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Tuesday, February 16, 2021

Ascendas REIT Review @ 16 February 2021

Basic Profile & Key Statistics

Ascendas REIT (AREIT) is a diversified REIT that invests in Business Park, Industrial, Logistics and Integrated Development Amenities and Retail (IDAR) properties. AREIT currently owns 200 properties across Singapore, U.S., Australia and England.

Performance Review

Gross revenue and NPI increased YoY by 2.5% and 7.8% mainly due to contributions from U.S. properties as well as 254 Wellington Road. Distributable income increased by 9.9% YoY but DPU decreased by 0.9% due to enlarged unitholders base.
4Q rental reversion at +2.5% while FY20 rental reversion at +3.8%. IDAR and U.S. business parks achieved double-digit positive rental reversion.
AREIT has just completed 1-5 Thomas Holt Drive in January 2021. There are 3 proposed acquisitions of properties that are under development to be completed in between 2H 2021 and Mid 2022.
There are development and AEI which 4 are expected to complete by 2021.

Lease Profile

  • Occupancy is slightly low at 91.7%
  • WALE is moderate at 4.1 years
  • Highest lease expiry within 5 years is low at 21.5% which falls in 2023
  • Weighted average land lease expiry is slightly short at 52.34 years


Debt Profile

  • Gearing ratio is low at 32.8%
  • Cost of debt is moderate at 2.7%
  • Fixed rate debt % is moderate at 78.1%
  • Unsecured debt % is high at 88.2%
  • WADE is long at 3.7 years 
  • Highest debt maturity within 5 years is low at 18.5% which falls in 2024 (same for 2025)
  • Interest coverage ratio is high at 4.3 times


Diversification Profile

  • Top geographical contribution is high at 72.8%
  • Top property contribution is low at 4.4%
  • Top tenant contribution is low at 4% 
  • Top 10 tenants contribution is slightly low at 19% 

Key Financial Metrics

  • Property yield is slightly high at 5.8%
  • Management fees over distribution is competitive at 12.5% in which unitholders receive S$ 8 for every dollar paid 
  • Distribution on capital is high at 4%
  • Distribution margin is moderate at 50.4% 

Trends

  • Slight Uptrend - NAV per Unit
  • Flat - Distribution Margin
  • Slight Downtrend - DPU, Property Yield
  • Downtrend - Interest Coverage Ratio, Distribution on Capital


Relative Valuation

  • Dividend Yield - Past 4 quarters DPU @ 14.688 cents / average yield @ 5.86% = S$ 2.51
  • Price/NAV - NAV @ S$ 2.211 x average P/NAV @ 1.27 = S$ 2.81


Author's Opinion

 Favorable Less Favorable
Diversified SectorHigh Top Geographical Contribution
Well Spread Lease ExpiryInterest Coverage Ratio Downtrend
Low Gearing RatioDistribution on Capital Downtrend
High Unsecured Debt % 
Long WADE 
Well Spread Debt Maturity 
High Interest Coverage Ratio 
Low Top Property Contribution 
Low Top Tenant & Top 10 Tenants Contributions 
Competitive Management Fees 
High Distribution on Capital

AREIT fundamentals remain strong as seen from the above table. With those recently completed acquisitions, AREIT performance would be improved in upcoming quarters.


For more information, you could refer to:

SREITs Dashboard - Detailed information on individual Singapore REIT

SREITs Data - Overview of Singapore REIT

REIT Analysis - List of previous REIT analysis posts

REIT-TIREMENT Patreon - Support this blog as a Patron and get SREITs Dashboard PDF

REIT Investing Community - Facebook Group where members share and discuss REIT topic


*Disclaimer: Materials in this blog are based on my research and opinion which I don't guarantee the accuracy, completeness, and reliability. It should not be taken as financial advice or a statement of fact. I shall not be held liable for errors, omissions as well as loss or damage as a result of the use of the material in this blog. Under no circumstances does the information presented on this blog represent a buy, sell, or hold recommendation on any security, please always do your own due diligence before any decision is made.

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