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Tuesday, November 09, 2021

Ascendas India Trust Review @ 9 November 2021

Basic Profile & Key Statistics

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

Performance Highlight

Performance has improved YoY mainly due to income contribution from Anchor Annex2 building at ITPL and aVance 6 at aVance Hyderabad.

Rental reversion is positive for the above 6 properties.

On 29 October, AIT completed the acquisition of land for the development of a data centre campus in Navi Mumbai. The construction is expected to be commenced soon and target to be completed by 3Q 2024. 

There are 4 developments expected to be completed by this year and the other 4 developments which are expected to be completed between 2024 and 2025. BlueRidge 3 phase 2 has been pushed out from 2H 2023 to 1H 2025.

Related Parties Shareholding

  • REIT sponsor's shareholding is low at 21.646%
  • REIT manager's shareholding is high at 5.739%
  • Directors of REIT manager's shareholding is low at 0.07%

Lease Profile

  • Occupancy is low at 89%
  • All income is received in India Rupee
  • WALE is moderate at 3.9 years
  • Highest lease expiry within 5 years is high at 40% which falls in 2025 and beyond, without breakdown
  • Most of the properties are freehold

Debt Profile

  • Gearing ratio is slightly low at 35%
  • Cost of debt is high at 5.3%
  • Fixed rate debt % is moderate at 74%
  • All debts or unsecured debts
  • WADM is short at 2.1 years
  • Highest debt maturity within 5 years is moderate at 32.7% which falls in 2022
  • Interest coverage ratio is slightly low at 3.8 times

Diversification Profile

  • Top geographical contribution is low at 36.2% 
  • Top property contribution is high at 36.2% 
  • Top 5 properties contribution is high at 86% 
  • Top tenant contribution is high at 13% 
  • Top 10 tenants contribution is high at 43.6%

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 - Average for 1y, 3y and 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
100% Unsecured DebtLow Occupancy
Low Top Geographical ContributionAll income is received in India Rupee
High Property YieldHigh Cost of Debt
High Distribution on CapitalShort WADM
DPU UptrendHigh Top Property & Top 5 Properties Contributions
NAV per Unit UptrendHigh Top Tenant & Top 10 Tenants Contributions
Interest Coverage Ratio UptrendNon-Competitive Management Fees
Distribution Margin UptrendProperty Yield Downtrend

Despite occupancy dropping to a historical low of 89% and an unfavorable exchange rate, AIT has managed to increase gross revenue and NPI (in SGD) as compared to the whole past 1 year. From the presentation, AIT expects the leasing activity to be improved in early 2022. 


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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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