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Ascendas Real Estate Investment Trust Reports A 1.6% Increase In Distributions

With a market capitalization close to S$8 billion, Ascendas Real Estate Investment Trust (SGX: A17U) is the largest REIT listed in Singapore. It invests mainly in industrial properties in Singapore and Australia.

On Monday, the REIT released its fourth quarter and full year earnings update for the fiscal year ended 31 March 2018 (FY17/18). Here are 10 highlights:

1. Gross revenue for the full financial year increased by 3.8% to S$862.1 million, from S$830.6 million the year before. Likewise, net property income grew 3.0% to S$629.4 million from S$611.0 million. Distributable income increased at a slightly faster pace of 4.9% to S$468.0 million from S$446.3 million. Distributions per unit increased by 1.6% to 15.99 Singapore cents from 15.74 Singapore cents the previous year.

2. The higher revenue and net property income was due to contributions from the REIT’s acquisitions of 12,14, and 16 Science Park Drive in Singapore, 197-201 Coward Street, 100 and 108 Wichham Street, and 52 Fox Drive in Australia. The completion of redevelopment works at 50 Kallang Avenue on June 2017 also contributed to the increase. At the same time, the REIT’s growth was partially offset by divestments of three properties each in China and Singapore. There was also a one-off property tax refund in FY16/17. Excluding this one-off item, management said that Ascendas REIT’s net property income would have instead increased by 5.3%.

3. As of 31 March 2018, the REIT had total debt of S$3.56 billion and assets valued at S$10.35 billion. That puts its aggregate leverage at 34.4%. This is a slight improvement from 31 December 2017 when it had aggregate leverage of 35.2%. Ascendas REIT also currently has an average debt maturity of 3.2 years, and a well-spread debt maturity profile with just S$286 million worth of borrowings expiring in FY18/19. The REIT’s interest cover ratio is high at 5.9 times, and its weighted average all-in cost of debt is healthy at 2.9%.

4. The net total assets for the REIT increased to S$6.2 billion, up from S$6.0 billion a year ago. However, its adjusted net asset value per unit remained stable at S$2.04 per unit.

5. As of 31 March 2018, Ascendas REIT had a total of 130 properties valued at S$10.14 billion. The valuation of its properties (excluding properties under development) on a comparable basis inched up slightly to S$9.84 billion from S$9.75 billion. For the full year, the REIT had an average capitalization rate of 6.24%.

6. As of the end of March 2018, the REIT’s total portfolio occupancy stood at 91.5%, compared to 90.2% a year ago, and 91.1% on 31 December 2017.

7. For the full financial year, Ascendas REIT recorded a positive rental reversion rate of 0.7%, slightly down from the positive 3.1% rate seen in FY16/17. However, rental reversions declined by 6.8% for the fourth quarter of FY17/18.

8. The REIT’s portfolio weighted average lease expiry (WALE) stood at 4.2 years at the end of FY17/18. About 14.0% of its gross revenue is due for renewal in FY18/19.

9. On Ascendas REIT’s outlook, management said that despite improvements in leasing enquires in the Singapore market, businesses are still cautious and some are still consolidating and right-sizing. Meanwhile, with Australia’s economy expected to grow 2.7% this year, management expects its performance in Australia to remain stable.

10. Based on yesterday’s closing price of S$2.68 per unit, Ascendas REIT had a price to book ratio of 1.31 and a trailing distribution yield of 6.0%.

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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 Jeremy Chia doesn’t own shares in any companies mentioned.