By Lee Meixian

leemx@sph.com.sg

@LeeMeixianBT

Singapore

THE management of Manulife US Reit,

which over the weekend announced

its acquisition of an office building in

New Jersey for US$313.2 million, is

keeping mum on which other US cit-

ies it is planning to expand into next.

One thing clear though is that it

will probably not enter gateway cities

such as New York because of low of-

fice yields there.

On Saturday, the pure-play US Reit

said it will undertake a rights issue to

raise US$208 million to partly fund

the acquisition of 10 Exchange Place,

a 30-storey Class-A office building in

Jersey City, its second and largest buy

to date.

The estimated total cost of the ac-

quisition, including the purchase

price and other fees, is about US$332

million. This will be funded through

debt financing and proceeds from the

rights issue.

On Monday, the counter fell 2.6

per cent to S$0.94, as the Straits

Times Index also declined 1.4 per

cent to 3,230.97 after banking stocks retreated. Despite the sell-down, ana-lysts generally agree that the building is a good-quality asset. Located on the Hudson River waterfront, the free-hold office tower has unobstructed views of the Manhattan, New York City skyline and the Statue of Liberty.

It has a net lettable area of about 730,598 sq ft, and counts Amazon Corporate, global logistics company Kuehne & Nagel and software firm Op-era Solutions among its top tenants.

The timing is also opportunistic, they said, as there is little new supply coming onstream in the Hudson area.

At a Monday briefing, when asked

about future acquisitions, Jillian

Smith, CEO of the manager, replied:

“We’re always looking at something,

somewhere. (But) there is one place

we might not be looking at – at the mo-

ment.”

She was referring to New York City

where the capitalisation rates of

prime office buildings average about

4 per cent currently. Such assets

would not meet the Reit’s current

yield of about 6.5 per cent. The Reit

thus has to look at “key cities, but not

the golden deals in gateway cities”,

bearing in mind still the quality of the assets and sustainability of their in-come growth.

Chief investment officer Jeffrey Wolfe also said that while 95 per cent and above seems to be the normal definition of “high occupancy” in Singapore, the situation is different in the US, where a high occupancy would be closer to the mid to high 80s. So 10 Exchange Place’s occu-pancy rate of 93.1 per cent at end-July is actually high for its location.

Ms Smith also highlighted that the Reit has been performing better than its forecasts since listing in May 2016.

In terms of organic growth, meaning gross revenue and net property in-come, it has been beating estimates. Inorganically, through acquisitions, it has also been making accretive addi-tions.

The latest acquisition will boost its market capitalisation to about US$912 million, from about US$519 million at the time of listing. The Reit has made two acquisitions since list-ing; the other was 500 Plaza Drive, an 11-storey freehold Class-A office building also in New Jersey. It also has assets in Los Angeles, Irvine and Atlanta.

By Amit Roy Choudhury

amit@sph.com.sg

@AmitRoyCBT

Singapore

THE Prime Minister, Lee Hsien Loong,

during his National Day rally speech,

said turning Singapore into a Smart Na-

tion would be one of the key national ef-

forts. The government has articulated

a very comprehensive roadmap in this

endeavour and a combination of ser-

vices and sensors are being rolled out

in this journey to becoming the world’s

first Smart Nation.

A point that needs articulating is

that Singapore’s Smart Nation object-

ive, along with a host of other smart cit-

ies projects around the world, has been

made possible due to the combination

of unique technology trends that, to-

gether, have resulted in a perfect storm

that is ushering in digital disruption in

almost every field of human endeav-

our; at gale force, if you will.

Singapore must become a Smart Na-

tion not only because it desires to be

one but also because it needs to, in or-

der to remain globally relevant. Simil-

arly, industry and even citizens need

to adapt as well or risk being left be-

hind. These disruptive technologies

can be described by the mnemonic, So-

MoCloBad. This stands for the conflu-

ence of social media, mobility, cloud

computing, and big analytic data or

big data analytics. Almost every tech-

nology trend that we see around us are

related to these four megatrends; so

next time you hit the like button on

Facebook or ask Google to find out

something for you, remember SoMoC-

loBad.

Why is it so vital that companies

don’t drop the ball as this disruption

sweeps through virtually every facet

of human activity?

That’s because disruption is usher-

ing in what is known as the fourth in-

dustrial revolution. Trends such as the

Internet of Things (IoT), robotics, vir-

tual reality (VR) and artificial intelli-

gence (AI) are changing the way we live

and work. In many ways, this revolu-

tion just builds on what is known as

the third industrial revolution or the di-

gital revolution which saw the ubiquit-

ous use of computers and the Internet

for business. Even though the fourth

industrial revolution is essentially a

continuation of the third, it is still con-

sidered a new era because of the speed

or “explosiveness” of its development

and its disruptive nature.

This disruption is, in many ways, a

double-edged sword for a small coun-

try like Singapore. Harnessed prop-

erly, it provides both the country as

well as local companies a shot at

leapfrogging over the physical limita-

tions of size and small population to

become global players.

However, this is where the other

edge of the sword comes to play. A

clear digital strategy is a must not only

to take advantage of the disruption

but also to survive it. This requires a

radical mindset change among all

stakeholders; the government, com-

pany management and workers who

need to be prepared for things such as

lifelong learning because of the speed

of change that is being ushered in.

Today’s champions can become to-

morrow’s roadkill if they don’t keep up

with the disruption.

Anecdotal evidence suggests that,

by and large, in the legislative domain

the government is aware of the need

for a flexible approach to ensure gov-

ernment policy keeps up with the dis-

ruption. A good example of this is the

Monetary Authority of Singapore’s

(MAS’s) approach to new disruptive

technologies such as blockchain,

crypto-currencies and services such as

those offered by fintechs.

The workforce, particularly the

younger ones such as the millennials,

who are digital natives, seem to be

quite at ease using new technology at

the workplace. However, the jury is

still out on whether company manage-

ment, particularly in SMEs, have suffi-

cient skills and experience to be able

to reap the benefits of what is essen-tially the democratisation of techno-logy that is putting tools, that were once available only to the very large or-ganisations, in the hands of even small SMEs and startups. And also in the hands of every employee.

Due to a proliferation of smart devices, social media and ubiquitous connectivity, the workplace today has transformed and along with it em-ployee expectations. Many employees, especially millennials, do not under-stand the need to have to go to a partic-ular place to work at a particular time.

Technology allows employees to gain access to data in a secure manner at any place at any time and manage-ment, instead of resisting, needs to provide all the tools required to im-prove employee productivity and satis-faction.

The question then is, do the board-rooms in Singapore have the neces-sary expertise to recognise what needs to be done to keep a fine balance between productivity and business ob-jectives?

A recent Asia Workplace Study by Microsoft shows that out of the Singa-pore respondents, 62 per cent con-sider themselves to be mobile workers and spend at least 20 per cent of their time working outside of their offices.

Also, only 37 per cent feel em-powered by their organisation’s cul-ture and managers to be able to work together productively and collaborat-ively. In addition, only 26 per cent of respondents agree that their organisa-tion is committed at a leadership level to ensure every employee is included in closing the digital skills gaps within the workforce.

A related study showed that in Singapore 75 per cent of the business leaders – all of whom were pre-quali-fied as being involved in shaping their organisations’ digital strategy – believe that their organisations need to trans-form into a digital business to enable future growth. Yet, only 34 per cent said their companies have a full digital strategy in place today.

To reap the full benefits of digital transformation, business leaders in Singapore will need to think out of the box to envision the best way to bring together the most powerful resources – people, information and processes – in order to create value.

The success of every stakeholder will depend on a combination of busi-ness acumen and tech savviness. The competitor is no longer the company across the street. It could be one in an-other city thousands of kilometres away.

NEWS ANALYSIS

Today’s champions, tomorrow’s roadkill?

Manulife Reit coy about location of next acquisition

The success of every stakeholder will depend on a combination of business acumen and tech savviness. The competitor is no longer the company across the street.It could be one in another city thousands of kilometres away.

A clear digital strategy is a must, not only to take advantage of the disruption, but also to survive it

The SME Magazine:coming with The Business Times tomorrow

IN THIS ISSUE

ON THE ROAD: China’s Belt and Road Initiative offers tremendous opportunities,even for Singapore SMEs that lack scale.

CONSTRUCTING A FAMILY BUSINESS: While the daughters of Prime Structures founderand managing director Sonny Bensily are poised to take leadership roles in the company,they'll have to earn the experience. When he retires, the second generation – staff who

have been with him for a long time – have a fair shot at the helm, too.

MOVING TOWARDS GROCERIES 2.0: As a startup in South-east Asia that solely focuses onthe grocery sector while employing an asset-light model, HappyFresh partners with

brick-and-mortar grocery retailers to offer an online shopping experience that leverages off theirexisting physical assets and distribution networks.

MONETISING MYANMAR’S POTENTIAL: The recent opening up of the country presents anopportunity for technology leap-frogging, even as the burgeoning IT sector is increasingly

looking for investments and expertise from foreign companies.

. . . and more

6 | TOP STORIESThe Business Times | Tuesday, September 5, 2017