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Three Things To Like About Ascendas Real Estate Trust

What is there not to like about Ascendas Real Estate Investment Trust (SGX: A17U)?

It is one of Singapore’s largest business space and industrial Real Estate Investment Trust. It has a portfolio of around 103 properties that includes factories, science parks and distribution centres. It even has a couple of business parks in China.

Ascendas has been able to increase its rental revenues consistently over the last 11 years. That is the first thing to like about the company. In 2003, rental revenue stood at S$53m. By 2014, rental revenue had jumped almost 12-fold to S$613m. That is a compound increase of over 20%.

The stepwise increase in revenues coupled with prudent control over expenses has enabled the property company to improve both operating profits and bottom-line income in similar fashion. That has enabled Ascendas to reward shareholders with rising distribution units.

That is the second thing to like about Ascendas Real Estate Investment Trust – namely its dividends. In 2003, the company paid out S$0.06 per share in dividends. That equated to a dividend yield of around 7%. Last year, Ascendas paid out S$0.14 in dividends, which roughly equated to a 6% yield. Meanwhile, the share price has increased nearly 2.6 times.

That is the third thing to like about Ascendas Real Estate Investment Trust – its total return. The company has delivered an annual total return of 16% since 2003. This has been made up of a 10% annual increase in its share price and 6% from dividends.

A 16% annual total return would mean that an investment of S$1,000 in 2003 would be worth S$5,700 today. What’s more the company has achieved that without an excessive use of borrowings. Total debt is around 55% of shareholder equity, while net debt is around 50%. There is a lot to like about that.

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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 Director David Kuo doesn’t own shares in any companies mentioned.