Ascendas REIT (SGX:A17U) have switched to half-yearly reporting with effect from financial year 2020. As such, for the most recent quarter ended 31 March 2020 (i.e. Q1 FY2020), the REIT provided just some key business updates.

I have gone though the updates (published yesterday evening after trading hours) and in this post, you’ll find some key highlights, along with my thoughts:

Portfolio Occupancy Profile (Q3 FY2019 vs. Q1 FY2020):

Compared to the previous quarter ended 31 December 2019 (i.e. Q3 FY2019), how is the REIT’s portfolio occupancy like in the most recent quarter ended 31 March 2020 (i.e. Q1 FY2020)?

Let us check it out in the table below:

Q3 FY2019Q1 FY2020
Portfolio Occupancy
(%)
90.9%91.7%
Rental Reversion
(%)
+8.8%+8.0%

In terms of the REIT’s overall portfolio occupancy rate, there was a slight improvement by 0.8 percentage points to 91.7% for the quarter under review, as a result of an improvement in the occupancy rate of its properties in Singapore (from 87.2% in Q3 FY2019 to 88.6% in Q1 FY2020, on the back of higher demand for logistics space), offset by slight dips in its properties in Australia (from 97.4% in Q3 FY2019 to 97.3% in Q1 FY2020), the United Kingdom (from 97.7% in Q3 FY2019 to 97.5% in Q1 FY2020), as well as in the United States (from 93.9% in Q3 FY2019 to 92.9% in Q1 FY2020.)

Rental reversions for lease renewals in multi-tenanted buildings made in the quarter continued to be positive. That said, the REIT added that they expect rental reversions for FY2020 to be flat in view of the current uncertainties.

As at 31 March 2020, the REIT has a total of 197 properties in its portfolio – with 71% of its total investment properties in Singapore, 13% in Australia, 10% in the United States, and 6% in the United Kingdom.

Also, industries that were directly impacted by Covid-19 made up less than 15% of the REIT’s monthly gross revenue. More than 50% of the REIT’s monthly gross revenue are contributed by the resilient industries such as financial services, government, data centres, and biomedical.

My Thoughts: As a unitholder, I am happy to note the improvements in the REIT’s overall portfolio occupancy rate, and that it has remained at healthy levels, above 90.0%. Also, it is good to note that the rental reversion for the quarter under review has been maintained at a positive percentage. The management was also candid enough to share that the rental reversion, in light of the uncertainties ahead (owing to the Covid-19 outbreak), is expected to be flat.

Debt Profile (Q3 FY2019 vs. Q1 FY2020):

Another update provided by the REIT is its debt profile. In this section, let us take a look at the current quarter’s debt profile, and compare it against the previous quarter’s (i.e. Q3 FY2019 ended 31 December 2019):

Q3 FY2019Q1 FY2020
Aggregate Leverage
(%)
35.1%36.2%
Interest Cover Ratio
(times)
4.9x5.0x
Weighted Average
Tenure of Debt (years)
4.0 years3.8 years
Weighted Average
All-In Cost of Debt (years)
2.9%2.9%

In the REIT’s press release, they added that in the event where Covid-19 is prolonged, the REIT has S$490m in its reserves to make up for any shortfall.

My Thoughts: Compared to the previous quarter, Ascendas REIT’s debt profile have remained stable. Its aggregate leverage, at 36.2%, is a safe distance away from the temporarily revised regulatory limit of 50.0%.

Other Key Updates to Take Note of:

  • There will be a delay in the completion of Grab Holdings’ headquarters from Q4 FY2020 to Q1 FY2021, due to the circuit breaker measures implemented by the Singapore government.
  • None of the REIT’s properties had to be closed down during the circuit breaker period, due to some 85% of its tenants operating in essential industries.
  • Finally, the REIT’s CEO and Executive Director of the Manager Mr William Tay updated that, apart from passing on all benefits of any reduction in property tax granted by the Singapore government to all qualifying tenants in the REIT’s Singapore portfolio in full, the REIT will also provide additional assistance to its tenants in industries affected by Covid-19.

Download Ascendas REIT’s Latest Business Update Presentation and Press Release for Q1 FY2020 Below:

Disclaimer: At the time of writing, I am a unitholder of Ascendas REIT.

 

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