Ascendas REIT Reports Full Year Results

Ascendas REIT (SGX: A17U) reported its full year results yesterday. The REIT had an 8.5% growth in annual distributable amount from S$281.7m to S$305.6m. The total yearly distribution per unit (DPU) for investors inched up by 1.3% to S$0.1374 from S$0.1356 due to an increase in the number of units in the trust.

The REIT’s gross yearly revenue had increased by 14.4% from S$503.3m to S$575.8m, driven by positive rental reversions that averaged 14% when leases are renewed. But, net property income only managed 11% growth from S$368.3m to S$408.8m as operating expenses for its properties jumped by 23.8% to S$167.0m.

Unit-holders will be happy to know that A-REIT’s properties were deemed to have appreciated by S$72.8m in the latest financial year on the back of a stable capitalization rate of 6.6% for its properties. The entire stable is worth a total of S$6.45b as of 31 March 2013. Last year, A-REIT’s properties had advanced by S$224.5m in value.

The REIT added a new property in March 2013 when The Galen was acquired for S$127.5m. Elsewhere, a total of S$74m was also spent on property development and asset enhancement. A-REIT’s managers had also sold one block out of a six-block property for S$38m that was acquired for S$128.9m in 2002.

Looking at A-REIT’s balance sheet, the gearing ratio is now 28.3%, well below the allowable limit of 60% for a REIT that has been rated by rating agencies.

The Chief Executive Officer and Executive Director of A-REIT’s manager, Mr. Tan Ser Ping, had this to say about the REIT’s latest financial year and upcoming expectations: “A-REIT’s portfolio continues to achieve positive rental reversion averaging 14.0% for leases renewed during the financial year. We expect the trend to continue in FY13/14 albeit at a more modest rate. The multi-tenanted portion of A-REIT’s portfolio has a vacancy of about 10% and this would provide significant potential net property income growth when these spaces are leased out in due course.”

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Chong Ser Jing doesn’t own shares in any companies mentioned.