Phillip SGX APAC Dividend Leaders REIT ETF

[cyclone]

Phillip SGX APAC Dividend Leaders REIT ETF

Initial Offer Period : 5 October 2016 at 9:00 a.m. to 13 October 2016 at 10:00 a.m. (Singapore time)

Listing Date  : 20 October 2016

Trading Board lot size : 100 units

Dividend Distribution : Semi-annually 

Dividend Yield : Around 5.19%

P/E Ratio : 10.32

P/B Ratio : 1.17

ETF Replication : Physical Replication

Management Fee : 0.50% per annum

Total Expense Ratio : 0.65% per annum

SGX Trading/Counter Name :
- Primary Currency: PHLP AP DIV REIT US$
- Secondary Currency: PHLP AP DIV REIT S$D

Tracked Index : SGX APAC Ex-Japan Dividend Leaders REIT Index
The Index is designed to track the performance of 30 highest total dividend-paying REITs in the Asia Pacific Ex-Japan region subject to size, free-float market capitalisation and liquidity constraints. Index Securities are ranked and weighted by total dividends, where total dividends refer to each Index Security’s trailing 12 month dividends per share (in US$) multiplied by the free-float number of outstanding shares.

Investment Objective :
The investment objective of the Fund is to seek to provide a high level of income and moderate long-term capital appreciation by tracking, as closely as possible, before expenses, the performance of the SGX APAC Ex-Japan Dividend Leaders REIT Index (the "Index"). By tracking the Index which is weighted by a fundamental factor such as total dividends, the Fund aims to enhance risk-adjusted returns above that of traditional market capitalisation-weighted indices as the 30 REITs comprising the Index will be ranked and weighted according to the highest total dividends paid in the preceding 12 months subject to size, free-float market capitalisation and liquidity constraints.

As at 29 September 2016, the constituent REITs of the SGX APAC Ex-Japan Dividend Leaders REIT Index are:
#. Security Name - Country - Weightage
1. Link Real Estate Investment Trust -  Hong Kong - 10.20%
2. Scentre Group - Australia - 9.80%
3. Westfield Corp. - Australia - 9.63%
4. Stockland Corporation Limited - Australia - 8.61%
5. Vicinity Centres - Australia - 6.67%
6. Goodman Group - Australia - 5.47%
7. Mirvac Group - Australia - 5.34%
8. Ascendas Real Estate Investment Trust - Singapore - 5.07%
9. GPT Group - Australia - 4.84%
10. CapitaLand Mall Trust - Singapore - 3.97%
11. Suntec Real Estate Investment Trust - Singapore - 3.36%
12. CapitaLand Commercial Trust - Singapore - 2.81%
13. Mapletree Commercial Trust - Singapore - 2.03%
14. Mapletree Industrial Trust - Singapore - 1.95%
15. Mapletree Greater China Commercial Trust - Singapore - 1.89%
16. Investa Office Fund - Australia - 1.83%
17. Keppel REIT - Singapore - 1.80%
18. Mapletree Logistics Trust - Singapore - 1.63%
19. Charter Hall Retail REIT - Australia - 1.37%
20. Shopping Centres Australasia Property Group - Australia - 1.32%
21. BWP Trust - Australia - 1.22%
22. Charter Hall Group - Australia - 1.21%
23. Champion REIT - Hong Kong - 1.14%
24. Starhill Global Real Estate Investment Trust - Singapore - 1.09%
25. Ascott Residence Trust - Singapore - 1.07%
26. Cromwell Property Group - Australia - 1.00%
27. Cache Logistics Trust - Singapore - 0.99%
28. Frasers Centrepoint Trust - Singapore - 0.97%
29. CDL Hospitality Trusts - Singapore - 0.97%
30. Abacus Property Group - Australia - 0.75%

Country Weighting :
- Australia : 61.22%
- Singapore : 27.44 
- Hong Kong : 11.34%

[mobo]

Phillip SGX APAC Dividend Leaders REIT ETF

Initial Offer Period : 5 October 2016 at 9:00 a.m. to 13 October 2016 at 10:00 a.m. (Singapore time)

Listing Date  : 20 October 2016

Trading Board lot size : 100 units

Dividend Distribution : Semi-annually 

Dividend Yield : Around 5.19%

P/E Ratio : 10.32

P/B Ratio : 1.17

ETF Replication : Physical Replication

Management Fee : 0.50% per annum

Total Expense Ratio : 0.65% per annum

SGX Trading/Counter Name :
- Primary Currency: PHLP AP DIV REIT US$
- Secondary Currency: PHLP AP DIV REIT S$D

Tracked Index : SGX APAC Ex-Japan Dividend Leaders REIT Index
The Index is designed to track the performance of 30 highest total dividend-paying REITs in the Asia Pacific Ex-Japan region subject to size, free-float market capitalisation and liquidity constraints. Index Securities are ranked and weighted by total dividends, where total dividends refer to each Index Security’s trailing 12 month dividends per share (in US$) multiplied by the free-float number of outstanding shares.

Investment Objective :
The investment objective of the Fund is to seek to provide a high level of income and moderate long-term capital appreciation by tracking, as closely as possible, before expenses, the performance of the SGX APAC Ex-Japan Dividend Leaders REIT Index (the "Index"). By tracking the Index which is weighted by a fundamental factor such as total dividends, the Fund aims to enhance risk-adjusted returns above that of traditional market capitalisation-weighted indices as the 30 REITs comprising the Index will be ranked and weighted according to the highest total dividends paid in the preceding 12 months subject to size, free-float market capitalisation and liquidity constraints.

As at 29 September 2016, the constituent REITs of the SGX APAC Ex-Japan Dividend Leaders REIT Index are:
#. Security Name - Country - Weightage
1. Link Real Estate Investment Trust -  Hong Kong - 10.20%
2. Scentre Group - Australia - 9.80%
3. Westfield Corp. - Australia - 9.63%
4. Stockland Corporation Limited - Australia - 8.61%
5. Vicinity Centres - Australia - 6.67%
6. Goodman Group - Australia - 5.47%
7. Mirvac Group - Australia - 5.34%
8. Ascendas Real Estate Investment Trust - Singapore - 5.07%
9. GPT Group - Australia - 4.84%
10. CapitaLand Mall Trust - Singapore - 3.97%
11. Suntec Real Estate Investment Trust - Singapore - 3.36%
12. CapitaLand Commercial Trust - Singapore - 2.81%
13. Mapletree Commercial Trust - Singapore - 2.03%
14. Mapletree Industrial Trust - Singapore - 1.95%
15. Mapletree Greater China Commercial Trust - Singapore - 1.89%
16. Investa Office Fund - Australia - 1.83%
17. Keppel REIT - Singapore - 1.80%
18. Mapletree Logistics Trust - Singapore - 1.63%
19. Charter Hall Retail REIT - Australia - 1.37%
20. Shopping Centres Australasia Property Group - Australia - 1.32%
21. BWP Trust - Australia - 1.22%
22. Charter Hall Group - Australia - 1.21%
23. Champion REIT - Hong Kong - 1.14%
24. Starhill Global Real Estate Investment Trust - Singapore - 1.09%
25. Ascott Residence Trust - Singapore - 1.07%
26. Cromwell Property Group - Australia - 1.00%
27. Cache Logistics Trust - Singapore - 0.99%
28. Frasers Centrepoint Trust - Singapore - 0.97%
29. CDL Hospitality Trusts - Singapore - 0.97%
30. Abacus Property Group - Australia - 0.75%

Country Weighting :
- Australia : 61.22%
- Singapore : 27.44 
- Hong Kong : 11.34%

The term "Dividend Leaders" is a misnomer considering this ETF is 100% REIT driven. Distributions are not dividends and in current low interest rate environment, it is simply not possible for a broad based index focused in AU, HK and SG to generate 5.19% "dividend yield".

Asset managers have deliberately conflated the two distinctive financial terms in their self-promotion. This is a potential major hazard down the road as I understand a lot of retired senior citizens are living on such "dividends" under the wrong impression that they are safe and sustainable.

[MINX]

Phillip SGX APAC Dividend Leaders REIT ETF

Initial Offer Period : 5 October 2016 at 9:00 a.m. to 13 October 2016 at 10:00 a.m. (Singapore time)

Listing Date  : 20 October 2016

Trading Board lot size : 100 units

Dividend Distribution : Semi-annually 

Dividend Yield : Around 5.19%

P/E Ratio : 10.32

P/B Ratio : 1.17

ETF Replication : Physical Replication

Management Fee : 0.50% per annum

Total Expense Ratio : 0.65% per annum

SGX Trading/Counter Name :
- Primary Currency: PHLP AP DIV REIT US$
- Secondary Currency: PHLP AP DIV REIT S$D

Tracked Index : SGX APAC Ex-Japan Dividend Leaders REIT Index
The Index is designed to track the performance of 30 highest total dividend-paying REITs in the Asia Pacific Ex-Japan region subject to size, free-float market capitalisation and liquidity constraints. Index Securities are ranked and weighted by total dividends, where total dividends refer to each Index Security’s trailing 12 month dividends per share (in US$) multiplied by the free-float number of outstanding shares.

Investment Objective :
The investment objective of the Fund is to seek to provide a high level of income and moderate long-term capital appreciation by tracking, as closely as possible, before expenses, the performance of the SGX APAC Ex-Japan Dividend Leaders REIT Index (the "Index"). By tracking the Index which is weighted by a fundamental factor such as total dividends, the Fund aims to enhance risk-adjusted returns above that of traditional market capitalisation-weighted indices as the 30 REITs comprising the Index will be ranked and weighted according to the highest total dividends paid in the preceding 12 months subject to size, free-float market capitalisation and liquidity constraints.

As at 29 September 2016, the constituent REITs of the SGX APAC Ex-Japan Dividend Leaders REIT Index are:
#. Security Name - Country - Weightage
1. Link Real Estate Investment Trust -  Hong Kong - 10.20%
2. Scentre Group - Australia - 9.80%
3. Westfield Corp. - Australia - 9.63%
4. Stockland Corporation Limited - Australia - 8.61%
5. Vicinity Centres - Australia - 6.67%
6. Goodman Group - Australia - 5.47%
7. Mirvac Group - Australia - 5.34%
8. Ascendas Real Estate Investment Trust - Singapore - 5.07%
9. GPT Group - Australia - 4.84%
10. CapitaLand Mall Trust - Singapore - 3.97%
11. Suntec Real Estate Investment Trust - Singapore - 3.36%
12. CapitaLand Commercial Trust - Singapore - 2.81%
13. Mapletree Commercial Trust - Singapore - 2.03%
14. Mapletree Industrial Trust - Singapore - 1.95%
15. Mapletree Greater China Commercial Trust - Singapore - 1.89%
16. Investa Office Fund - Australia - 1.83%
17. Keppel REIT - Singapore - 1.80%
18. Mapletree Logistics Trust - Singapore - 1.63%
19. Charter Hall Retail REIT - Australia - 1.37%
20. Shopping Centres Australasia Property Group - Australia - 1.32%
21. BWP Trust - Australia - 1.22%
22. Charter Hall Group - Australia - 1.21%
23. Champion REIT - Hong Kong - 1.14%
24. Starhill Global Real Estate Investment Trust - Singapore - 1.09%
25. Ascott Residence Trust - Singapore - 1.07%
26. Cromwell Property Group - Australia - 1.00%
27. Cache Logistics Trust - Singapore - 0.99%
28. Frasers Centrepoint Trust - Singapore - 0.97%
29. CDL Hospitality Trusts - Singapore - 0.97%
30. Abacus Property Group - Australia - 0.75%

Country Weighting :
- Australia : 61.22%
- Singapore : 27.44 
- Hong Kong : 11.34%

The term "Dividend Leaders" is a misnomer considering this ETF is 100% REIT driven. Distributions are not dividends and in current low interest rate environment, it is simply not possible for a broad based index focused in AU, HK and SG to generate 5.19% "dividend yield".

Asset managers have deliberately conflated the two distinctive financial terms in their self-promotion. This is a potential major hazard down the road as I understand a lot of retired senior citizens are living on such "dividends" under the wrong impression that they are safe and sustainable.

Care to explain to me why distributions are not the same as dividends? 
Why do you say that these dividends are not safe & sustainable?

[brattzz]

WAOS!! sure or not??? :O

all REITS counters!!! interest rates rise up, all do right issues how?? :O :O

[weijian]

The term "Dividend Leaders" is a misnomer considering this ETF is 100% REIT driven. Distributions are not dividends and in current low interest rate environment, it is simply not possible for a broad based index focused in AU, HK and SG to generate 5.19% "dividend yield".

Asset managers have deliberately conflated the two distinctive financial terms in their self-promotion. This is a potential major hazard down the road as I understand a lot of retired senior citizens are living on such "dividends" under the wrong impression that they are safe and sustainable.

Care to explain to me why distributions are not the same as dividends? 
Why do you say that these dividends are not safe & sustainable?

To answer your question, one would need to look into each and every REIT on their "capital structure" (gearing, type of loans etc). A dividend is defined as a distribution out of excess earned profits, rather than out of capital. So even though some of the leasehold type of Trusts disguise their "return of capital" as profits, it should still be considered dividends, based on the definition.

"Safe" is a really relative term. So unless we have a reference point for "safe", then there is no point to start a discussion here, since all of us have different notions for it.

I reckon a lot of retired senior citizens were once regular salary-receiving employees. This explains why they would continue to seek "regular dividends" from their investments, when it should be very clear to them, that along the way as they aged, they should have observed that the really rich people are the ones who focus capital gains over dividend payouts. For those retired senior citizens whom have held the big caps/blue chips (low dividend yield when they purchased it donkey years ago, but has a higher probability to keep growing with GDP), kudos to them. I do suspect that those who piled a large portion into REITs (and depend on its predictability/high yield) are not going to end up as per intention.

[mobo]

The term "Dividend Leaders" is a misnomer considering this ETF is 100% REIT driven. Distributions are not dividends and in current low interest rate environment, it is simply not possible for a broad based index focused in AU, HK and SG to generate 5.19% "dividend yield".

Asset managers have deliberately conflated the two distinctive financial terms in their self-promotion. This is a potential major hazard down the road as I understand a lot of retired senior citizens are living on such "dividends" under the wrong impression that they are safe and sustainable.

Care to explain to me why distributions are not the same as dividends? 
Why do you say that these dividends are not safe & sustainable?

To answer your question, one would need to look into each and every REIT on their "capital structure" (gearing, type of loans etc). A dividend is defined as a distribution out of excess earned profits, rather than out of capital. So even though some of the leasehold type of Trusts disguise their "return of capital" as profits, it should still be considered dividends, based on the definition.

"Safe" is a really relative term. So unless we have a reference point for "safe", then there is no point to start a discussion here, since all of us have different notions for it.

I reckon a lot of retired senior citizens were once regular salary-receiving employees. This explains why they would continue to seek "regular dividends" from their investments, when it should be very clear to them, that along the way as they aged, they should have observed that the really rich people are the ones who focus capital gains over dividend payouts. For those retired senior citizens whom have held the big caps/blue chips (low dividend yield when they purchased it donkey years ago, but has a higher probability to keep growing with GDP), kudos to them. I do suspect that those who piled a large portion into REITs (and depend on its predictability/high yield) are not going to end up as per intention.

Thanks. Actually it is much more complicated that "capital structure", there is nothing inherently wrong with the leverage or type of loans by most REITS. It is a combination of the REIT operating model and financial engineering quirks that render the difference in the concept of distribution and dividends. It's a pretty technical subject which I hope to touch on in more detail when I have some time.

[CY09]

In my opinion, the Singapore REITS system is broken.

1) Many REITS here pay only the interest and rollover the principal
2) Many properties here are leaseholds
From 1) and 2), when leases of these properties expire, what are REITS going to do? No property but got principal to repay

IMO, it will be a matter of time before banks will ask REITS to switch to an amoritsing loan structure instead of bullet loan. This will affect dividends cashflow

3) Due to capitalization rate valuation being used, many valuers are using very low cap rates relative to historical numbers. Once normalised cap rates numbers are used again. The result: asset prices fall, debt amount remains the same; leading to higher leverage ratio. In such situation, MAS will have to either relax the rule, or REITS raise rights which dilutes current shareholders. It is unlikely revenue will increase enough to offset fall in asset prices

Therefore, while it seems nice that REITS are yielding 4 to 6% in the current low interest environment. One has to seriously think about the future implications.

[brattzz]

the banks/REITS management co. would kick the can down the road, as far as they can... while collecting interests/commissions/fees...etc, everyone is happy!

Crunch time comes, then we them naked swimming all over again,

[corydorus]

Basically paying themselves high management fee on the expenses of shareholders ? .... wah lao

[specuvestor]

In my opinion, the Singapore REITS system is broken.

1) Many REITS here pay only the interest and rollover the principal
2) Many properties here are leaseholds
From 1) and 2), when leases of these properties expire, what are REITS going to do? No property but got principal to repay

IMO, it will be a matter of time before banks will ask REITS to switch to an amoritsing loan structure instead of bullet loan. This will affect dividends cashflow

3) Due to capitalization rate valuation being used, many valuers are using very low cap rates relative to historical numbers. Once normalised cap rates numbers are used again. The result: asset prices fall, debt amount remains the same; leading to higher leverage ratio. In such situation, MAS will have to either relax the rule, or REITS raise rights which dilutes current shareholders. It is unlikely revenue will increase enough to offset fall in asset prices

Therefore, while it seems nice that REITS are yielding 4 to 6% in the current low interest environment. One has to seriously think about the future implications.

Actually it's not just REITS. IMHO one of the benchmark of a sensible business model is one that can reduce the debt principal (after paying dividend) post expansion phase. Note that this runs contrary to the optimal capital structure thesis that we have been fed with because IMHO the optimal structure is not static and very different in normal times and in crunch times.