Ascendas REIT's Dividends Was Diluted By Enlarged Unit Base
Updated: Feb 12, 2020
Key Highlights:
Ascendas REIT (SGX: A17U)'s 3Q19 DPU dropped 12.3%
The annualised yield and price to book ratio are 4.5% and 1.46 respectively
1. Dividends
Net property income was up 8.5% to $182.3m. The was mainly due to the reclassification of land rent as a finance cost. Distributable income was impacted by lower rental guarantees from few UK and Australia properties and higher interest expense. Besides, the enlarged unit base by the right issues last year has also further diluted the DPU.
The annualised yield is 4.5%. As the biggest industrial REIT in Singapore, Ascendas REIT has been delivering very consistent results to the unitholders. Both the DPU and price has been in the uptrend over the years.
Source: reitscompass's REITs Insider ratings
2. Portfolio
Portfolio occupancy dropped to 90.9%. This was mainly dragged by the weaker occupancy of its Singapore portfolio, especially at Wisma Gulab, 40 Penjuru Lane and Pioneer Hub. The portfolio leverage is currently at the healthy side of 35.1%. The interest cost is at 2.9%, with 75.8% of the loans are on fixed rates.
It is currently trading at a price to book ratio of 1.46.
3. Growth Catalyst
Ascendas REIT has started two asset enhancement at Singapore Science Park 2 and redevelopment of iQuest@IBP and 25/27 Ubi Road 4. Besides, the new development for Grab office is on track for completion in 4Q20.
For its Australia portfolio, Ascendas REIT is adding a fourth suburban office once the construction of 254 Wellington Road is completed in 2Q20.
Summary
Moving forward, the industrial REIT expects rental reversion to further drop to a low single-digit, mainly due to economic uncertainty. However, we like the industrial REIT for its diversified portfolio size, with a growing segment of business parks/high-specs portfolio, and potential DPU growth from further overseas acquisitions.
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