Ascendas Reit Q2 property income up 23.1%

But distribution per unit down 3.1% on lack of one-off items; local portfolio facing headwinds

Ascendas real estate investment trust (Ascendas Reit) reported a large jump in property income for the second quarter, but distribution to unitholders dropped slightly due to a lack of one-off items.

Net property income of the Ascendas Reit, which has a portfolio of 131 business and industrial assets, rose 23.1 per cent year on year to $152.4 million in the three months ended Sept 30. The amount available for distribution was $112.5 million, up 12.3 per cent.

"This was boosted mainly by the contributions from the acquisition of the Australian portfolio and ONE@Changi City," Reit manager Ascendas Funds Management said, announcing the results.

The higher distributable income was also a result of lower property tax and utilities expenses.

However, distribution per unit (DPU) for the period was 4.03 cents, down 3.1 per cent from 4.16 cents a year earlier, when there was a one-off distribution of taxable income from operations of $6.5 million. Excluding the one-off impact, the estimated recurrent DPU grew 3.6 per cent.

The Reit's overall portfolio occupancy improved from 88.2 per cent in June to 89.1 per cent at the end of last month due to new leases and expansion in Australia and China.

  • AT A GLANCE

    NET PROPERTY INCOME

    $152.4 million (+23.1%)

    DISTRIBUTION PER UNIT

    4.03 cents (-3.1%)

Last month, Ascendas Reit completed the $148.6 million acquisition of a business park property in Sydney. It now has 28 properties in Australia and one more in China.

But in its home market Singapore, where the Reit has 102 properties, signs of economic slowdown persisted, with local occupancy dropping from 88.3 per cent in the previous quarter to 87.9 per cent, "mainly due to some non-renewals at two logistics properties, 40 Penjuru Lane and Pioneer Hub", the Reit manager noted. "The industrial property market condition in Singapore is expected to remain challenging. The slowing economy is expected to affect leasing demand in Singapore," it added.

Still, barring any unforeseen events, it expects Ascendas Reit to maintain a "stable performance" for the financial year ending March 31. Capital recycling initiatives - such as the Ascendas Z-link divestment in the second quarter that brought a capital gain of around $95.6 million - will be part of the growth strategy.

Meanwhile, Ascendas Reit's aggregate leverage was 34.2 per cent at the end of the quarter. The debt maturity profile is well spread and weighted average tenure of outstanding debt is 3.8 years, the Reit manager said.

Earnings per unit were 4.046 cents for the second quarter, down from 5.116 cents a year earlier; net asset value per unit was $2.05 as at Sept 30, down from $2.06 at the end of March.

Ascendas Reit units ended flat at $2.43, ahead of the results announcement.

A version of this article appeared in the print edition of The Straits Times on October 21, 2016, with the headline 'Ascendas Reit Q2 property income up 23.1%'. Print Edition | Subscribe