Higher occupancy helps lift A-Reit's Q2 earnings

Ascendas Reit reported improved occupancy rates at Aperia (above), a mixed-used development in Kallang, and its commercial building at 40 Penjuru Lane, as well as A-Reit City@Jinqiao, its business park property in Shanghai.
Ascendas Reit reported improved occupancy rates at Aperia (above), a mixed-used development in Kallang, and its commercial building at 40 Penjuru Lane, as well as A-Reit City@Jinqiao, its business park property in Shanghai.BT FILE PHOTO

Other factors include contributions from new acquisitions, asset enhancements

Ascendas Real Estate Investment Trust (A-Reit) saw better earnings in its second quarter, thanks to contributions from new acquisitions and high occupancy rates.

Distributable income for the three months to Sept 30 rose to $100.2 million, up 14 per cent from levels posted a year earlier, the Reit reported yesterday.

Distribution per unit for the quarter came to 4.16 cents - a gain of 13.7 per cent.

Net property income rose 8 per cent to $123.8 million, while gross revenue increased 10.8 per cent to $182.6 million.

The chief executive of the Reit's manager, Mr Tan Ser Ping, said the results were creditable given the challenging environment.

  • AT A GLANCE

  • GROSS REVENUE:

    $182.6 million (+10.8%)


    NET PROPERTY INCOME:

    $123.8 million (+8%)


    DISTRIBUTION PER UNIT:

    4.16 cents (+13.7%)

He added: "Net property income rose year on year with contributions from new acquisitions, completed asset enhancement initiatives, and higher rental reversion and occupancy."

Rental reversion refers to adjustments made to rental rates after a lease expires.

Mr Tan said that, when completed, a proposed Australian acquisition would add further value to A-Reit's portfolio.

Occupancy rates for the portfolio and multi-tenant buildings grew to 89 per cent, up slightly from 88.8 per cent in the previous quarter.

The main reason was higher occupancy at 40 Penjuru Lane, Aperia and A-Reit City@Jinqiao.

A-Reit has about 1,430 tenants from a portfolio that consists of 102 properties in Singapore and two in China. It is thus diversified in terms of rental income, the Reit noted - no single property makes up more than 6 per cent of its monthly gross revenue.

The manager announced last month the proposed acquisition of a portfolio of 26 prime logistics properties located in Australia for A$1 billion (S$1 billion).

The transaction is expected to be completed within the last quarter.

The targeted portfolio has a combined gross floor area of about 631,000 sq m. The properties are located on freehold land in major Australian cities such as Sydney, Melbourne, Brisbane and Perth.

The manager also noted the Reit's focus on "improving returns from existing buildings through asset enhancement".

During the second quarter, A-Reit completed the renovations of two high-tech industrial buildings in Singapore - Techlink and Techview - "to maximise plot ratio and upgrade specifications to reposition the properties".

It also sold BBR Building to BBR Holdings for $13.9 million, realising capital gains of $6.8 million.

Quarterly earnings per unit came to 5.116 cents, up 8.9 per cent.

Net asset value per unit for the six months to Sept 30 came in at $2.10 for the group, against $2.07 a year earlier.

A-Reit units closed five cents higher at $2.45 each yesterday.

A version of this article appeared in the print edition of The Straits Times on October 23, 2015, with the headline 'Higher occupancy helps lift A-Reit's Q2 earnings'. Print Edition | Subscribe