Yesterday morning (07 April 2021), another blue-chip REIT in my long-term investment portfolio (you can check out a list of all the companies I have investments in here) in Ascendas REIT (SGX:A17U) released its latest annual report for the financial year 2020 ended 31 December 2020.
As usual, I have gone through the report to receive the latest updates (I highly recommend you do this for all the companies you are invested in, to keep abreast of the latest developments) and for the benefit of those who do not have the time to go through it, I have compiled a summary of the most important points you need to take note of. You will also find details about the REIT’s upcoming Annual General Meeting (AGM).
Chairman Beh Swan Gin’s Message
- The Covid-19 pandemic led to a slowdown of economic activities globally, with many businesses significantly affected – the real estate business was one of them.
- In light of the situation, Ascendas REIT provided support to the affected tenants (with S$17.8m of rental rebates, or 1.7% of the REIT’s total gross rental income), along with offering rent deferment and restructured payments for more than 60 tenants in Singapore and overseas tenants. The REIT will continue to work closely with all its tenants to help them ride out this uncertain period.
- Despite of that, Ascendas REIT still managed to navigate through this difficult period with limited impact, due to its long-standing strategy of maintaining a diversified portfolio across multiple countries, asset types, and customer industries – and this led to a stable cash flow for the REIT.
- Portfolio occupancy remained healthy at 91.7% as at 31 December 2020, and the REIT recorded a positive rental reversion of +3.8% for the leases renewed during FY2020.
- In terms of its capital profile, the REIT’s aggregate leverage is healthy at 32.8%, with a large debt headroom of about S$5.0b before reaching the regulatory limit of 50.0%; weighted average term of debt is 3.7 years, and weighted average all-in borrowing cost improved to 2.7% per annum.
- On acquisitions, Ascendas REIT acquired 2 offices in San Francisco (US), 2 suburban offices in Sydney (Australia), 2 logistics developments in Melbourne and Sydney (Australia), as well as a 25.0% stake in a business park property in Singapore.
- Looking ahead, the recovery from Covid-19 is expected to be uneven across geographies and industry sectors. Nevertheless, the REIT will continue to develop and strengthen their business to deliver value to its unitholders.
In Conversation with Mr William Tay Wee Leong, CEO and Executive Non-Independent Director
- Achievements of Ascendas REIT in FY2020:
- Despite the uncertainties in FY2020, the REIT did not withhold any dividends at any point in time
- Revenue for FY2020 crossed above the S$1b mark, which can be attributed to acquisitions made in FY2019 (28 business park properties in US and 2 business park properties in Singapore), and in FY2020 (a suburban office in Melbourne, Australia, and 2 office properties in San Francisco, US)
- Green financing was another milestone achieved – where Ascendas REIT issued its first green bond (S$100m) and green perpetual securities (S$300m) following the establishment of the Green Finance Framework in August 2020
- The impact of Covid-19 on Ascendas REIT’s financial position:
- Revenue stream was stable despite having to provide tenants with S$17.8m in rental rebates, due to 50.0% of the REIT’s gross monthly income coming from tenants in resilient sectors such as financial services, government, data centres, and biomedical industries; higher-risk tenants, such as those from the retail, hospitality and leisure, and aviation sectors make up less than 15.0% of the REIT’s gross monthly revenue
- How the REIT’s Singapore portfolio will perform in the coming year, considering the fact that it recorded negative rental reversions in some segments in FY2020:
- Priority is to keep building a stronger and profitable portfolio for the long-term
- The REIT will be scaling up their presence in Singapore, the US, Australia, and the UK, and at the same time, unlock value from its existing portfolio to optimise returns
- It will continue to look for properties in business parks, logistics and data centre subsegments that are expected to benefit from economic drivers such as digitalisation, e-commerce, and healthcare
- As at 31 December 2020, 66% of their properties are in Singapore, while the remaining 34% are in overseas market (15% in US, 13% in Australia, and 6% in UK); although Ascendas REIT is a Singapore-centric REIT, they may also take the opportunity to buy good quality and accretive properties as and when they become available
Financial Performance of FY2020
- Gross revenue was up by 50.1% to S$1,049.5m (FY2019: S$699.1m) mainly due to the additional 3 months in FY2020, along with full-year contributions from the 28 US business park properties (acquired in December 2019), as well as with the newly completed suburban offices in 254 Wellington Road in Melbourne, Australia, and 2 office properties recently acquired in San Francisco (US).
- Net property income grew by 44.1% to S$776.2m (FY2019: S$537.7m) mainly due to the additional 3 months in FY2020.
- Total amount available for distribution increased by 43.4% to S$538.4m (FY2019: S$375.4m) largely due to contributions from the new acquisitions in US and Singapore, as well as the completion of the property in Australia.
Details of Ascendas REIT’s Upcoming AGM
In view of the current safe distancing measures, Ascendas REIT’s upcoming AGM on Thursday, 29 April 2021, at 3.00pm, will be held online. Unitholders can register to attend the meeting here (the deadline to do so will be on Monday, 26 April 2021, at 3.00pm.)
I have registered to sign up for the AGM, but my actual attendance is not confirmed, as I will be also attending OCBC’s AGM held on the same day at 2.00pm (and if the Singapore bank’s AGM overruns, then I will not be able to attend the REIT’s AGM.)
Disclaimer: At the time of writing, I am a unitholder of Ascendas REIT.
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