CapitaLand Ascendas REIT (CLAR) A17U has declared 2.0% lower distribution per unit (DPU) y-o-y of 7.719 Singapore cents for the 1HFY2023 ended June, despite reporting 6.7% higher net property income (NPI) of $508.8 million for the same period.
According to the REIT’s manager, the total amount available for distribution declined by 1.0% y-o-y to $327.5 million mainly due to higher interest expense resulting from rising interest rates. DPU declined on account of the lower distribution and an enlarged unit base following CLAR’s private placement in May, says the manager on July 31.
Meanwhile, gross revenue for 1HFY2023 rose 7.7% y-o-y to $718.1 million, owing to newly-acquired properties in Singapore during the period and the US during FY2022. In addition, the REIT’s Singapore portfolio recorded higher utilities income and service charges.
William Tay, chief executive officer and executive director of the manager, says the REIT maintained portfolio occupancy of 94.4% and achieved an average rental reversion of 18.0% for leases renewed during 2QFY2023 despite “macroeconomic uncertainties”.
The Singapore logistics segment led the charge with a 39.1% reversion amid a tight supply, he adds.
As at June 30, CLAR’s portfolio occupancy rate remained at 94.4%, unchanged from the previous quarter.
See also: CapitaLand Ascendas REIT to acquire Seagate's The Shugart in one-north for $218.2 mil
The REIT’s portfolio of 230 investment properties was worth $17.0 billion as at June 30. This comprised $10.7 billion (63%) of properties in Singapore, $2.5 billion (14%) in the US, $2.3 billion (14%) in Australia and $1.5 billion (9%) in the UK and Europe.
On a same-store basis, there was no significant change in the valuation of the portfolio, says the REIT’s manager. “The same-store valuation, excluding the three acquisitions in 1HFY2023, was stable at $16.4 billion, underpinned by a resilient and diversified portfolio.”
Meanwhile, gearing declined to 36.7% as at June 30 from 38.2% on March 31, following equity fundraising of $500 million in May.
See also: Low Keng Huat reverses into $5.8 mil profit for 1HFY2025
CLAR’s weighted average all-in cost of borrowing remained unchanged from the previous quarter at 3.3%, with some 82% of borrowings on fixed rates. Less than 15% of borrowings are due for renewal in any single year for the next five years.
Recent acquisitions
In 1HFY2023, CLAR completed three accretive acquisitions in Singapore with an aggregate purchase consideration of $514.9 million. The acquisitions were a high-tech industrial property at 622 Toa Payoh Lorong 1 ($104.8 million), a cold storage facility at 1 Buroh Lane ($191.9 million) and The Shugart, a business park property at 26 Ayer Rajah Crescent ($218.2 million).
During the same period, CLAR divested KA Place, a high-specification industrial building in Singapore, for $35.4 million, a 55% premium to its market valuation.
On asset enhancement initiatives (AEI), the manager is redeveloping a logistics property at 5 Toh Guan Road East for $107.4 million, increasing the current gross floor area (GFA) by 71%. Upon completion in 4Q2025, the redeveloped property will have an expanded GFA of 50,920 sq m.
There are a total of six ongoing redevelopment and AEI projects worth $776.5 million, scheduled for completion between 2H2023 and 2Q2026.
Inflation, high interest rates and global economic uncertainties continue to pose challenges that may have an impact on tenants’ businesses as well as CLAR’s operating costs, says the manager. “The manager is committed to proactively manage these challenges in a prudent manner and is also well-positioned to leverage CLAR’s healthy balance sheet to capture any growth opportunities that may arise, to deliver long-term sustainable returns to unitholders.”
Units in CapitaLand Ascendas REIT closed 4 cents lower, or 1.4% down, at $2.81 on July 31.
