Ascendas Real Estate Investment Trust’s Latest Earnings: What Investors Need to Know

Ascendas Real Estate Investment Trust  (SGX: A17U) released its fiscal first-quarter earnings report yesterday evening. The reporting period was from 1 April 2015 to 30 June 2015.

The real estate investment trust (REIT) has 105 properties in its portfolio which are used for commercial and/or industrial purposes. Of the 105 properties, 103 are located in Singapore while the other two are seated in China.

You can read more about the REIT in here, or catch up with its previous quarter’s earnings here.

Financial highlights

Here’s a quick take of Ascendas REIT’s latest financial figures:

  1. Gross revenue for the reporting quarter rose 10.3% year over year to $180.5 million.
  2. Quarterly net property income (NPI) followed suit with a 6.9% year over year increase from $116.3 million to $124.3 million.
  3. The REIT’s distribution per unit (DPU) for the fiscal first-quarter was 3.841 cents, which was 5.5% higher from the same quarter a year ago.
  4. Ascendas REIT’s property portfolio was valued at $2.4 billion (as of 30 September 2014).
  5. The REIT had reported an adjusted net asset value per unit of $2.01, up 1.5% from the selfsame figure of $1.98 seen a year ago.

Beyond these, Foolish investors might want to keep an eye on the REIT’s debt profile. The debt profile may provide clues on how the REIT is funded and its sensitivity to the interest rate environment. These are summarised for Ascenads REIT below:

2015-07 Ascendas Debt Table

Source: Ascendas REIT’s earnings presentation

Ascendas REIT hasn’t been able to make improvements to its balance sheet on a quarter-on-quarter basis. As the table above shows, the REIT’s aggregate leverage, total borrowings, and all-in borrowing cost had all increased.

As of 30 June 2015, the REIT’s weighted average debt to maturity was 3.8 years. Investors might be pleased to know that the REIT’s debt profile is fairly well spread out by year.

For the quarter, the REIT also refinanced a S$300 million term loan facility due in 2017. Foolish investors should continue to keep an eye out for the REIT’s refinancing activities.

Operational highlights

For the reporting quarterhigher revenue came from a combination of new acquisitions (Hyflux Innovation Centre, Aperia and the Kendell), positive rental reversions, and increased occupancy.

Overall portfolio occupancy stood at 88.8% with a weighted average lease to expiry of 3.7 years. For context, the selfsame figures a year ago were 88.1% and 3.9 years respectively; it’s good to see the REIT’s occupancy level increase, but a shorter average lease to expiry adds more uncertainty to the REIT’s income stream.

Commenting on the quarter, Tan Ser Ping, the Chief Executive Officer of Ascendas REIT’s Manager, added:

“In the first quarter of the new financial year, A-REIT achieved a 5.5% growth in distribution per unit, underpinned by higher occupancy as well as positive rental reversion on lease renewals. Our new acquisitions, Aperia, Hyflux Innovation Centre and The Kendall contributed to the strong performance, reaffirming our track record of value-adding investments.”

Looking forward, Ascendas REIT also has S$101.6 million worth in asset enhancement initiatives (AEI) ongoing at six properties. Meanwhile, its development project in China (valued at $23.7 million) is estimated to be completed in the first quarter of 2016.

The management team also expects a stable performance for the financial year ending 31 March 2016.”

Foolish summary

Ascendas REIT closed at S$2.43 yesterday. This translates to a historical price-to-book ratio of 1.2 and a distribution yield of around 6%.

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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.