SINGAPORE (July 30): The manager of Ascendas Real Estate Investment Trust (Ascendas REIT) reported 1Q18 DPU of 4.002 cents, 1.2% lower than the DPU of 4.049 cents declared a year ago.

1Q18 net property income (NPI) rose by 3.8% y-o-y to $159.2 million mainly attributable to contributions from newly acquired properties, 100 Wickham Street and 108 Wickham Street in Brisbane, Australia, and a redeveloped property, 50 Kallang Avenue in Singapore.

Lower property operating expenses also contributed to the higher NPI as property tax expense were reduced due to retrospective downward revisions in the annual value of certain properties.

However, amount available for distribution declined by 1.0% y-o-y to $117.3 million as a result of a one-off distribution made in 1Q17 relating to the non-deductibility of certain upfront financing fees incurred in FY11/12.

Excluding one-off distribution in 1Q17 relating to the non-deductibility of certain upfront financing fees incurred in FY11/12, amount available for distribution would have increased by 4.1% y-o-y and DPU would have rose 4.0% y-o-y to 4.002 cents.

Overall portfolio occupancy rate declined to 90.5% from 91.5% a quarter ago. The Singapore portfolio occupancy rate declined to 88.1% from 89.5% at end March, dragged down by the newly completed redevelopment at 20 Tuas Avenue 1, which was 51.1% occupied as at June 30. Non-renewals at SB Building and No. 31 International Business Park also contributed to the lower portfolio occupancy rate.

The Australian portfolio maintained a high occupancy rate of 98.6% from 98.5% at end.

Rental reversion of about +10.5% was achieved for renewed leases in multi-tenant buildings in Singapore during 1Q18.

In its outlook, manager Ascendas Funds Management says although global trade and industrial production have strengthened, the escalating trade tensions between the US and China continue to be one of the key uncertainties surrounding the global outlook.

Meanwhile, interest rates are widely expected to continue rising in the months ahead although the REIT is well positioned to mitigate the impact of interest rate increases and maintain an optimal financial position.

Units in Ascendas REIT closed 3 cents higher at $2.76 on Monday.