Ascendas Real Estate Investment Trust has announced a 3.5% year-on-year growth in net property income to $83.9 million for 2Q FY2010/11. Distributable Income rose 0.4% to $61.8 million. DPU for the quarter stands at 3.3 cents.

Ascendas REIT is Singapore’s first listed business space and industrial real estate investment trust. It has a diversified portfolio of 92 properties in Singapore, comprising business and science park properties, hi-tech industrial properties, light industrial properties, and logistics and distribution centres, with total assets of about $4.9 billion.

Chief Executive Officer and Executive Director of the Manager Tan Ser Ping says, “While y-o-y gross revenue grew by 8.6%, net property income increased by 3.5% due to higher operating expenses, attributed to the enlarged portfolio, higher utilities expenses as well as the cessation of land rent and property tax rebates granted by the Singapore Government in 2009. Rental reversion on lease renewals was positive across most sub-sectors of between 0.6% and 11.6%. Occupancy rate moderated slightly to 95.3% for the portfolio and 90.5% for the multi-tenanted buildings. We are also pleased to report that the Manager has secured further new lease commitments of about 14,783 sqm since 30 September 2010.”

Ascendas REIT’s manager has identified three asset enhancement opportunities within the portfolio to capitalise on underutilised plot ratio or to enhance the attractiveness of the properties, including the redevelopment of 1 Senoko Avenue, asset enhancement for Techview and 10 Toh Guan Road.

After a strong and brisk recovery from the recession in 1H 2010, the slowdown in the growth momentum in the second half of the year was largely expected, says Ascendas REIT. Forward looking indicators, such as the PMI, are also pointing to a moderation in the pace of global economic activity. The effect of fiscal stimuli, which fuelled the global recovery thus far, is showing signs of waning and there is now growing concerns over the uncertainty and pessimism in global economies.

For the second half of FY2010/11, only 5.8% of its revenue is due for renewal, says Ascendas REIT. While vacancy rate seems to have stabilised, new demand for space will depend largely on the pace and strength of the economic recovery. With a diversified portfolio across five segments of the business space and industrial property sector and a good mix of long and short term leases accounting for a weighted average lease to expiry of 5 years, Ascendas REIT is able to provide a high degree of predictability and sustainability of the earnings for the portfolio.

Barring any unforeseen events, Ascendas REIT says it aims to at least maintain the previous financial year’s level of net income for FY2010/11.