3 Key Things Investors Should Know About Ascendas Real Estate Investment Trust From Its Latest Earnings Presentation

Ascendas Real Estate Investment Trust (SGX: A17U) is one of the cool companies and REITs in Singapore that shares webcasts and/or transcripts of their earnings presentations.

In late October, the REIT released its second-quarter earnings for its financial year ending 31 March 2017 (FY16/17). I had spent time going through the webcast of the earnings presentation and noted down three things that may interest investors.

As a quick background, Ascendas REIT is one of the largest business space and industrial real estate investment trusts in Singapore. With 102 properties here, 28 properties in Australia, and one business park in China, the REIT’s total assets amount to S$9.9 billion as of 30 September 2016.

With that, here are my notes:

1. Divestment gains

Yeow Kit Peng, Ascendas REIT’s Head of Capital Markets and Corporate Development, shared one of the divestments the REIT made during the quarter:

“We continuously evaluate options relating to our investments from time to time, so we took advantage of the strong asset pricing in China and divested Z-link in Beijing at around 5% cap rate. The divestment generated proceeds of about SGD 155 million and achieved gains of about SGD 84 million over the original cost.”

The proceeds were put to use by reducing the REIT’s gearing level from 37% in the previous quarter to 34.2% in the latest quarter.

2. Managing refinancing risk

Speaking of debt, Yeow also said:

“To minimize any refinancing risks, no more than 20% of our debt will be due for refinancing in any one year.”

Ascendas REIT also issued a HK$923 million (or S$162.9 million) 10-year bond during the quarter. This came with a coupon rate of 2.77%. As a result, the REIT’s debt maturity profile also improved.

“So as such, this helped to lengthen the debt maturity profile with an average debt expiry of 3.8 years. The previous quarter, it was about 3.3 years.”

The two statements paint a picture of how Ascendas REIT is on a better footing now in terms of its debt profile as compared to the previous quarter.

3. Portfolio lease expiry profile

Yeow also reported that Ascendas REIT has an average weighted lease to expiry (WALE) of 3.7 years. She said that around 10.5% of the REIT’s gross revenue is slated for renewal during the current fiscal year. The majority of its leases are also multi-tenancy in nature, rather than being single-tenant based.

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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.