Ascendas Real Estate Investment Trust (SGX: A17U) owns properties that are used for either commercial or industrial purposes, or both. It has assets in Singapore, Australia and United Kingdom. There are two things about the real estate investment trust (REIT) that investors may want to know about right now: its latest financial performance and valuation.
Here’s a table showing important items from Ascendas REIT’s financial performance for the second quarter of financial year ending March 2019.
Source: Ascendas REIT’s Earnings Update
Overall, we see that the financial performance was mixed.
Gross revenue improved as compared to the same period last year due to new acquisitions in Australia and UK. On the other hand, distribution per unit (DPU) declined 4.2% mainly due to increase in the number of units.
William Tay, chief executive and executive director of the REIT’s manager, commented:
“We had a very active quarter and made significant progress in expanding into the UK. We also raised equity in anticipation of the second UK portfolio acquisition which was completed in October 2018. Besides Singapore, our long term strategy is to build up our portfolio in Australia, the UK and also into Europe.”
As of 30 September 2018, the REIT’s gearing stood at 33.2% while its committed occupancy rate was 90.6%.
There are two useful valuation metrics for assessing REITs. They are the price-to-book (PB) ratio, and the distribution yield.
The table below shows Ascendas REIT’s PB ratio and distribution yield. It also shows the respective averages for the two valuation metrics for the 40 REITs that are in Singapore’s stock market.
Source: SGX StockFacts
We can see that Ascendas REIT is trading at a premium to market average based on its low distribution yield and high PB ratio.
Stop worrying about the uncertain REITs market with our new Complete Guide To Buying The Best Singapore REITs. We give you 3 quick ways to easily value your REITs so you save tons of research time. Value your REITs today so you know exactly when to buy, sell or hold. Simply enter your email here and we will rush the 42-page PDF immediately to your inbox...for FREE!
The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Lawrence Nga doesn’t own shares in any companies mentioned.