Ascendas REIT unit price: what to watch out for its Q1 results

Singapore's Ascendas real estate investment trust (REIT) will be releasing its first quarter results for the three months ended June 30, 2019, after trading hours next Monday (July 29, 2019).

The business space and industrial REIT is one of the largest REITs in Singapore, with more than 170 properties - spread across Singapore, Australia, and the United Kingdom (UK) - in a portfolio worth around S$11 billion. It is one of the oldest REITs in Singapore, having been listed since 2002, and is a contributing component to Singapore’s Straits Times Index.

The REIT’s distribution per unit rose 6.1% in the previous quarter

Ascendas REIT posted a 6.1% increase in distribution per unit (DPU) for the fourth quarter at 4.148 Singapore cents, from 3.190 Singapore cents a year ago.

The growth was supported by contributions from 38 newly acquired properties in the UK, four purchases in Australia, and two redeveloped properties in Singapore.

Gross revenue for the fourth quarter was up by 4.3% at S$225.06 million, while net property income rose by 3.5% to S$163.43 million.

For the full-financial year, DPU edged higher by 0.3% to 16.035 Singapore cents. Gross revenue for the 12 months improved by 2.8% to S$886.17 million while net property income rose by 3.2% to S$649.58 million.

Ascendas REIT’s unit price up 18.8% year-to-date

The REIT’s pricing on Friday (July 26, 2019) was at S$3.03 per unit, which is an 18.8% gain year-to-date, from S$2.55 on January 2, 2019.

On July 5, 2019, the REIT reached an all-time-high closing price of S$3.18. The last time prices reached similar levels was in July 2007, at a unit price of S$3.15.

DPU growth at CAGR of 2.4%

The REIT’s DPU growth has been steady over the years, from 13.56 Singapore cents in the financial year 2012 to 16.04 Singapore cents in 2019, forming a compound annual growth rate (CAGR) of 2.4% for its DPU.

At the current price of S$3.03, Ascendas REIT’s 12-month yield is at 5.3%.

Overseas growth strategies set to continue

On its outlook, the REIT’s manager said in the earlier earnings statement that it will continue with its overseas growth strategies and unlock value in its assets to ‘further strengthen its portfolio’.

The REIT had expanded its overseas investments in the previous financial year in a bid to create a ‘more diversified and sustainable income stream’.

As at March 31 this year, properties in Australia and the UK made up 21% of its total portfolio value of S$11.1 billion, an increase from the 15% total portfolio value of S$10.1 billion in the same period a year ago.

In spite of a large portfolio, the REIT continued to expand through the acquisition of properties in the UK and Australia and redeveloped properties in Singapore in the last fiscal year. The REIT’s aggregate leverage ratio as of March 31, 2019 is at 36.3%, which is still below the regulatory ceiling of 45% for REITs.

Ascendas REIT's manager changed the REIT's financial year-end to December 31, to align with the change in the financial year-end of the manager’s holding company Ascendas Investments Pte Ltd, a subsidiary of Ascendas Pte Ltd.

For this current financial year, the reporting timeframe will be based on a nine-month period from April 1, 2019 to December 31, 2019. Thereafter, the financial year curation will be on a regular 12-month timeframe, ending on the 31st December of every year.