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

Credit: Axisadman

Yesterday, Ascendas Real Estate Investment Trust (SGX: A17U) released its second-quarter earnings report for the financial year ending 31 March 2018 (FY17/18). The reporting period was from 1 April 2017 to 30 June 2017.

The real estate investment trust (REIT) houses properties which are used for either commercial or industrial purposes, or both. As of 30 June 2017, Ascendas REIT had 103 properties in Singapore and 29 properties in Australia.

You can read more about the REIT here .

Financial Highlights

Here’s a quick rundown on the financial figures for latest quarter:

1. Gross revenue rose to $213.3 million, up 2.7% from a year ago.  

2. Net property income (NPI) rose by 2.6% year on year. NPI came in at $153.4 million, compared to $149.5 million recorded a year ago.

3. Distribution per unit (DPU) was 4.049 cents, which was a 4.3% increase from the first-quarter last year. DPU was boosted by a 0.227 cent distribution from capital. Without the capital distribution, DPU would have only increased by 3% to 3.822 cents.

4. Investment properties were valued at $10.2 billion on 30 June 2017. Ascendas REIT reported an adjusted net asset value per unit of $2.04.

Foolish investors might want to keep up 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. This is summarised below:

Source: Ascendas REIT’s earnings presentation

Total borrowings decreased to $3.45 billion in the latest quarter. The weighted average all-in borrowing cost was relatively flat while interest cover ratio increased 5.8 times. Aggregate leverage was 33.9%, down from the ratio of 37% recorded a year ago. Ascendas REIT has outstanding loans of $615 million to be refinanced for 2017.

Operational Highlights

Overall portfolio occupancy stood at 91.6% with a weighted average lease to expiry of 4.3 years. Chief executive officer of the REIT’s manager, Chia Nam Toon, added:

“We are pleased to report an improvement in portfolio occupancy together with a slight positive rental reversion in Singapore. However, Singapore’s industrial property market still remains soft amid the intense competition for tenants. Potential new supply of industrial space for the remaining of 2017 is expected to put pressure on rental rates and occupancy.”

Looking forward, the REIT said that the global economy has improved but there were lingering uncertainties. The management team expects a stable performance for FY17/18.

Foolish summary

Ascendas REIT closed at S$2.72 on Thursday. The units traded at a price-to-book ratio of 1.33 and a distribution yield of 5.8%.

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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.