Ascendas REIT’s unit price unchanged after its Q1 DPU came in at 4.005 cents

Unit prices of Ascendas real estate investment trust (REIT) were flat on Tuesday morning after the business space and industrial REIT raised its distribution per unit (DPU) to 4.005 Singapore cents from 4.002 Singapore cents a year ago on an enlarged unit base.

Gross revenue for the first quarter was up by 6.1% from a year ago, at S$229.7 million. The bump up was mostly due to the newly acquired properties in the United Kingdom (UK) and Australia in the previous financial year.

Total amount available for distribution for the first quarter grew by 6.3% to S$124.7 million, supported by higher gross revenue and lower property operating expenses.

The prices of Ascendas REIT units were unchanged on Tuesday morning. The REIT had announced its results after market hours a day earlier.

Muted demand for local industrial space

In the earnings statement, the manager of the REIT’s chief executive and executive director, William Tay said: ‘In view of the weak economic outlook, demand for industrial space in Singapore remains muted.’ Rental rates are expected to remain subdued, in view of the available industrial supply and moderated economic growth, the REIT manager said.

The REIT manager noted that properties in the business and science park segment, which makes up 42% of the Singapore portfolio, can serve the needs of industries in the new economy and this segment remains a key growth area for Ascendas REIT.

Leasing activity for logistics sector in UK slows, but portfolio attributes to shine through

The global economic outlook continues to weaken amid uncertainties arising from the ongoing trade frictions, political tensions and Brexit negotiations. Meanwhile, some central banks have signalled that they are prepared to lower interest rates to support economic growth.

With the on-going political and economic uncertainty arising from Brexit, leasing activity for the logistics sector has slowed in the first quarter of 2019, Ascendas’ manager said. However, the sector remains fundamentally resilient as rents are expected to remain firm amidst supply constraints, it noted.

The manager cited the long weighted average lease to expiry of 9.1 years and the domestic nature of the tenants’ logistics business as “strong attributes” that will support the REIT’s UK portfolio in overcoming any potential impact arising from Brexit.

‘Ascendas REIT’s stable performance in the first quarter of 2019 reflects the resilience of its large and diversified portfolio,’ claimed Tay.

The resilience from Ascendas was underpinned by proactive asset management as well as prudent diversification executed in the value-add strategy, Tay added. ‘We will continue to explore accretive investment opportunities in Singapore and other developed markets to grow and strengthen the portfolio,’ he said.