General S-REITs Discussion Thread

[Shion]

Bill to be fast-tracked to compel landlords to waive up to 2 months' rent for eligible SMEs

Bill to be fast-tracked to compel landlords to waive up to 2 months' rent for eligible SMEs

SINGAPORE — Landlords of commercial, industrial and office properties may soon be legally required to shoulder the rental burden that their tenants have been bearing while fighting for survival amid the Covid-19 pandemic.

On Wednesday, the Law Ministry (MinLaw) said it will be proposing several amendments to the existing Covid-19 (Temporary Measures) Act, including a rental relief framework that, if passed, will compel landlords to waive up to two months of base rent for eligible small- and medium-sized enterprises (SMEs) that have suffered significant losses due to Covid-19.

This adds to the two months’ rent relief that the Government announced in the Resilience Budget and the recent Fortitude Budget, and is expected to benefit nearly all of the 260,000 SMEs in Singapore. SMEs — defined as corporations with annual turnovers of under S$100 million — are responsible for employing more than 70 per cent of the country’s workforce, or 2 million workers.

Deputy Prime Minister Heng Swee Keat had said in his Fortitude Budget statement last month that the decision to table this Bill had been deliberated carefully by the Government, adding: “The Government does not ordinarily intervene in contracts after they have been entered into.

“However, as the Minister for Law had explained… (for) exceptional situations such as this, the Government needs to intervene, through legislation, with temporary targeted steps to safeguard the economic structure for the common good.”

The proposed amendments will be fast-tracked in Parliament by a Certificate of Urgency. It will be tabled and debated in the same sitting on Friday and, if passed, the existing Act is expected to be amended in end-July, the Law Ministry said.

Speaking to the media on Tuesday, Law Minister K Shanmugam said the proposal comes as the entire economy has faced very severe headwinds, and businesses will continue to face hardship even as Singapore comes out of the circuit breaker in phases.

“People have had to shut down for two months. Even when Phase Two (of the economy’s reopening) starts, recovery will be slow, or is likely to be slow. We have nearly 260,000 SMEs employing more than 2 million of our people, and they are the lifeblood of our economic system, jobs, people's futures,” he said.

“It's a huge economic crisis. Government comes in, has put in S$92 billion. Landlords have to do their part, tenants have to do their part, and together, with a bit of sharing of the pain, we hope that as many as possible can pull through. So that's the whole purpose of this.”

LANDLORDS TO PROVIDE RELIEF

To qualify, SMEs need to show that they turned over S$100 million or less in 2019, and suffered a 35 per cent fall in average monthly revenue from April to May 2020 compared with the same period last year. The tenancy must also have been entered into before March 25, 2020, said the ministry.

This also applies to eligible SMEs who are sub-tenants or licensees of the property, and will also be extended to eligible non-profit organisations and tenants of government properties.

Said MinLaw: “The new rental relief framework aims to help affected SMEs who need more time and support to recover from the impact of Covid-19 by providing mandated co-sharing of rental obligations between the Government, landlords and tenants.”

The proposed amendments include a new rental relief framework for eligible SMEs that will force landlords to provide waivers of base rental for two months to eligible SMEs if they rent commercial properties, and for one month if they rent industrial or office properties.

Landlords who are facing financial hardship themselves and are therefore unable to provide the waiver can appeal to a panel of assessors to halve the waivers to one month for commercial property tenants and half a month for industrial and office property tenants, said MinLaw.

“This will take into consideration whether his rental income forms a substantial part of his total income and the annual value of his properties,” said the ministry.

These waivers will come on top of rent reliefs provided for in the government budgets announced earlier this year.

Mr Heng, who is also Finance Minister, had announced a total of S$2 billion of cash grants to offset rents in the Fortitude Budget and S$1.8 billion worth of property tax rebates in the Resilience Budget.

Altogether, the measures and the proposed framework will work out to two months of rental relief for commercial tenants, and one month for industrial or office tenants.

The rental waivers can be offset against any previous direct monetary assistance provided by the landlord to the tenant, MinLaw added.

HELP FOR ARREARS

Under the proposed framework, eligible SMEs may also seek a repayment scheme for rental arrears that they may have accumulated from Feb 1 up till Oct 19 this year, with the first instalment beginning no later than Nov 1.

The interest payable for arrears in this scheme will be capped at 3 per cent a year, and if the SME misses paying an instalment, the scheme will be cancelled and the SME will be liable to repay all the arrears immediately.

Aside from tenancy agreements, other amendments will also cap the late payment interest for arrears for certain contractual obligations disrupted by Covid-19, such as a contract for the provision of goods and services that could not be fulfilled due to pandemic control measures.

The ministry is proposing to cap any interest or charges due to late payments arising from these obligations.

“Creditors will also not be allowed to terminate such contracts due to late payments during the prescribed period (until Oct 19),” it said.

RELIEF FROM VACATING PREMISESThe Bill will also propose amendments to provide relief to tenants who are unable to vacate a non-residential property after their lease or licence expires before October 19.

This means that in that period, they will not be liable to their landlord for failing to vacate the property, unless the Minister for Law determines otherwise, said MinLaw.

The ministry added that it had received feedback that Covid-19 has created difficulties for tenants who had to vacate their business premises after their leases expired.

If passed, the move would prevent these businesses who are hampered by the strict restrictions caused by Covid-19 from having to fork out high financial penalties for failing to vacate. In Singapore, lease contracts typically charge double rent for tenants who overstay beyond lease expiry.

To qualify for this relief, the ministry said the tenants must notify the landlord and meet “such other conditions as may be prescribed by the Minister”.

 

[NewInvestor]

Singapore’s private home prices likely to rebound after Covid-19 https://www.edgeprop.sg/property-ne...-rebound-after-covid-19#.Xtg-DBl9Tzo.whatsapp

Going to shoot up? What else can people do with all the millions they are making fr the stock market??

 

[starbugs]

Reits out of steam today.

 

[NewInvestor]

Reits out of steam today.

Not surprising. If u read some of the threads in SSI, you will notice that some bears becoming bulls. It is like when aunties and students start plowing into the stock market, that's when the market take a dive.

 

[Sadisticnoob]

Reits out of steam today.

waiting to collect.. need to open my purse and throw a few coins out.

 

[Jazzbie]

Even after recovery, I still see upside potential for REITs due to very low interest rate environment. But sticking to logistics, office and local shopping malls portfolio (near to MRT). Avoiding hospitality.

Banks also recovered alot but in comparison is still facing double whammy of lower NIM and higher NPL.

 

[wutawa]

waiting to collect.. need to open my purse and throw a few coins out.

I threw some coins out today. Now my purse is empty, waiting for 18 jun.

 

[Iyarash11]

still got some coins but need tee-gong boh bee boat come back for a short while

 

[Tool18]

Even after recovery, I still see upside potential for REITs due to very low interest rate environment. But sticking to logistics, office and local shopping malls portfolio (near to MRT). Avoiding hospitality.

Banks also recovered alot but in comparison is still facing double whammy of lower NIM and higher NPL.

Jialat Liao I into Ascott HMN

 

[Shion]

Amended COVID-19 laws passed requiring landlords to give SME tenants more rental waivers

Amended COVID-19 laws passed requiring landlords to give SME tenants more rental waivers

https://www.channelnewsasia.com/new...aws-landlords-tenants-rental-waivers-12807726

SINGAPORE: Landlords will now be required to step up and provide their struggling small and medium-sized enterprise (SME) tenants with rental waivers of up to two months after Parliament passed amendments to the COVID-19 regulations on Friday (Jun 5).

As part of the changes that will be implemented at the end of next month, commercial property owners must give eligible tenants a waiver of base rent for June and July. Those that own industrial and office properties will have to waive the base rent for the month of May.

These rental waivers to be borne by landlords will come on top of already-announced rent support from the Government, which landlords are required to pass on as rent waivers for the months that the “circuit breaker” was in place.

Taken together, tenants at commercial properties are set to get four months’ worth of rental relief from April to July, while those renting spaces at industrial or office properties will get two months of help for April and May.

To be eligible, SMEs need to have no more than S$100 million turnover in 2019 and suffered at least 35 per cent drop in average monthly revenue from April to May compared to the same period last year. They also must have tenancies entered into before Mar 25 this year.

Sub-tenants or licensees that meet these requirements will also be eligible for the rental reliefs.

“FAIR SHARING OF OBLIGATIONS”

The wide-ranging COVID-19 (Temporary Measures) Act, which was passed in Parliament on Apr 7 and took effect on Apr 20, grants those who cannot fulfil contractual obligations amid the virus outbreak with temporary relief for six months.

That was a “major intervention”, said Law and Home Affairs Minister K Shanmugam as he tabled the amendment Bill on Friday.

But since then, the economy has taken another turn for the worse and uncertainties remain as Singapore takes a phased re-opening of its economy. For some businesses, this means they would not be able to reopen until the second phase and even then only partially.

There has also been feedback on “uneven” concessions from landlords and how accumulated arrears need to be “handled fairly”, said Mr Shanmugam.

With that, the Government has decided to intervene in “a more substantive way”, said the minister, noting similar interventions in countries like Australia and Germany.

The amendment Bill, added Mr Shanmugam, is premised on a “fair sharing of obligations” between the Government, landlords and tenants.

The Government has since rolled out relief measures across four Budgets, while the various criteria for SME tenants mean that only those who have taken a “substantial hit … will get more help”.

The minister also noted it is “not realistic” to expect market forces to arrive at a “fair” burden sharing between landlords and tenants, and the risk of non-intervention could mean impact for everyone.

Last year, SMEs contributed to 45 per cent of economic growth and 72 per cent of employment in Singapore, the minister explained. The failure of SMEs will have a domino effect on the rest of the economy and for landlords, an economic downturn would weigh on the value of their assets.

“Everyone has a stake in the success of the SMEs,” he said.

HELP SMALLER LANDLORDS: MPs

The Bill received support from the three Members of Parliament (MPs) who spoke during the debate.

East Coast GRC MP Jessica Tan said the amendments take a “targeted approach” and are “reasonable” as they do not apply across the board to all SMEs and businesses.

While small businesses are the immediate beneficiaries of the Bill, Bukit Batok MP Murali Pillai said landlords are protected in the long run as it ensures that the tenant’s market will not collapse.

He added: “This should not be seen as an anti-landlord Bill.”

However, the MPs highlighted some concerns, particularly how the rental waivers required of landlords could put some of them into financial hardship.

This includes smaller landlords that are dependent on the rental income to meet their financial obligations, said Ms Tan.

Holland-Bukit Timah GRC MP Christopher de Souza said a “flexible system” is needed to differentiate between landlords that are large corporates and those who have invested in small commercial shophouses as a form of retirement income.

He cited the predicament of one of his residents who relies on rental income to service bank loans and the rest for living expenses. In a letter to Mr de Souza, the resident had said that having to “further absorb an additional two months of rent would be too much for many to bear” amid problems with rent collection, as well as demands for waivers and haircuts from tenants.

Mr Shanmugam said this has been considered carefully and under the amendments, landlords that are unable to provide tenants with the additional rental waivers may seek an assessment on “grounds of financial hardship”. If the appeal is granted, they will only have to give half of the waivers.

The factors considered during the assessment include the annual value of the property and whether rental forms a substantial proportion of the landlord’s total income.

“This will help us distinguish between larger landlords and those that depend on rental for their livelihoods,” the minister said.

Authorities also announced more support for cash-strapped landlords earlier this week, such as allowing landlords who are individuals and are current in their loan repayments as at February this year to defer principal and interest repayments up to Dec 31.

Larger corporate landlords, including real estate investment trusts (REITs) listed on the Singapore Exchange, are encouraged to explore funding solutions with their banks, authorities have said. S-REITs are also given more time to distribute their taxable income derived in FY2020 and FY2021 to qualify for tax transparency treatment.

S-REITs have raised various concerns such as potential constraints on their operating income and cash flow, said Mr Shanmugam. These measures will give them more flexibility in managing cash flows and prevent them from incurring additional tax expenses, he added.

HELP WITH ARREARS AND MORE

Other amendments to the COVID-19 regulations include allowing eligible SMEs to repay part of the rental arrears that they may have accumulated from Feb 1 up till Oct 19 this year via instalments, with the first being no later than Nov 1.

For commercial tenants, the maximum amount of arrears that can be paid in instalments will be five months of base rent. For those at industrial and office properties, it will be four months of base rent.

The interest payable on such arrears will be capped at 3 per cent per annum. If a tenant fails to make payment or terminates the lease, the repayment scheme will be cancelled and it may be liable to repay all arrears immediately.

In response to Mr Murali’s question on how the 3 per cent interest rate is derived, Mr Shanmugam said it is “comparable” to the median rate of secured bank loans in April, while considering the landlords’ cost of capital with property as security.

“We are aware that some landlords’ cost of capital could be higher than 3 per cent but this rate is intended to strike a balance between the needs of landlords who have their own financial obligations and their tenants who do face significant challenges repaying their rental obligations under these fairly extraordinary circumstances,” the minister said.

Apart from that, the Bill also introduced a cap on late payment interest for arrears that arise due to COVID-19 under specific contracts, as well as provide relief for tenants who are unable to vacate their non-residential premises at the end of their leases due to COVID-19.

On the latter, Mr Shanmugam said the ministry has received feedback from some tenants whose tenancies expired during the circuit breaker period and were not able to find movers or enter the premises.

“In such cases, it would be unfair for the tenant to have to pay double rent or similar charges under the contract of the law,” he said, although he said there could be situations where it "might be fair for the tenant to pay some amount".

“(This) especially if the tenant continued to derive benefit from the premises. We will prescribe the circumstances and how that amount can be assessed,” said the minister.

While Mr Murali supported this amendment, he asked if there is a corollary provision to protect landlords who may have a back-to-back arrangement with new tenants.

Mr Shanmugam said such knock-on impact will be taken into account, noting that a landlord can serve a notification for relief on the new tenant in such instances.

“This will give the landlord and new tenant time to work out a compromise. If they cannot agree, they can apply to an assessor who will make a determination to reach a just and equitable outcome.”

 

[Shion]

Low levels of supply and record low vacancies will set the stage for 'faster recovery'

Low levels of supply and record low vacancies will set the stage for 'faster recovery' for Singapore office REITs: DBS

https://www.theedgesingapore.com/ca...-low-vacancies-will-set-stage-faster-recovery

SINGAPORE (June 8): While the office sector has been the least impacted by Covid-19 so far, DBS analysts Rachel Tan and Derek Tan are “cautious” on the potential economic impact it might have on office demand as Singapore gradually reopens its economy.

In a Monday report, both analysts note that there is a historical co-relation between office demand, and GDP across the past three recessions caused by economic crises in Singapore. Hence, they believe that the current economic recession in 2020 will coincide with the bottom in both office demand and office S-REIT share prices.

Forecasting a bottoming in the current Covid-19 recession in 2Q20, both analysts expect office net demand to start declining in 2Q20, in tandem with the GDP.

“Our DBS economist forecasts FY20F GDP to decline by 5.7% yo-y before recovering to 3.5% y-o-y growth in FY21F. Headline GDP growth figure will contract the most in 2Q20 by 8% y-o-y but GDP (in value) will likely bottom out in 3Q20.” they say.

“Post 2Q20, we believe office net demand can start to recover when GDP bottoms and drive the re-rating of office REITs,” they add.

While economic recovery is said to be gradual for 2H20, the analysts see downside risks mitigated by the lower supply of developments till 2022 due to projected construction delays from 2020 to 2022.

“We believe the low levels of net incoming supply, coupled with record low vacancies (less than 5% in the downtown core), will mitigate a steeper fall in office fundamentals and set the stage for a faster recovery into 2021 and beyond when the economy recovers,” say the analysts.

“These two factors, in our view, would set this economic crisis apart from previous economic crises. We believe that this current downcycle will likely be shorter and less steep leading to a quicker recovery in office sector post-COVID-19,” they add.

While the future of workspaces is uncertain due to the adoption of work-from-home (WFH) practices during the circuit breaker measures from April to June, the analysts don’t see a full pivot towards WFH.

“We believe it is too early to turn cautious on potential structural demand shifts with the adoption of WFH practices”, they say.

“In fact, we see Office S-REITs upping the game by offering flexible workspace to meet their tenants’ evolving needs and integrating with sustainability practices,” they add.

The way Rachel and Derek see it, while they may be a little “early” in their call, they see attractive risk/reward ratios for the sector which is trading at 0.8x P/NAV, below its historical mean.

“We believe the sector remains attractive to ride on potential recovery post-COVID-19 and any potential share price weakness upon the release of GDP data would be a good entry opportunity,” they say.

The brokerage’s top picks for the sector are Keppel REIT and Mapletree Commercial Trust (MCT). Both analysts have upgraded CapitaLand Commercial Trust (CCT) to “buy” from “hold”, led by the repricing of their target price for CapitaLand Mall Trust (CMT).

As at 1.01pm, units in Keppel REIT are changing hands 0.9% up at $1.17. Units in Mapletree, on the other hand, are changing hands at 1.4% up at $2.15. Units in CapitaLand Commercial Trust are changing hands 2.2% up at $1.86.

 

[Shion]

Hospitality REITs are "heading for a good start": CGS-CIMB

Hospitality REITs are "heading for a good start": CGS-CIMB

https://www.theedgesingapore.com/ca...itality-reits-are-heading-good-start-cgs-cimb

SINGAPORE (June 9): CGS-CIMB analysts Eing Kar Mei and Lock Mun Yee believe hospitality REITs in Singapore are “heading for a good start”.

On the “fast lane” arrangements with China, Eing and Lock believe this is a “big move in the right direction”.

Moving forward, Eing and Lock are positive that there will be more “fast lane” arrangements with New Zealand, South Korea, Australia, and Malaysia, as Singapore are in talks with these countries.

“CDL Hospitality Trust (CDLHT) and Far East Hospitality Trust (FEHT) would be the main beneficiaries of the current and ongoing fast lane arrangements given their large exposure in Singapore (49% of revenue for CDLHT and 81% for FEHT from its hotel and serviced residence segments),” state Eing and Lock in a Friday (June 5) report.

“CDLHT and FEHT generate [around] 50% and 30% of their Singapore revenue from corporates, respectively, and we believe both REITs have about 10% revenue exposure to Chinese tourists,” they add.

Conversely, Ascott Residence Trust (ART), which generates most of its revenue from corporates given its focus on serviced residences, would have a slower recovery process due to its diversified revenue stream.

“In FY19, ART generated [some] 9% of its revenue in Singapore and we estimate this to decline to ~8% in FY20 after the merger with Ascendas Hospitality Trust,” say the analysts.

Due to the decline in tourist arrivals and circuit breaker measures in Singapore, the country’s hotel revenue per available room (RevPAR) plunged 80% y-o-y on lower occupancy and average room rates. However, this was mitigated by the stay-home-notice for citizens returning home from overseas, and Malaysian workers due to Malaysia’s border closures.

Believing that the hospitality industry will see a “gradual recovery” moving forward, Eing and Lock have maintained their FY20 industry RevPAR forecast of 40-50%.

On hospitality REITs, the analysts have estimated a 30% to 40% RevPAR and 15% to 40% RevPAU y-o-y decline in FY20.

“We expect CDLHT to see the strongest rebound post Covid-19 given its high-country concentration and its status as the bellwether of [the] hospitality industry. We also like FEHT for its more resilient income given the high proportion of master lease income from its sponsor,” they note.

“We believe our FY20F DPU forecast for FEHT has the least downside risk given that we have trimmed our forecast near to its minimum income,” they add.

ART may recover at a more gradual pace under this situation as compared to the REITs which have higher revenue concentration. Near-term catalyst would be the potential inclusion into the FTSE EPRA NAREIT Developed Index in Jun 20. The stock is trading near 0.84x P/BV, near 1 s.d. below mean.

The analysts have maintained their “add” calls on Ascott Residence Trust, CDL Hospitality Trust, and Far East Hospitality Trust, with target prices of $1.21, $1.31, and $0.59 respectively.

“ART, CDLHT and FEHT are trading at 0.84x, 0.72x and 0.64x P/BV which we believe have priced in the negative impact from Covid-19. ART’s potential inclusion into the FTSE EPRA NAREIT Developed Index in June 20 would serve as an immediate re-rating catalyst for the stock,” they say.

As at 10.18am, units in Ascott Residence Trust are changing hands 0.9% up at $1.13; units in CDL Hospitality Trust 0.8% up at $1.20; and Far East Hospitality Trust flat at 57 cents.

 

[wutawa]

If is 神 wont even lose in the 1st place don't laugh at me hor

Wah, heng u sold off everything. Today sti red sea.

 

[peppermint7]

Wah, heng u sold off everything. Today sti red sea.

You're season trader u should know it's normal to have ups and downs in the market. Cannot be 1 straight line up mah.

So long u buy into good company at weak price. When good time comes the price should justify.

 

[NewInvestor]

You're season trader u should know it's normal to have ups and downs in the market. Cannot be 1 straight line up mah.

So long u buy into good company at weak price. When good time comes the price should justify.

Feds said last night that they expect recovery in H2 and US to grow 5% in 2021. Chances are the rest of the world will b Moreno less the same. I think hanging to good stocks now.is still ok. I don't see the need to sell.....yet.

 

[peppermint7]

Feds said last night that they expect recovery in H2 and US to grow 5% in 2021. Chances are the rest of the world will b Moreno less the same. I think hanging to good stocks now.is still ok. I don't see the need to sell.....yet.

I kind of worry about 2nd covid wave. If that is off the table, all should be back to normal.

 

[Squaredot]

jie, monitor Capland hor
12c CD coming soon
I called Capland they told me one. They're going to pass reso soon

Capitaland proposes scrip dividend

I take ca$h

 

[peppermint7]

Capitaland proposes scrip dividend

I take ca$h

Wah. Squaredot everywhere collect $

 

[wutawa]

I just bought reit ytd. 气死我了
My etf also drops..

 

[NewInvestor]

I kind of worry about 2nd covid wave. If that is off the table, all should be back to normal.

If there is a 2nd Covid19 wave, wouldn't the Feds pump a few more liquidity waves into the market? Lol.