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Monday, August 09, 2021

Ascendas India Trust Review @ 9 August 2021

Basic Profile & Key Statistics

Ascendas India Trust (AIT) invests in mainly office properties and owns 8 properties in India.

Performance Highlight

In SGD terms, total property income decreased YoY by 4% mainly due to SGD/INR FX rate. On the other hand, NPI increased YoY due to lower expenses and reversal of credit loss in 1H FY2021. However, despite the increase in NPI, distributable income and DPU decreased YoY mainly due to the reversal of DDT provision in 1H FY2020 and higher finance costs.


Rental reversion is positive for the above 6 properties.

On 5th July, AIT announced the proposed acquisition of a 6.6-acres greenfield site for data centre development in Navi Mumbai. The acquisition will be funded by debt and internal resources.

The development of 7th Warehouse for Arshiya Warehouse has been completed. There are 4 developments that are expected to be completed by 2H 2021.

Related Parties Shareholding

  • REIT sponsor's shareholding is low  at 21.51%
  • REIT manager's shareholding is high at 5.66%
  • Directors of REIT manager's shareholding is low at 0.07%

Lease Profile

  • Occupancy is moderate at 90%
  • All income is received in India Rupee
  • WALE is slightly short at 3.5 years
  • Highest lease expiry within 5 years is high at 36% which falls in 2025 and beyond, without breakdown
  • Most of the properties are freehold

Debt Profile

  • Gearing ratio is low at 33%
  • Cost of debt is high at 5.3%
  • Fixed rate debt % is moderate at 77%
  • All debts or unsecured debts
  • WADM is short at 2.1 years
  • Highest debt maturity within 5 years is low at 23.4% which falls in 2022
  • Interest coverage ratio is moderate at 3.9 times

Diversification Profile

  • Top geographical contribution is low at 36.7% 
  • Top property contribution is high at 36.7% 
  • Top 5 properties contribution is high at 86% 
  • Top tenant contribution is moderate at 11.8% 
  • Top 10 tenants contribution is high at 41.8%

Key Financial Metrics

  • Property yield is high at 7.7% 
  • Management fees over distribution is high at 16.9% in which unitholders receive S$ 5.92 for every dollar paid 
  • Distribution on capital is high at 4.5%
  • Distribution margin is moderate at 51.4%

Trends

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

Relative Valuation

  • P/NAV - Average for 1y, 3y and 5y
  • Dividend Yield -Below average for 1y and 3y; Average for 5y

Author's Opinion

 Favorable Less Favorable
High REIT Manager's ShareholdingLow REIT Sponsor's Shareholding
Mostly Freehold PropertiesLow Directors of REIT Manager's Shareholding
Low Gearing RatioAll income is received in India Rupee
100% Unsecured DebtHigh Cost of Debt
Well Spread Debt MaturityShort WADM
Low Top Geographical ContributionHigh Top Property &Top 5 Properties Contributions
High Property YieldHigh Top 10 Tenants Contribution
High Distribution on CapitalNon-Competitive Management Fees
DPU UptrendProperty Yield Downtrend
NAV per Unit Uptrend 
Interest Coverage Ratio Uptrend 
Distribution Margin Uptrend

Occupancy has again dropped slightly as compared to the previous quarter. The Park Square Mall in ITPB, which previously close from 22 April has re-opened on 5 July 2021, this should reduce the rent relief giving in upcoming quarters. Moving forward, the 4 developments that are targeted to be completed by this year-end would increase an additional 3.79 million sqft of floor area (26% of existing floor area) and should start contributing in next year.


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*Disclaimer: Materials in this blog are based on my research and opinion which I don't guarantee 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 and 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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