5 Useful Things Investors Should Know About Ascendas Real Estate Investment Trust

Ascendas Real Estate Investment Trust (SGX: A17U) is one of the cool stocks in Singapore that shares webcasts of their investor presentations.

There may be new information investors can pick out from these webcasts.

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 $8.3 billion as of 30 September 2015.

You can read more about Ascendas REIT in here.

What’s behind Ascendas REIT’s growth?

Below are five useful things I learned from listening to the REIT’s recent investor presentation:

  1. Recently, Ascendas REIT had expanded its investment mandate to include mature developed markets for growth opportunities. Germany and Australia are on its radar. Touching on this topic, Tan Ser Ping, the Chief Executive Officer of the REIT’s manager, said that the Singapore market is relatively small. As such, future opportunities here may be limited. Tan also said that Ascendas REIT still has a good pipeline of properties from its sponsor. According to the REIT’s announcement, it has a target of having 20% to 30% of its assets be in the new mature markets.
  2. Tan also added that Ascendas REIT has faced challenges in converting its single tenant buildings to multi-tenanted buildings in the last two to three fiscal years. He felt that the REIT should not be bogged down by this issue, moving forward.
  3. As Ascendas REIT expands into foreign markets, Tan notes that it will be exposed to currency fluctuations. He said that the REIT should have the flexibility to implement natural hedges, that is, taking local-denominated loans to match up with the foreign assets.
  4. Tan also shared his thoughts around future acquisitions. He said that the volume of acquisitions that Ascendas REIT can undertake is dependent on two major factors. The first is the availability and attractiveness of investment opportunities and the available capacity for the REIT to digest the new opportunities. He pointed to the last fiscal year’s acquisition value of around $700 million to $800 million as well within Ascendas REIT’s capability. The second factor is more nuanced. Tan spoke in length about the potential of improving the properties’ value, including occupancy.
  5. The Monetary Authority of Singapore has recently raised the development limit for a REIT from 10% of its deposited properties to 25%. Speaking on this, Tan said that he does not expect Ascendas REIT to expand its development activities significantly.

Foolish takeaway

To buy and hold a company for the long-term also means the need to keep up with its developments.

The access to management teams via webcasts gives the Foolish investor a fair chance to judge for themselves whether they would like to be invested alongside a particular team. It also helps us put together a more complete thesis around a company and keep up with 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.