to 7 saw 100 changes in director interests and substantial shareholdings filed for close to 40 primary-listed stocks.

There were four company director acquisitions and five disposals filed, with substantial shareholders filing 17 acquisitions and 23 disposals.

AEM Holdings

Last week, Inside Insights noted that on Oct 24, with the aggregation of its global position, Morgan Stanley's deemed interest in AEM Holdings had crossed back above the 5.0 per cent substantial shareholder threshold again.

On Oct 31, Morgan Stanley's deemed interest increased above the 6.0 per cent threshold, and on Nov 4 the deemed interest increased above the 7.0 per cent threshold.

From Oct 24 through to Nov 4, its deemed interest in AEM Holdings had increased by approximately 5.76 million shares.

On Nov 4, Standard Life Aberdeen plc reduced its deemed interest in AEM Holdings from 8.048 per cent to 7.7003 per cent with the disposal of 937,800 shares for a consideration of S$1,527,582. This was at an average price of S$1.63 per share.

When the deemed interest of Standard Life Aberdeen plc crossed above the 8.0 per cent threshold back on June 7, the relevant 669,3000 shares were acquired at an average price of S$0.858 per share.

AIMS APAC Reit

On Nov 4, ESR Cayman Ltd (ESR) acquired 26,827,400 units in AIMS APAC Reit (AA Reit) for a consideration of S$37,290,086 at S$1.39 per unit. The married deal increased ESR Cayman Ltd's deemed interest in AA Reit from 5.24 per cent to 9.09 per cent.

ESR's direct interest in AA Reit is 1.285 per cent with deemed interests of 7.803 per cent from units held by e-Shang Infinity Cayman Ltd and ESR HK Management Ltd.

On Nov 5, the manager of AA Reit reported Q2FY20 (ended Sept 30) gross revenue of S$30.6 million which was stable compared to the preceding Q1FY20, and up 4 per cent from Q2FY19, mainly due to maiden rental contribution from the recently acquired Boardriders Asia Pacific HQ in Gold Coast, Queensland, Australia, and higher rental and recoveries at 8 Tuas Avenue 20 and 1 Bukit Batok Street 22.

Lendlease Commercial Reit

On Oct 29, Lion Global Investors Ltd purchased more units of Lendlease Commercial Reit, which saw Great Eastern Holdings' deemed interest in Lendlease Commercial Reit cross above the 11.0 per cent threshold from 10.952 per cent to 11.064 per cent.

The Reit, with a portfolio consisting of the three-building Sky Complex in Milan and 313 @ Somerset, listed on SGX on Oct 2.

On Nov 1, the deemed interest of Blackrock, Inc in Lendlease Commercial Reit, also marginally crossed back over the 5.0 per cent threshold after marginally crossing below on Oct 25.

Lendlease Commercial Reit listed with 13 cornerstone investors including Lion Global Investors Ltd and funds and accounts under management by investment management subsidiaries of BlackRock Inc, in addition to AEW Asia Pte Ltd, Fullerton Fund Management Company Ltd, Nikko Asset Management Asia Ltd, Principal Asset Management (S) Pte Ltd and TMB Asset Management Co Ltd.

With an initial offer price of S$0.88 per unit, the Reit ended the Nov 7 session at S$0.940 per unit.

Vividthree Holdings

On Nov 1, Vividthree Holdings substantial shareholder Lee Chun Fun reduced her direct interest in the Catalist-listed company by 10.11 per cent to below the substantial shareholder threshold at 4.89 per cent.

The consideration of the disposal of the 17,428,300 shares was S$2,618,776 at an average price of S$0.15 per share.

Keppel Pacific Oak US Reit

On Oct 31, the chairman of Keppel Pacific Oak US Reit Management Pte Ltd (the manager), Peter McMillan III, increased his deemed interest in Keppel Pacific Oak US Reit (KORE) from 0.50 per cent to 0.68 per cent.

The change in his deemed interest was the result of the issuance of 1,636,759 units in KORE at a price of US$0.7578 per unit, as payment of the base component of the management fee due to the manager of KORE.

Mr McMillan holds one-third of the voting shares in KPA, which in turn holds 50 per cent of the voting shares in the manager.

Mr McMillan is the co-founder of Pacific Oak Capital, KBS Capital Advisor as well as Willowbrook Capital Group, LLC where he is also the managing partner of the firm.

Prior to forming Willowbrook Capital Group in 2000, Mr McMillan served as the executive vice-president and the chief investment officer of SunAmerica Investments, Inc, which was later acquired by AIG.

As chief investment officer, he was responsible for over US$75 billion in assets, including residential and commercial mortgage-backed securities, public and private investment-grade and non-investment-grade corporate bonds and commercial mortgage loans and real estate investments.

On Oct 29, the manager of KORE issued 104,286,000 new units at an issue price of US$0.725 per new unit. This was pursuant to a private placement that raised approximately US$75.6 million to partially fund the acquisition of One Twenty Five, a Class A office complex in Dallas, Texas.

Back on Oct 15, KORE reported Q3FY19 distributable income of US$12.4 million which exceeded the IPO forecast for the same period by 23.3 per cent. This was also 31.0 per cent higher than the distributable income for Q3FY18.

iFAST Corporation

Between Nov 1 and 4, iFAST Corporation chairman and CEO Lim Chung Chun acquired 145,000 shares of the listed company for a consideration of S$148,400.

At an average price of S$1.023 per share, the acquisition took Mr Lim's total interest in iFAST Corporation from 22.20 per cent to 22.25 per cent.

Mr Lim's preceding acquisition of iFAST Corporation shares took place between Sept 18 and 19, with 138,400 shares acquired at an average price of S$0.999 per share.

Mr Lim is also the co-founder of iFAST Corporation and is responsible for setting the strategic direction of the group together with the board and oversees the entire overall management of the group.

From 1991 to 1998, Mr Lim was an investment analyst with two securities companies in Singapore and eventually rose to become the head of research at ING Barings Securities Pte Ltd.

On Nov 6 the Albizia Asean Tenggara Fund acquired 300,000 shares of iFAST Corporation for a consideration of S$308,910 at an average price of S$1.0297 per share.

This increased the fund's deemed interest in iFAST Corporation above the substantial shareholder threshold from 4.97 per cent to 5.08 per cent.

Albizia Capital is an independent boutique fund management company based in Singapore.

With its experience and network in the Asean region, its goal is to invest in companies at an attractive discount to intrinsic value.

Frasers Centrepoint Trust

On Nov 5, Schroders plc increased its deemed interest in Frasers Centrepoint Trust to above the substantial shareholder threshold from 4.997 per cent to 5.006 per cent.

The relevant 100,000 units were acquired at an average unit price of S$2.68 which were bought on behalf of clients in Schroders plc's capacity as investment managers.

Wong Fong Industries

On Oct 31, Wong Fong Industries substantial shareholder Lee Teck Leong disposed of 555,000 shares for a consideration of S$99,900.

The married deal at S$0.18 per share reduced Lee Teck Leong's direct interest in the listed company from 8.17 per cent to 7.93 per cent.

Cache Logistics Trust

On Oct 31, ARA Trust Management (Cache) Ltd chairman and non-executive director, Lim How Teck, acquired 100,000 units of Cache Logistics Trust at S$0.730 per unit.

The consideration of the acquisition totalled S$73,000 and took his stake in Cache Logistics Trust from 0.139 per cent to 0.148 per cent.

He had similarly acquired 100,000 shares in the preceding session at S$0.725 per unit, and prior to this had acquired 200,000 shares at S$0.720 per unit on Aug 26.

Mr Lim is also the chairman of Heliconia Capital Management Pte Ltd, Redwood International Pte Ltd and Catalist-listed NauticAWT.

He was previously with the NOL Group from 1979 to 2005, where he held various positions such as executive director, group CFO, group COO and group deputy CEO.

Hwa Hong Corporation

Between Oct 30 and Nov 1, Hwa Hong Corporation (Hwa Hong) substantial shareholder David Ong Eng Hui increased his direct stake in Hwa Hong from 5.932 per cent to 5.966 per cent.

Dr Ong acquired 217,100 shares of the property rental investor and developer for a consideration of S$68,096 at an average price of S$0.314 per share.

This also increased the deemed and hence total Hwa Hong interest of Dr Ong's father, Steven Ong Kay Eng, to 15.618 per cent.

Dr Ong's preceding acquisition of Hwa Hong shares was on Oct 22, involving 158,000 shares at S$0.313 per share.

Dr Ong has gradually increased his total interest in Hwa Hong from 5.316 per cent at the end of 2018.

TrickleStar

On Nov 4, TrickleStar independent director Ling Hee Keat acquired 221,000 shares of the Catalist-listed company for a consideration of S$66,300 at a price of S$0.30 per share.

This took his total interest in TrickleStar from 3.40 per cent to 3.67 per cent. Mr Ling had previously acquired 607,000 shares at an average price of S$0.30 between Oct 2 and 3.

From January 2013, he has been a senior associate in Leong Partnership Advocates and Solicitors, a boutique law firm focusing on corporate law and conveyancing, where he is responsible for advising private and corporate clients, and for the business development of the firm.

Mr Ling is also a non-executive director of Maxdotcom Sdn Bhd, Nuswarna Development Sdn Bhd, Armada Marketing (M) Sdn Bhd, and an independent non-executive director of Iris Corporation Berhad.

  • The writer is the market strategist at Singapore Exchange (SGX). To read SGX's market research reports, visit sgx.com/research.