Effective 19 October, CapitaLand Commercial Trust will be deleted from the STI in preparation for its merger with CapitaLand Mall Trust. Keppel DC REIT, the largest stock on the STI Reserve List (as at 14 Oct 2020), is scheduled to join the STI.
Keppel DC REIT, which debuted on SGX in 2014 as the first pure data centre REIT to list in Asia, has since grown its portfolio from 8 assets valued at $1.0 billion, to 18 assets valued at $2.8 billion. The stock has generated a 330% total return since listing.
Following the changes on 19 October, the combined indicative weighting of REITs in the STI will be 14%, remaining as the third largest sector in the index (behind Financial Services and Industrials). Fraser Logistics & Commercial Trust will also become the largest stock in the STI Reserve List.
The Straits Times Index (“STI”) generated 4.1% total returns the month-to-date ending 13 October, slightly outperforming the FTSE ASEAN All-Share index which generated 3.8% total returns. On the evening of 13 Oct 2020, FTSE Russell announced that due to the upcoming merger of CapitaLand Mall Trust and CapitaLand Commercial Trust, CapitaLand Commercial Trust’s last trading day is expected to be on 16 Oct and will be deleted from the STI on 19 Oct. A replacement stock from the STI Reserve List will be added to the index at the start of trading on 19 Oct.
According to STI Ground Rule 7.4.1, the replacement stock for STI will be selected by the highest ranking security by full market value in the Reserve List as at the close of the index calculation two days prior to the deletion., i.e. 14 Oct 2020. As of the end of trading day on 14 Oct, Keppel DC REIT with market capitalisation S$4,817 million is the largest stock on the STI Reserve list, and is expected to join the STI on the coming Monday. Frasers Logistics & Commercial Trust, with market capitalisation of S$4,711 million, was a closer second in terms of the size on the Reserve List.
Keppel DC REIT was top performing S-REIT in 2020 YTD
Keppel DC REIT debuted on SGX in 2014 as the first pure data centre REIT to list in Asia and remained till today as the only pure data centre S-REIT on SGX. It invests in a diversified portfolio of income-producing real estate assets which are used primarily for data centre purposes. The REIT’s portfolio grew from 8 assets valued at $1.0 billion at IPO, to 18 assets across Asia Pacific and Europe valued at $2.8 billion as of 30 Jun 2020.
S-REITs sector’s market capitalisation has grown at a compound annual growth rate of 15% over the last 10 years and has been one of the best performing REIT markets globally with iEdge S-REIT Index total returns declining 5.4% in 9M2020 (vs. average of -16.9% across other REIT markets). Keppel DC REIT, has been the top performing S-REIT in YTD 2020 till 14 Oct with 45.3% total returns, receiving net institutional inflows of S$46.4 million. Click here to download the October 2020 SREITs & Property Trusts Chartbook for more information.
Merger of CapitaLand Mall Trust and CapitaLand Commercial Trust
The merger of CapitaLand Commercial Trust and CapitaLand Mall Trust will form a new combined entity called CapitaLand Integrated Commercial Trust (CICT), which is expected to be one of the largest REITs in Singapore and in Asia Pacific.
On 12 October 2020, CapitaLand Commercial Trust announced that the Trust Scheme (CapitaLand Mall Trust to acquire all the issued units in CapitaLand Commercial Trust in the form of cash and new CapitaLand Mall Trust units) has been sanctioned by the court and that the last trading day of CapitaLand Commercial Trust will be 16 October 2020. CapitaLand Commercial Trust unitholders will receive $0.259 in cash and 0.72 new CapitaLand Mall Trust units for each CapitaLand Commercial Trust unit they hold.
Click here for the full indicative timetable of the Trust Scheme.
Potential New STI Weights
As detailed in the table below Keppel DC REIT will have an indicative index weight of 1.2% (based on 30 June 2020 data) it joins the STI on the 19 October open. According to FTSE Russell, a CapitaLand Mall Trust Temporary Line will be added to the STI on the open of 19 October and will be deleted once its shares are amalgamated with CapitaLand Mall Trust at the close of the distribution ex-date. FTSE Russell will issue a further notice in due course.
|STI Stock||Stock Code||30Jun2020
|New Indicative Weight
|Wilmar International||F34||3.27%||3.2%||Consumer Non-Cyclicals|
|CapitaLand||C31||2.99%||3.0%||Real Estate (excl. REITs)|
|Hongkong Land||H78||2.74%||2.7%||Real Estate (excl. REITs)|
|Thai Beverage||Y92||2.71%||2.7%||Consumer Non-Cyclicals|
|Mapletree Logistics Trust||M44U||2.02%||2.0%||REITs|
|CapitaLand Mall Trust||C38U||1.93%||1.9%||REITs|
|Genting Singapore||G13||1.80%||1.8%||Consumer Cyclicals|
|Mapletree Industrial Trust||N2IU||1.80%||1.8%||REITs|
|Mapletree Commercial Trust||N2IU||1.73%||1.7%||REITs|
|Venture Corporation||V03||1.72%||1.7%||Technology (Hardware/ Software)|
|City Developments||C09||1.61%||1.6%||Real Estate (excl. REITs)|
|UOL||U14||1.37%||1.4%||Real Estate (excl. REITs)|
|Jardine Cycle & Carriage||C07||0.82%||0.8%||Consumer Cyclicals|
|Dairy Farm International||D01||0.80%||0.8%||Consumer Non-Cyclicals|
|CapitaLand Commercial Trust||C61U||1.89%||REITs|
|CMT Temporary Line||C38U||-||1.6%||REITs|
|Keppel DC REIT||AJBU||-||1.2%||REITs|
New Sector Weighting
The potential sector weightings of the STI including Keppel DC REIT and CapitaLand Mall Trust Temporary Line, are illustrated below. This will bring the indicative combined weighting of REITs in the STI from the 13.2% (as of 30 June 2020) to 14%. Note that since S-REITs’ performance have outpaced the STI since 30 June 2020, the actual weighting of the REITs sector in the STI could potentially be closer to 15% instead.
STI Reserve List
STI reserve list consists of (in order of size as of 14 Oct 2020) Keppel DC REIT, Frasers Logistics & Commercial Trust, Suntec REIT, NetLink NBN Trust and Keppel REIT. There will be four companies remaining in the STI Reserve list once Keppel DC REIT enters the index on 19 October 2020. The STI Reserve List will be updated to five companies during the next STI Review in December.
The STI Reserve List is used in the event that one or more of the STI constituents are deleted during the period up to the next quarterly review. As detailed in the STI Ground Rules, when a company is going to be removed from the STI, the vacancy will be filled by selecting the highest ranking security by full market value in the Reserve List as at the close of the index calculation two days prior to the deletion.