Date: December 9, 2020
Why would you stay mediocre when you can be extraordinary?
This is the motto that spurs real estate veteran Karen Lee to pursue excellence and reach for the stars.
“A former boss gave me this advice – in business, don’t be mediocre,” recalled Lee, the CEO of the manager of SGX-listed ARA LOGOS Logistics Trust. “The mediocre will accept the market, or the status quo, as given, but the great will do better than the market.”
Another wise observation from her 82-year-old father still resonates with her: “Anything is possible if you set your mind to it – if you never try, you will never know.”
For Lee, these exhortations remain touchstones till today. “This is what drives me, and what I share with my team to inspire them to achieve their targets,” she added.
Lee has more than two decades of experience in the real estate industry, including industrial real estate development, asset and investment management, business development, leasing, marketing and property management.
She was appointed the Chief Executive Officer of ARA LOGOS Logistics Trust Management Ltd, the manager of ARA LOGOS Logistics Trust, in August this year. Before this appointment, she was the Head of Asset and Investment Management for LOGOS’s Southeast Asian business. Prior to joining LOGOS, between 2008 and 2018, Lee held a senior management role in Ascendas REIT.
Her career journey in real estate began in 1999 with Jurong Town Corporation (JTC), Singapore’s largest industrial landlord, after she graduated with a Bachelor of Science in Economics with Honours, and Master of Science in Real Estate, from the National University of Singapore.
“It was those years in JTC that helped me understand the industry landscape, and solidified my real estate calling,” she said.
“Many people think real estate is all about brick-and-mortar structures, but it’s actually much more than that – it extends beyond the physical into the unseen, and includes the businesses of tenants, which span different industries with all their colour, as well as relationships with tenants, who are our customers.”
Leveraging Strengths
Listed on SGX Mainboard since 2010, ARA LOGOS Logistics Trust (ALOG), previously known as Cache Logistics Trust, is a real estate investment trust that invests in income-producing real estate used for logistics purposes and real estate-related assets in the Asia Pacific. Its portfolio comprises 27 high-quality logistics warehouse properties located in established logistics clusters across Singapore and Australia.
In March 2020, ARA Asset Management, a leading Asia-Pacific real assets fund manager, completed its acquisition of a majority stake in LOGOS, a logistics real estate specialist across Asia Pacific. Post-acquisition, LOGOS operates as ARA’s exclusive logistics real estate platform and ALOG’s Sponsor. In April 2020, Cache Logistics Trust was rebranded as ARA LOGOS Logistics Trust.
LOGOS has over 6.7 million square metres of property owned and under development, and a completed value of S$14 billion across 24 ventures. As a vertically integrated business, LOGOS manages every aspect of logistics real estate, from sourcing land or facilities, to undertaking development and asset management, on behalf of some of the world’s leading global real estate investors.
“ALOG can now leverage the combined complementary strengths of ARA and LOGOS, realising key benefits such as an enlarged network in key and new high-growth markets, enhanced complementary capabilities and resources, as well as increased attractiveness to a larger pool of institutional investors,” Lee noted.
In October, underscoring the beneficial relationship between ALOG and its Sponsor, the trust unveiled its maiden acquisition under LOGOS’s sponsorship.
The proposed acquisition, which has a total purchase price of more than S$400 million, comprises five logistics properties located in Brisbane, and two fund investments that own a combined portfolio of five logistics assets in New South Wales and Victoria.
Following these acquisitions and fund investments, ALOG’s deposited property value will increase by 28.2% to S$1.7 billion on a pro forma basis as at 30 June 2020, from about S$1.3 billion. The portfolio value attributable to Australia is also expected to rise to 47.6% from 32.5%.
“This is a transformational acquisition for ALOG as it expands our footprint across key economic hubs in the East Coast of Australia, and paves the way for our next chapter of growth under LOGOS’s sponsorship,” Lee noted.
And asset acquisitions will continue to drive the trust’s expansion over the next few years, she added.
“ALOG has an Asia-Pacific mandate – we will continue to leverage on our Sponsor’s robust pipeline – totalling S$14 billion – across key markets in Asia Pacific, as well as its expertise, and adopt a disciplined, proactive approach when sourcing for opportunities to grow the trust.”
Resilient Fundamentals
ALOG’s balance sheet also remains resilient. As at 30 September 2020, the trust had a well-balanced debt maturity profile, with aggregate leverage ratio of 40.5%, an interest coverage ratio of 3.7 times, and a weighted average debt maturity of 3.3 years. There are no refinancing requirements until December 2021.
“We continue to proactively manage our portfolio and capital structure to safeguard the long-term sustainability of our unitholders’ interests,” Lee added.
The trust also has deep, established tenant relationships that support its strong retention rate – ALOG’s portfolio occupancy rate remains high at 97%, despite prevailing soft market conditions, and its weighted average lease expiry (WALE) by net lettable area stands at 2.6 years.
Lee is focused on further improving the trust’s WALE, a closely watched industry metric. “Our priority is to reduce ALOG’s trading yield or equity cost, so we can acquire assets at more accretive levels,” she said.
“We’re working hard to boost the specs of our real estate assets – such as customising the specs to meet the needs of our tenants, for example, converting ambient warehouse to air-conditioned ones. This enables us to add value, which spurs tenants to extend their leases and become more sticky.”
The logistics industry’s robust fundamentals also add to ALOG’s bright prospects. The trust’s diversified and high-quality tenant base spans various industry and trade sectors, underpinning the trust’s cashflows and stable operational performance.
“We’re continuing to see stable leasing appetite from existing and prospective tenants for warehouse and prime logistics space across our portfolio, particularly from large-scale end-users, following a flight to quality and the shift to better locations,” Lee said. “This has been underpinned by higher demand from e-commerce, food logistics and third-party logistics players.”
Key growth drivers for the sector include the rise of online transactions and shifts in supply chain management. “We observed that businesses are looking to de-risk, either by diversifying their sources of raw materials or by stockpiling, following the impact of COVID-19 lockdowns. These trends can be seen across Australia and Singapore,” she added.
At the end of the day, this 47-year-old mother of two derives immense satisfaction from the knowledge that she is contributing to the improvement and growth of ALOG’s business.
“For the management of any REIT, there’s always that element of accountability and responsibility, to ensure we deliver on our promises, not only to our unitholders, but also to our tenants,” she added.
Building cohesion and grooming talent in her team are also key focus areas. “I’m likewise accountable to my team mates, and we’re on this transformational journey, not as individuals, but together as a team,” she said with a smile.
This is why trust, integrity and respect are among the key principles that she upholds, and tries to instill in her daughter, 15, and son, 11.
“These are core values in life – the ones that form the basis of your code of ethics, and the foundation of all your relationships – whether professional or personal.”
ARA LOGOS Logistics Trust
Listed on Singapore Exchange on 12 April 2010, ARA LOGOS Logistics Trust (ALOG) is a real estate investment trust that invests in quality income-producing industrial real estate used for logistics purposes, as well as real estate-related assets in the Asia Pacific. As at 30 September 2020, ALOG’s portfolio comprises 27 high-quality logistics warehouse properties strategically located in established logistics clusters in Singapore and Australia. The portfolio has a total gross floor area of approximately 9.0 million square feet valued at approximately S$1.26 billion.
ALOG is managed by ARA LOGOS Logistics Trust Management Ltd, a wholly owned subsidiary of LOGOS. ARA Asset Management Ltd is a majority shareholder of LOGOS, which operates as ARA’s global logistics real estate platform. LOGOS is a leading logistics property group in Asia Pacific, with over 6.7 million sqm of property owned and under development, and a completed value of S$14 billion across 24 ventures.
The company website is: www.aralogos-reit.com.
Click here for the company’s StockFacts page.
For the three months ended 30 September 2020 results, click here.
First published on SGX website on 20 November 2020
About kopi-C: the Company brew
Text: Jennifer LH Tan
Photo: Company file
kopi-C is a regular column on the SGX Research website that features C-level executives of leading companies listed on Singapore Exchange. These interviews are profiles of senior management aimed at helping investors better understand the individuals who run these corporations.
For previous editions of kopi-C: the Company brew, please click here.
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