Ascendas REIT (SGX:A17U), Singapore’s first and largest-listed business space and industrial REIT (with its portfolio comprising 96 properties in Singapore, 34 properties in Australia, 49 properties in the United Kingdom/Europe, and 41 properties in the United States, along with a customer base of more than 1,500 international and local companies from a wide range of industries and activities), have made available its business update for the first quarter ended 31 March 2022 after market hours today (04 May 2022.)
As the REIT is no longer mandated to report its full financial statements on a quarterly basis, no such figures were reported for the current quarter under review. Also, the REIT have also switched to paying out a distribution on a half-yearly basis (as such, there are no distributions declared for the current quarter under review too.)
For the current quarter under review, only updates about its portfolio occupancy and debt profile were made available (where I will be comparing them against the stats reported in the previous 3 months ago), which you’ll read about in this post:
Portfolio Occupancy (Q4 FY2021 vs. Q1 FY2022)
| Q4 FY2021 | Q1 FY2022 | |
| Portfolio Occupancy (%) | 93.2% | 92.6% |
| Rental Reversion (%) | +2.9% | +4.6% |
My Observations: Apart from the portfolio occupancy in UK (which remained the same at 96.7%), Ascendas REIT’s portfolio occupancy in all the other geographical locations saw slight declines (with the portfolio occupancy rate of its Singapore properties down from 90.2% in Q4 FY2021 to 90.0% in Q1 FY2022, the portfolio occupancy rate of its Australia properties down from 99.2% in Q4 FY2021 to 96.8% in Q1 FY2022, and the portfolio occupancy rate of its United States properties down from 94.5% in Q4 FY2021 to 94.0% in Q1 FY2022), the REIT’s overall portfolio occupancy rate saw a 0.6 percentage point (pp) dip to 92.6% – personally I do not think there’s a big concern here as the portfolio occupancy still remains high at above 90.0% in all the geographical locations (where the REIT has properties in.)
Rental reversion-wise, its good to note that it has further improved compared to the previous quarter – particularly, all the new/renewed leases in Singapore, Australia, and United States saw positive rental reversions at +3.9%, +16.5%, and +14.0% respectively.
For the remaining quarters of FY2022, 16.5% of the leases will be up for renewal, with another 19.5% of the properties with leases expiring in the coming FY2023 ahead, 17.0% in FY2024, 14.4% in FY2025, and the remaining 32.6% of the properties will only be expiring in FY2026 or later.
Debt Profile (Q4 FY2021 vs. Q1 FY2022)
| Q4 FY2021 | Q1 FY2022 | |
| Aggregate Leverage (%) | 35.9% | 36.8% |
| Interest Coverage Ratio (times) | 5.7x | 5.7x |
| Average Term to Debt Maturity (years) | 3.5 years | 3.5 years |
| Average Cost of Debt (%) | 2.2% | 2.1% |
My Observations: Compared to the previous quarter 3 months ago, I felt that the REIT’s debt profile have more or less remained the same – while its aggregate leverage have went up slightly, but at the current level, there still remains a debt headroom of about S$4.6bn before it reaches the regulatory limit of 50.0% – again, I’m not too concerned.
Also, 79.1% of the debts are at fixed rates, which provides adequate “protection” against upcoming interest rate hikes by the Federal Reserve.
Closing Thoughts
The REIT’s portfolio occupancy, as well as its debt profile, still remains resilient in my opinion – as far as the former is concerned, no doubt its overall portfolio occupancy edged down slightly (compared to the previous quarter), but on the whole, its overall portfolio occupancy for the individual geographical locations (Singapore, Australia, United States, as well as the United Kingdom) are all over 90.0% occupied, with rental reversions for new/renewed leases made in the current quarter under review continuing to at improved rates; for the latter, while its aggregate leverage inched up slightly, at its current level, there remains a good debt headroom before the regulatory limit is reached (hence allowing the REIT to embark on more yield-accretive acquisitions as and when an opportunity to do so arises.)
With that, I have come to the end of my review of the Ascendas REIT’s business update for the first quarter of the financial year 2022. Do note that everything you’ve just read above are purely meant for educational purposes only, and they do not imply any buy or sell calls for the REIT’s units. You’re strongly encouraged to do your own due diligence before you make any investing decisions.
Meet up with Ascendas REIT’s CEO Mr William Tay “Live” in REITs Symposium on 21 May 2022
Co-organised by InvestingNote, you can meet up with Ascendas REIT’s CEO Mr William Tay in the upcoming REITs Symposium – where he will be in the “REITs Live Chat” session between 12.50pm and 1.20pm to share more about the REIT.
The event will be held in a “hybrid format” – meaning you can choose to attend it either online (where your attendance is confirmed), or offline (where it will be pending confirmation, due to limited tickets available.)
If you are new to investing, and would like to know more about the different Singapore-listed REITs (the managements of 12 REITs will be attending the event), then this event is one I recommend attending (in case you’re wondering, its absolutely free of charge.) You can sign up here.
The Singaporean Investor is proud to be one of the media partners of the upcoming REITs Symposium 2022.
Related Documents
Disclaimer: At the time of writing, I am a unitholder of Ascendas REIT.
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