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Ascendas India Trust’s First Quarter Distribution Per Unit Jumps By 23%

Ascendas India Trust (SGX: CY6U) is the first trust listed in Singapore that focuses on investing in real estate in India. It currently has a portfolio of properties located in seven IT parks and six warehouses (acquired in February 2018) in some of the most important cities in India such as Mumbai, Chennai and Bangalore.

On Wednesday, 25 July, the trust released its earnings update for the 3-month period ended 30 June 2018. Here are the key takeaways:

1. Total property income rose 6% to ₹2,254 million from ₹2,134 million in the corresponding period last year. Net property income consequently rose 20% to ₹1,684 million, from ₹1,408 million.

2. Income available for distribution increased an impressive 48% to ₹925 million from ₹626 million. The trust retains 10% of income available for distribution and distributes 90% of distributable income. Therefore, income to be distributed was ₹833 million, up 48% year-on-year from ₹564 million.

3. Distribution per unit rose 33% to ₹0.8 from ₹0.6. However, as the Singapore currency appreciated 8.4% against the Indian rupee from a year ago, DPU in Singapore dollar only increased 23% to 1.6 cents from 1.31 cents.

4. The higher income was due to contributions from new acquisitions at BlueRidge 2 and Arshiya warehouses, completion of Atria building, and positive rental reversions.

5. Below are two charts showing total and net property income in the last three years in Singapore dollars:

Source: Ascendas India Trust FY18/19 Q1 Earnings Presentation

Source: Ascendas India Trust FY18/19 Q1 Earnings Presentation

6. As of 30 June 2018, the group had a gearing ratio of 31%, which is five percentage points above March 2018’s figure. The increase is largely due to higher borrowings used to fund the construction of two buildings in an IT park in Navi Mumbai.

7. Effective weighted average cost of debt was 5.5%, interest cover stood at 4.1 times and the trust has debt headroom of S$523 million before reaching the 45% regulatory limit. It had 73% of its debt hedged. Net asset value per unit remained stable at S$0.91.

8. The trust operates in five cities in India, namely Mumbai, Pune, Chennai, Bangalore and Hyderbad. Below is the portfolio breakdown during the quarter:

Source: Ascendas India Trust FY18/19 Q1 Earnings Presentation

9. Portfolio occupancy during the quarter was a healthy 96%. Of note, its newly acquired Blueridge had a committed occupancy of 87%, slightly below market occupancy of 89%, leaving it room for improvement. The other properties had higher occupancies than the peripheral market. Weighted average lease expiry was 4.5 years. Only 10% of tenant contracts are due for renewal in FY18/19 (ending 31 March 2019).

10. The trust is in the midst of developing two properties in the International Tech Park in Bangalore. One is expected to be completed in the second half of 2019 and the other in 2020. Both have been 100% pre-leased. It has also agreed to acquire two buildings in another IT park in Navi Mumbai.

11. Management mentioned that a research by CBRE shows that rental rates are expected improve in Bangalore and Hyderabad, while rates in Chennai and Pune will remain largely stable.

12. At the time of writing, units of Ascendas India Trust exchanged hands at S$1.10, giving a price-to-book ratio of 1.2 and an annualised 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 Jeremy Chia doesn’t own shares in any companies mentioned.