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

Yesterday, Ascendas Real Estate Investment Trust  (SGX: A17U) released its fiscal third quarter earnings report for its financial year ending 31 March 2017 (FY16/17). The reporting period is from 1 October 2016 to 31 December 2016.

As a quick background, the real estate investment trust (REIT) has 130 properties which are used for either commercial or industrial purposes, or both. Of the 130 properties, 102 are located in Singapore while the other 28 are found in Australia.

You can read more about the REIT in here, or catch up with the results from its previous quarter here.

Financial highlights

The following’s a rundown on some of Ascendas REIT’s latest financial figures:

  1. Gross revenue rose 7.6% to $208.6 million in the reporting quarter.
  2. Net property income (NPI) increased by 9.0% year-on-year from $142.2 million to $155.0 million.
  3. Distribution per unit (DPU) for FY16/17’s third quarter is 3.993 cents, a 1.2% increase from the same period a year ago.
  4. Ascendas REIT ended its reporting quarter with an adjusted net asset value per unit of $2.04, up slightly from the $2.02 seen a year ago.

Beyond these, Foolish investors may also 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 Ascendas REIT below:

2017-01-25 Ascendas REIT Debt Table
Source: Ascendas REIT’s earnings presentations

Over the past year, Ascendas REIT has been able to reduce its aggregate leverage to under 32%. It was also able to reduce its total debt to EBITDA ratio to 5.6. That being said, the REIT’s interest cover ratio had declined slightly and its all-in borrowing cost had stepped up.

As of 31 December 2016, Ascendas REIT’s weighted average debt to maturity is 3.9 years. The REIT’s debt maturity profile is fairly well spread out, but Foolish investors should continue to keep an eye on the REIT’s refinancing activities.

Operational highlights

For the reporting quarterhigher revenue came from new acquisitions. The REIT’s overall portfolio occupancy currently stands at 90.2% (up from 89.2% a year ago) with a weighted average lease to expiry of 3.7 years (unchanged from a year ago).

Chia Nam Toon, the chief executive of Ascendas REIT’s manager, shared his thoughts regarding the reporting quarter:

“Our operating performance has remained resilient in 3Q, underpinned by our diverse property portfolio and proactive portfolio management. The new acquisitions will broaden and strengthen our resilience in view of the expected challenging business environment.”

Looking forward, Ascendas REIT expects global economic growth to pick up. But, the REIT also cited possible uncertainties arising from Brexit, China’s debt and the impact of new US president Donald Trump’s trade policies. The REIT added that new supply of around 2.2 million square metres of industrial space in 2017 “will put further pressure on occupancy and rental rates.”

Ascendas REIT’s units closed at S$2.40 each yesterday. This translates to a historical price-to-book ratio of 1.18 and a distribution yield of 6.4%.

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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.