To The Moon

This week, we focus on 3 Singapore-listed US office Reits on how the increase in momentum of the return-to-office work as well as the change in dynamics of work culture will influence the leasing and portfolio occupancy rate of offices.

Citing a research report from Microsoft, with more than 50% of the companies around the world including the US, expecting employees to be back in office 5 days a week by the end of the year, alongside the easing of Covid restriction on work environment, we expect the demand for office space to improve gradually. Furthermore, according to Cushman and Wakefield, total leasing activity in 1Q22 was up 19% from the prior year and 41% on a four quarter rolling basis.

The US economy added slightly more jobs than expected in April despite rising inflation and a fear of growth slowdown. US unemployment rate held at 3.6% as the US job market remains resilient.

US Office S-Reits

Source: Bloomberg as of 30 June 2022

The 3 S-Reits with pure US office properties exposure are: Manulife US Reit, Keppel Pacific Oak US Reit, Prime US Reit.

The easing of Covid restriction among the US states as well as the return to office will drive demand for office spaces which will be positive for leasing office activity in the coming months. However, we note the change in employee’s expectation for a hybrid work environment which might result in some concerns whether office occupancy can return to pre-covid times as companies such as Google, Apple, and UBS have adopted a hybrid work model.

Manulife US Reit $MANULIFE US REIT(BTOU.SI)$ a Singapore Reit listed on SGX-ST since 2016 comprises of 12 office properties with an aggregated 5.4m sq ft of freehold office properties strategically located in the US. Theportfolio occupancy for the first quarter ended Mar 31 remained stable at 91.7%. The Reit posted a weighted average lease expiry of 5 years and expects positive rental revision this year. The trust also executed leases of about 68,000 square feet of executed leases, with a 3.9% rental reversion during the quarter.

Keppel Pacific Oak US Reit $KEPPEL PAC OAK US REIT(KEPPF)$ has a portfolio of freehold office buildings and business campuses across key growth markets that is driven by innovation and technology and the US.The portfolio occupancy stood at 91.9% at end of 2021. The Reit managers have identified the sectors of technology, advertising, media and information as key growth areas. They also observed mixed trends in which rents have increased in some areas such as Seattle while citing San Francisco’s rents showing signs of a decline.

Prime US Reit $Prime US ReitUSD(OXMU.SI)$ focuses on stable income producing prime grade A office assets in the US. Its portfolio occupancy stood at 89.9% for the quarter. The Reit has a weighted average lease expiry of 4.2 years with a positive rental revision of 3.4%. Leasing activity has more than doubled, with renewals contributing to a majority of it. Major tech companies announced the return to office starting in early April.

Important Information

This advertisement has not been reviewed by the Monetary Authority of Singapore.

Tiger Brokers (Singapore) Pte. Ltd. ("Tiger Brokers”) holds a Capital Markets Services Licence (Licence No: CMS100844) under the Securities and Futures Act 2001 granted by the Monetary Authority of Singapore. For more information, please visit:https://www.tigerbrokers.com.sg.

Any views shared with Prospective Clients (“Prospects”) are suggestive in nature and on a sample basis only. This may also be predicated on assumptions that are made by Tiger Brokers about the Prospects’ investment objectives and risk profile. Our suggestive and sample views extended to Prospects are not to be considered as recommendations made by the Company. Suggestions provided are also based on information that may be shared by the Prospects, the accuracy and comprehensiveness of which Tiger Brokers is not in a position to verify.

Tiger Brokers may, to the extent permitted by law, participate or invest in other transactions with the issuer of the products referred to herein, perform services or solicit business from such issuers, and/or have a position or effect transactions in the securities or options thereof. All opinions expressed and facts referred to herein are subject to change without notice. The information herein was obtained and derived from sources that we believe are reliable, but while reasonable care has been taken to ensure that stated facts are accurate and opinions are fair and reasonable, Tiger Brokers does not represent that it is accurate or complete and it should not be relied upon as such.

The information expressed herein is current and does not constitute an offer, recommendation or solicitation, nor does it constitute any prediction of likely future stock performance. Investment involves risk. The price of investment instruments can and do fluctuate, and any individual instrument may experience upward or downward movements, and under certain circumstances may even become valueless. Past performance is not a guarantee of future results. In preparing this information, we did not take into account the investment objectives, financial situation or particular needs of any person or affiliated companies. Before making an investment decision, you should speak to a financial adviser to consider whether this information is appropriate to your needs, objectives and circumstances. Tiger Brokers assumes no fiduciary responsibility or liability for any consequences financial or otherwise arising from trading in securities if opinions and information in this document may be relied upon.

Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.