Since the takeover of Ascendas REIT (SGX:A17U) by CapitaLand Limited (SGX:C31) on 30 June 2019, the REIT’s financial year have been changed to 31 December (from 31 March), in-line with the financial year-ends of all the other REITs under CapitaLand.
As such, for Ascendas REIT’s most recent financial year that ended on 31 December 2019 (i.e. FY2019), there are only 9 months worth of results – between 01 April and 31 December 2019.
The REIT published its 2019 annual report last Monday (13 April 2020), and as a unitholder, I have gone through the entire report to learn about the REIT’s latest developments, and have summarised the key pointers to take note of and am sharing them in my post today (for the benefit of those who do not have the time to go through the report):
Summary from Chairman Lim Hock San’s Message to Unitholders, and Interview with CEO William Tay Wee Leong:
- Among the highlights in 2019 is the REIT’s acquisition of a total of S$1.66 billion worth of properties (the largest in the history of the REIT) from their sponsor CapitaLand; with the acquisition, the REIT further diversified its portfolio geographically to include the United States.
- At the end of FY2019, the REIT’s total investment properties totalled to S$12.8 billion, with a total of 200 properties in its portfolio. Singapore remains the REIT’s biggest market at S$9.1 billion (72%), followed by Australia at S$1.6 billion (12%), the United Stated at S$1.3 billion (10%), and the United Kingdom at S$0.8 billion (6%.)
- In terms of the REIT’s property mix, 44% of its investment properties are business parks and suburban office properties, 31% are industrial properties, and the remaining 25% are logistics properties.
- Also, with more than 1,490 customers across 20 industries, it greatly reduces the REIT’s exposure to one particular industry, as well as having a low customer concentration risk.
- The REIT’s overall portfolio occupancy as at FY2019 remained stable at 90.9%, with rental reversion at +6.0% (for the leases that were renewed during the financial year), and a weighted average lease to expiry at 3.9 years.
- The REIT also had a very sound capital profile at the end of FY2019, with aggregate leverage at 35.1% (with 75% of its borrowings effectively on fixed interest rate), and a Moody’s credit rating of A3.
- Ascendas REIT’s distribution per unit for the 9 months of financial year ended 31 December 2019 was at 11.490 cents.
- Looking at the year ahead, while it was noted that fragile trade relations, geopolitical tensions, and the Covid-19 outbreak will continue to pose headwinds to global economic activity, but the REIT’s management remains confident moving forward, and plan to optimise their returns despite all the uncertainties.
- The management plans to continue to let Ascendas REIT remain a Singapore-centric REIT with about 60% to 70% of their investments in the country.
- Finally, some of the REIT’s redevelopment and asset rejuvenation plans in the year 2020 include a new redevelopment project at International Business Park, and 2 asset enhancement initiatives at Singapore Science Park 2 (which commenced from January 2020), along with the redevelopment and maximisation of plot ratio at iQuest@IBP.
Ascendas REIT’s Key Financial Statistics for FY2019 (Compared Against 9-Months of the Previous Financial Year Ended 31 December 2018):
- Gross revenue increased 5.7% year-on-year (y-o-y) to S$699.1 million, mainly attributable to the 2 UK logistics portfolios acquired in August 2018 and October 2018, contributions from the UK business park portfolio, and 2 Singapore business park properties acquired in December 2019.
- Net property income increased 10.6% y-o-y to S$537.7 million, in tandem with the increase in gross revenue, and the exclusion of land rent expenses arising from the adoption of FRS 116 since 01 April 2019.
- Total amount available for distribution rose 5.2% y-o-y to S$375.4 million, largely due to contributions from the new acquisitions in the United Kingdom, the United States, as well as Singapore.
Top 10 Customers of Ascendas REIT by Monthly Gross Revenue as at 31 December 2019:
Ascendas REIT’s top 10 customers accounted for not more than 17.9% of the REIT’s monthly gross revenue. Also, no single property accounts for more than 4.6% of the REIT’s monthly gross revenue, offering income diversity within the portfolio.
The following table is Ascendas REIT’s top 10 customers:
|Customer||Country||% Contributions |
|Singapore Telecommunications Ltd||Singapore||4.1%|
|DSO National Laboratries||Singapore||2.7%|
|DBS Bank Ltd||Singapore||1.7%|
|CareFusion Manufacturing, LLC||United States||1.4%|
|Ceva Logistics S Pte Ltd||Australia,|
|JPMorgan Chase Bank, N.A||Singapore||1.3%|
|Siemens Pte Ltd||Singapore||1.1%|
|A*Star Research Entities||Singapore||1.1%|
Postponement of Ascendas REIT’s Annual General Meeting (AGM) for FY2019:
In a separate note to unitholders, it was noted that, in light of the Covid-19 situation, and in anticipation of legislative amendments in relation to the conduct of general meetings (including holding such meetings by virtual means), Ascendas REIT will be deferring its AGM till further notice (you can read the note in full here.)
At the time of writing, I do not have any confirm date as to when the REIT will be holding its AGM. I will provide the latest updates in The Singaporean Investor’s Telegram broadcast channel (you can follow the updates here), as well as via InvestingNote (you can follow my profile here) as soon as I have them.
Download Your Copy of Ascendas REIT’s Latest 2019 Annual Report Here:
You can download your copy of Ascendas REIT’s latest 2019 annual report here.
Disclaimer: At the time of writing, I am a unitholder of Ascendas REIT.
Launch Event for My First Book: building your REIT-irement portfolio
After months of hard work, my first book, 'Building Your REIT-irement portfolio' is finally ready! In this easy-to-follow 178-page guide, you'll learn everything you need to know about building a REIT portfolio that can provide for you in your retirement years. You can check out a preview of the book here.
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