Among the year’s top gainers was ParkwayLife REIT (PLife REIT) which ended 2021 at $5.13 with a yield of just 2.7%. Since then, prices have dipped slightly.
Sponsor IHH Healthcare and the master lessee of ParkwayLife REIT’s three hospitals in Singapore — Mount Elizabeth Hospital, Gleneagles Hospital and Parkway East Hospital — announced that a fund known as Emqore Envesecure Capital Trust has filed a suit against IHH, 28 named dependents and 20 non-party defendants, with a claim for US$6.5 billion ($8.83 billion).
This amount incorporates compensatory damages plus treble damages and attorneys fees, IHH says in a statement.
“Emqore alleges that the defendants had conspired to frustrate a proposed share acquisition transaction between Fortis and Emqore’s supposed predecessors,” states a report by CGS-CIMB. At this juncture, the estimated potential liability to IHH cannot be determined as the suit involves 28 named defendants and 20 non-party defendants, IHH said.
“IHH believes it has strong grounds to seek a dismissal of Emqore’s claims and intends to file a motion to dismiss Emqore’s amended complaint for the following reasons: (1) lack of personal jurisdiction, (2) forum non conveniens, i.e. the case should be brought to a more appropriate venue for a legal case, and (3) failure to state a claim for relief,” CGSCIMB points out.
IHH said it had acquired its 31.1% stake in Fortis via preferential allotment and not by the purchase or transfer of existing Fortis shares and that it has obtained the requisite corporate and regulatory approvals for the acquisition. In addition, the subscription was undertaken and completed (through a process run by the reconstituted Fortis Board) after the Singh brothers were no longer in control of Fortis.
See also: CICT's manager proposes to acquire ION Orchard at $1.85 billion, subject to EGM
PLife REIT fell from an all-time high of $5.20 to $5.06 on the news but stabilised subsequently. We’ve had experiences of US funds of different ilk suing Singapore-based entities on minor grounds and these complaints have been thrown out. The US is, after all, a litigious nation.
More interestingly though is PLife REIT’s right-of-first-refusal property, Mount Elizabeth Novena. For investors yearning to gain a toehold as a PLife REIT unitholder, a capital raising to acquire this property when IHH is prepared to divest, provides an opportunity to invest in this REIT.
The worst performer in 2021 was CapitaLand China Trust (CLCT). In October 2021, CLCT raised $150 million at $1.165 per unit via a placement to partly finance four logistics assets in Shanghai, Kunshan, Wuhan and Chengdu.
See also: CICT's manager proposes to acquire ION Orchard at $1.85 billion, subject to EGM
The acquisitions are part of CLCT’s pivot away from being heavily invested in retail malls to New Economy sectors. This is defined as logistics, science and tech parks and data centres.
CLCT completed the acquisition of five New Economy properties including Ascendas Innovation Towers in Xian and the Singapore-Hangzhou Science and Technology Park Phases I and II in late 2020 and early 2021.
Since then, Xian has experienced a lockdown due to China’s Zero-Covid policy. In addition, China’s property sector has been hit with bond defaults. Elsewhere, China has been impacted by supply chain issues.
Nonetheless, occupancy in CLCT’s 11 retail malls has been recovering steadily. As at Sept 30, 2021, occupancy stood at 96.7%, up from 95.4% a quarter ago and 93.7% a year ago. In addition, based on business updates for 3QFY2021, CLCT’s nine-month NPI is up y-o-y excluding its New Economy property, and up 81.1% y-o-y including New Economy property.
CLCT is the largest listed S-REIT with Chinese properties, valued at $4.5 billion. The portfolio has stabilised, as fundamentals for the properties such as tenant sales, shopper traffic and occupancy improved. It remains to be seen whether and when investors will recognise the REIT’s improving metrics.
