4 Quick Things Investors Should Learn About Ascendas Real Estate Investment Trust

Credit: Cambridge Industrial Trust

Ascendas Real Estate Investment Trust (SGX: A17U) is one of the cool companies in Singapore which shares webcasts of their quarterly earnings presentations (the link for Ascendas REIT is here).

Ascendas REIT is one of the largest business space and industrial real estate investment trusts in Singapore. With more than 100 properties here and two business parks in China, the REIT’s total assets amount to more than $8.2 billion as of 31 March 2015.

You can read more about Ascendas REIT here.

What’s behind Ascendas REIT’s results?

Below are four useful things I learned from listening to the REIT’s fiscal fourth-quarter webcast for the financial year ended 31 March 2015 (FY14/15):

  1. Ascendas REIT ended FY14/15 with $770.6 million spent on acquisitions and $60 million spent on asset enhancement initiatives. Speaking of acquisitions, Yeow Kit Peng, head of Capital Markets and Corporate Development at the REIT’s manager, highlighted that the new acquisitions came with long land lease tenures of 53 years to 64 years. A capital gain of $9.4 million was also realized for FY14/15 from the divestment of two properties.
  2. Looking ahead, Ascendas REIT is looking to spend $45.5 million in development projects, of which $23.7 million is earmarked for a Jiashan logistics facility in China. When asked about the REIT’s future plans for China, Tan Ser Ping, Chief Executive Officer of the REIT’s manager, said that industrial land around the Tier 1 cities in China were very scarce and it would be premature to assume that Ascendas REIT is able to build a network of logistic properties. Instead, the REIT will be focusing on major consumer cities with e-commerce fulfilment opportunities.
  3. On rental reversions, Tan highlighted three factors that can influence it: locations, specific leases, and the current passing rent. Tan expects the rental reversion for the coming financial year to be around the mid-single digit range. This applies for most subclasses of properties under its portfolio, with the exception of the light industrial and logistics properties segment which have a larger gap between current passing rent with what Ascendas REIT has.
  4. Elsewhere, Tan also commented that the current acquisition pipeline will unlikely be as high as the $770.6 million performed in FY14/15. He quoted the example of the $193.9 million acquisition of Hyflux Innovation Centre in FY14/15; it was unique in terms of its scale, size, and opportunity.

Foolish takeaway

To buy and hold a share or REIT for the long term also means keeping up with developments in it.

The access to management teams via webcasts gives the Foolish investor a fair chance to judge if they would like to be invested alongside those teams. It also helps us put together a more complete thesis around a share or REIT and keep up with important developments in its industry.

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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 Chin Hui Leong doesn’t own shares in any companies mentioned.