Advantage of size underpins Ascendas REIT as market awaits data centre portfolio

Ascendas REIT’s DPU for the 2HFY2020 ended Dec 31, 2020, fell by 0.9% y-o-y to 7.418 cents and FY2020’s DPU fell by 6.1% to 14.688 cents largely because of a 13.6% rise in the number of units in FY2020 versus FY2019. The increase in the unit base was due to a private placement in November 2020, and a preferential equity fund raising in December 2020 which together raised $1.19 billion.

Out of the proceeds, $390.0 million was used to partially fund two office properties in San Francisco which together cost $768 million; $180 million part-funded a suburban office in Melbourne which cost $100.6 million, and a potential European acquisition; and approximately $614.0 million will partially fund the acquisition of a data centre portfolio in Europe.

According to a November announcement, these acquisitions would be between 2% and 2.5% accretive to DPU on a pro forma basis had they been completed in April 2019. The US portfolio would be just 0.85% accretive to DPU on the same basis. With loan-to-value ratios of around 50%, analysts have estimated that the data centre portfolio would cost between $1 billion and $1.2 billion. As at Dec 31, 2020, Ascendas REIT’s cost of debt fell to 2.7% from 2.9% as at June 30, 2020, and gearing fell to 32.8% as at Dec 31, 2020, from 36.1% as at June 30.