To The Moon

Data from the European and US office markets show potential signs of recovery.

According to the data of Knight Frank and Savills, office leasing activities in Europe remained strong and rents were resilient in the first quarter of 2022. Driven by the release of backlog demand, the fourth quarter of 2021 recorded the strongest number of quarterly leases since the fourth quarter of 2018.

At the same time, according to Jones Lang LaSalle (JLL), leasing activities in the United States increased by 5.4% compared with the first quarter of 2022, marking the fifth consecutive quarter of improvement in tenant demand.

There are six Singapore real estate investment trusts (S-REITs) with pure European or US office assets: $Cromwell Reit EUR(CWBU.SI)$ ，$IREIT GLOBAL(UD1U.SI)$ and $EliteComREIT GBP(MXNU.SI)$ have pure European office assets, while $MANULIFE US REIT(BTOU.SI)$ , $Prime US ReitUSD(OXMU.SI)$ and $KEPPEL-KBS US REIT(CMOU.SI)$ have pure US office assets.

Note：Dividend yield from Singapore Real Estate Investment Trust and Real Estate Business Trust Research Report in May 2022.

$Cromwell Reit EUR(CWBU.SI)$ reported that its overall portfolio occupancy rate was 94.8%, and the renewal rent increased by 4.2%. The trust has several lease renewals and smaller new leases in Italy, France and Finland, and its office portfolio recorded a 1.6% increase in renewal rents. The trust pointed out that Europe tends to short-term and flexible leases, while the conflict between Russia and Ukraine has weakened the willingness to expand office buildings in Finland and Poland, affecting the momentum of recovery.

$IREIT GLOBAL(UD1U.SI)$ reports that as of march31,2022, its portfolio occupancy rate remained unchanged at 95.7%. Supported by a high-quality tenant portfolio and a diversified asset base, the trust expects its portfolio to remain resilient. Ireit will continue to focus on asset management and maintain the occupancy rate and long-term attractiveness through sustainable development measures.

$EliteComREIT GBP(MXNU.SI)$ reported a year-on-year increase of 36.2% in its distributable income in the first quarter of 2022. As a British REIT group, elite's first acquisition of the portfolio and saved tax expenses drove the income growth. The trust achieved positive results from major lease restructuring activities, removing the lease suspension option from 109 assets (scheduled to take effect in march2023). The trust has been notified that 8 of the 9 assets occupied by the Department of work and pensions (DWP) will exercise the lease suspension option and will actively manage these assets. As of march31,2022, the investment portfolio of the trust is still fully settled.

 $MANULIFE US REIT(BTOU.SI)$ reported that in the first quarter of 2022, the renewal rent increased by 3.9%, and the portfolio occupancy rate was 91.7%, higher than the average level of class A in the United States (83%). The trust pointed out that, driven by professional services, information and financial activities, the employment rate of most industries using office buildings was higher than that before the COVID-19.

$Prime US ReitUSD(OXMU.SI)$ continued to observe stronger leasing activities in the first quarter of 2022, more than doubling year-on-year growth, and the rent increased by 3.4%. The renewal rent has maintained a positive trend in the past seven quarters. The trust pointed out that the actual rent of its portfolio was only 6.0% lower than the opening price, reflecting that the potential renewal will continue. With more people returning to the office in the first quarter of 2022, the revenue of the parking lot also increased by more than 30%.

$KEPPEL-KBS US REIT(CMOU.SI)$ reported that the renewal rent increased by 2.4% in the first quarter of 2022, and there was no delay in the payment of rent. The trust noted that the main demand and expansion came from professional services, finance and insurance, Tami (technology, advertising, media and information) and the medical and health care industries. As more and more companies expand their scale, tenants have confidence in the long-term performance of the office market.