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REITs investment & personal finance


Wednesday, February 23, 2022

Ascendas REIT Review @ 23 February 2022

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 221 properties across Singapore, U.S., Australia, England and Netherlands.

Performance Highlight

Gross revenue, NPI and DI improved YoY due to contribution from the completion of properties acquisitions since Sep 2020. DPU has also improved as a result albeit a smaller % due to enlarged unitholders base.

Rental Reversion
Rental reversion is +4.5% for FY2021 where business spaces in U.S. have the highest figure.

Completed Acquisition/Developments/AEI
In 2H 2021, AREIT has acquired 11 logistics properties, completed the development of Grab HQ as well as AEI for Hansapoint.

On-Going Development & AEI
Development for Lot 7 has been delayed from 4Q 2021 to 1Q 2022 while 500 Green Road was completed on 14 Feb 2022. MQX4 is expected to complete by 4Q 2022. As for redevelopments, 1 Science Park Drive and iQuest are expected to complete by 2Q 2025 and 4Q 2024 respectively. AEI for Changi Logistics Centre is expected to complete by 2Q 2022.

Divestment
In 2H 2021, AREIT has divested 82 Noosa Street, 62 Stradbroke Stree and 1 Science Park Street where 1 Science Park Street is being jointly re-developed into a Life Science and Innovation Campus.


 Related Parties Shareholding

  • REIT sponsor's shareholding is low at 17.933%
  • REIT manager's shareholding is low at 0.061%
  • Directors of REIT manager's shareholding is low at 0.005%

Lease Profile

  • Occupancy is moderate at 93.2%
  • WALE is slightly low at 3.8 years
  • Highest lease expiry within 5 years is low at 20.6% which falls in 2023
  • Weighted average land lease expiry is slightly short at 56.76 years

Debt Profile

  • Gearing ratio is moderate at 35.9%, including pers, the gearing ratio is at 37.7%.
  • Cost of debt is moderate at 2.2%
  • Fixed rate debt % is slightly high at 79.4%
  • Unsecured debt % is high at 90.8%
  • WADM is long at 3.5 years
  • Highest debt maturity within 5 years is low at 15.3% which falls in 2026
  • Interest coverage ratio is high at 5.7 times
  • Preferred/perpetual securities over debt is slightly low at 4.7%

Diversification Profile

  • Top geographical contribution is high at 64.4% 
  • Top property contribution is low at 4% 
  • Top 5 properties contribution is low at 15.1% 
  • Top tenant contribution is low at 3.4% 
  • Top 10 tenants contribution is low at 18.6%
  • Top 3 countries contribution is from Singapore, U.S. and Australia which contribute around 90% of GRI

Key Financial Metrics

  • Property yield is high at 5.8% 
  • Management fees over distribution is moderate 13.8% in which unitholders receive S$ 8.06 for every dollar paid 
  • Distribution on capital is slightly high at 3.9%
  • Distribution margin is slightly high at 50.7%

Trends

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

Relative Valuation

  • P/NAV - Below -1SD for 1y, 3y & 5y
  • Dividend Yield - Above +2SD for 1y; Above average for 3y; Average for 5y

Author's Opinion

 Favorable Less Favorable
Diversified SectorLow REIT Sponsor's Shareholding
Well Spread Lease ExpiryLow REIT Manager's Shareholding
High Unsecured Debt %Low Directors of REIT Manager's Shareholding
Long WADMHigh Geographical Contribution
Well Spread Debt MaturityInterest Coverage Ratio Downtrend
High Interest Coverage RatioDistribution on Capital  Downtrend
Low Top Property & Top 5 Properties Contributions
Low Top Tenant & Top 10 Tenants Contributions 
High Property Yield 
NAV per Unit Uptrend

AREIT performance has improved as compared to 1H 2021 and the occupancy has gradually improved since 2Q 2021. For upcoming quarters, the full half-yearly contribution from the 11 logistics properties in Kansas City should improve AREIT performance. Note that AREIT is currently trading in the 52 weeks low range.

You could also refer below for more information:

SREITs Dashboard - Detailed information on individual Singapore REIT

SREITs Data - Overview and Detail of Singapore REIT

REIT Analysis - List of previous REIT analysis posts


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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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