MNACT directors add to their stakes

FOR the five trading sessions that spanned July 23 to 29, the Straits Times Index (STI) gained 0.7 per cent, with the FTSE China A50 Index, Hang Seng Index and FTSE Bursa Malaysia KLCI averaging a 5.1 per cent decline.

Within the STI, Mapletree Industrial Trust ME8U , Singapore Airlines C6L , Sembcorp Industries U96 , SATS S58 and Frasers Logistics & Commercial Trust BUOU received the highest net institutional inflows from July 23 to 29.

Outside the STI, Raffles Medical Group BSL , Singapore Press Holdings T39 , Golden Agri-Resources E5H , Sembcorp Marine S51 and Frencken Group E28 received the highest net institutional inflows over the five sessions.

Overall, institutions were net sellers over the five sessions, to the amount of S$366 million, with DBS D05 , Wilmar International F34 and UOB U11 recording the highest net institutional outflow.

Share buybacks

The Hour Glass AGS and Global Palm Resources BLW Holdings were the only SGX primary-listed stocks that conducted share buybacks over the five sessions, with a combined buyback consideration of S$1,313,964. The Hour Glass bought back 901,000 shares, at an average price of S$1.45 per share, and Global Palm Resources bought back 34,200 shares at 16.0 cents per share.

The decline in buyback transactions coincides with the onset of the earnings season in Singapore. As best practice, companies should refrain from buying back their shares during the two weeks immediately before semi-annual financial statements and one month immediately before the full-year financial statements.

Director and substantial shareholder transactions

The five trading sessions saw more than 50 changes in director interests and substantial shareholdings filed for less than 25 primary-listed stocks.

This included seven company director acquisitions with one disposal filed, while substantial shareholders filed two acquisitions and three disposals.

While director transactions have slowed ahead of upcoming earnings, asset acquisitions made by companies and Reit managers have continued over the week with Keppel DC Reit AJBU and Keppel Pacific Oak US Reit CMOU (KORE) among the stocks announcing new acquisitions.

Mapletree North Asia Commercial Trust

On July 29, Mapletree North Asia Commercial Trust Management executive director and CEO Cindy Chow Pei Pei acquired 200,000 units of Mapletree North Asia Commercial Trust RW0U (MNACT) for a consideration of S$202,000. At S$1.01 per unit, the open market acquisition increased her total interest in MNACT from 0.02 per cent to 0.03 per cent.

Ms Chow has more than 23 years of investment experience in the region, including China, Hong Kong, India, Japan, Singapore, Thailand and Vietnam. Prior to joining the manager of MNACT, she was CEO, India with the sponsor of MNACT, Mapletree Investments, where she was instrumental in establishing investments in India.

On July 28, Mapletree North Asia Commercial Trust Management non-executive director Chua Tiow Chye acquired 250,000 units of MNACT for a consideration of S$252,500. At S$1.01 per unit, the open market acquisition increased his total interest from 0.07 per cent to 0.08 per cent.

This followed his acquisition of 250,000 units of MNACT at S$1.05 per unit on June 1.

Mr Chua is also the deputy group CEO of Mapletree Investments. Mr Chua focuses on driving the sponsor's strategic initiatives including expanding and directing Mapletree Group's international real estate investments and developments.

On July 26, MNACT reported that net property income for its Q1FY22 (ended June 30) was S$78.3 million, a year-on-year increase of 14.3 per cent.

This was attributed to lower rental reliefs of S$4.0 million granted to retail tenants at Festival Walk in Q1FY22 compared to Q1FY21, and a higher average occupancy from IXINAL Monzen-nakacho Building, partly offset by lower average rental rates at Festival Walk mall and Gateway Plaza.

There was also a maiden contribution from Hewlett-Packard Japan Headquarters, following MNACT's acquisition on June 18.

Ms Chow noted with the results that MNACT has continued to have high occupancy levels across its office properties, notwithstanding the restrictive measures due to Covid-19.

Raffles Medical Group

Between July 26 and 27, Raffles Medical Group independent director Allen Lew Yoong Keong acquired 200,000 shares of the company for a consideration of S$265,000.

At an average price of S$1.33, this took his interest in the leading integrated private healthcare provider to 0.01 per cent.

Appointed as independent director on Oct 28, 2020, Mr Lew has also served as the chairman of the audit & risk committee since May 1.

A telco veteran, Mr Lew is a long-time stalwart of Singtel, having held a range of senior management roles since joining the company in 1980.

The group noted with the appointment that Mr Lew brings to the group his leadership strength in running multi-billion-dollar businesses across different geographies in Singapore and the Asia-Pacific region.

On July 26, Raffles Medical Group reported stronger revenue of S$343.8 million in H1FY21 (ended June 30), up 42.4 per cent from H1FY20.

Over the period, the group noted its active support of the government in the Covid-19 vaccination and Polymerase Chain Reaction swab tests initiatives, and against this backdrop, the healthcare and hospital services divisions saw revenue grow by 65.4 per cent and 35.4 per cent respectively.

Second Chance Properties

Between July 22 and 29, Second Chance Properties 528 founder and CEO Mohamed Salleh Marican acquired 403,700 shares of the company at 27.5 cents per share. With a consideration of S$110,997 this increased his total interest in the properties and securities investor, apparel and gold retailer, from 69.18 per cent to 69.23 per cent.

Mr Salleh has gradually increased his total interest in Second Chance Properties from 67.13 per cent at the beginning of 2020.

Keppel DC Reit

On July 26, the manager of Keppel DC Reit AJBU , Keppel DC Reit Management, announced its first data centre acquisition in China. The seven floor fully fitted data centre facility in Jiangmen, Guangdong Province has a gross floor area of approximately 20,595 sq m (221,689 sq ft).

As part of the agreement, Keppel DC Reit will have the right of first refusal to acquire the remaining five data centres to be developed within the Bluesea Intelligence Valley Mega Data Centre Campus.

The purchase consideration for the Guangdong Data Centre is 635.9 million yuan (approximately S$132.0 million), which represents a 7.8 per cent discount to the independent market valuation and will be funded by a mix of debt and/or equity.

Post completion, the aggregate leverage of Keppel DC Reit is expected to increase to 37.5 per cent (from 36.7 per cent as at June 30, 2021). With completion expected in Q3 2021, the acquisition is distribution per unit (DPU) accretive.

In February, Anthea Lee was appointed CEO of Keppel DC Reit Management after joining the manager in 2015 as head of investment and asset management.

Ms Lee has been instrumental in growing Keppel DC Reit through various accretive acquisitions, and was appointed deputy CEO and head of investment in 2018. She has been actively involved in all aspects of Keppel DC Reit's business.

For its H1FY21 (ended June 30), Keppel DC Reit achieved a 12.4 per cent year-on-year growth in distributable income to S$84.3 million, due mainly to contributions from acquisitions and completion of asset enhancement initiatives.

The DPU of 4.92 cents for H1FY21 goes ex-dividend on Aug 2 and is 12.5 per cent above the H1FY20 DPU.

As at May 31, Temasek maintained a 22.97 per cent deemed interest in the units of Keppel DC Reit mostly through Keppel Corporation, which maintained a 20.95 per cent interest, in addition to interests maintained by Fullerton, DBS and SeaTown.

Keppel Pacific Oak US Reit

On July 28, the manager of Keppel Pacific Oak US Reit (KORE), Keppel Pacific Oak US Reit Management announced that it had entered into two purchase agreements to acquire two office buildings in the United States.

The estimated aggregate purchase consideration of the two buildings, Bridge Crossing located in Nashville, Tennessee and 105 Edgeview located in Denver, Colorado, is US$105.1 million.

Bridge Crossing has 199,194 sq ft of space and is currently 100 per cent leased to two tenants from the technology sector with a weighted average lease expiry (WALE) of 5.7 years by net lettable area as at June 30, 2021.

The 105 Edgeview property has 186,231 sq ft of space over five floors, and is currently 100 per cent leased to eight tenants mainly from the technology and telecommunications sectors, with no expiring lease until 2023.

Keppel Pacific Oak US Reit Management is financing the acquisition with proceeds from a US$65.0 million private placement of new units in KORE, in addition to debt financing.

The private placement that closed on July 28, was over two times subscribed, with strong demand from new and existing unitholders comprising institutional investors and accredited investors.

Post completion, KORE's pro-forma aggregate leverage as at June 30, 2021 is expected to increase to 37.4 per cent, from 37.1 per cent.

Like the Keppel DC Reit purchase, the acquisitions are DPU accretive and the completion of the two acquisitions is expected in Q3 2021.

With the announcement, Keppel Pacific Oak US Reit Management CEO David Snyder noted that Nashville and Denver are key growth markets with positive economic and office fundamentals, as well as significant tech investments, and that KORE's focus of investing in key growth markets driven by technology and innovation has been a cornerstone of its strategy since its listing.

The manager of KORE also maintains that Nashville and Denver are two of the six new favourite 'boomtowns' for young talent pool in the United States in a trend that researchers are calling 'the Great American Move'.

Mr Snyder was part of the management team that led the successful listing of KORE, and has been the CEO and chief investment officer of the manager since its listing in November 2017.

KORE's distributable income of US$29.9 million for its H1FY21 (ended June 30) increased 2.8 per cent higher year on year, driven by positive rental reversions and built-in annual rental escalations across the portfolio, as well as lower expenses, partially offset by a lower year-on-year occupancy.

As of an April 30 filing, Temasek maintained a 12.04 per cent deemed interest in the units of KORE through Keppel Corporation, which maintained a 7.92 per cent interest and DBS, which maintained a 4.12 per cent interest.

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