Ascendas REIT (“A REIT”) is the first and largest publicly traded REIT in Singapore. Ascendas REIT has properties in three major categories: 1) Business Space and Life Sciences, 2) Logistics, and 3) Industrial and Data Centers. The properties are located in Singapore, Australia, the United States and Europe. As of March 2022, A REIT’s total portfolio size stands at 221 properties totalling approximately S$16 billion.
Overview of Ascendas REIT’s Business
Key highlights of A-REIT Portfolio:
- 221 Properties and 1620 tenants
- Geographic breakdown:
- 95 (Singapore), 36 (Australia), 41 (USA) and 49 (Europe)
- Portfolio Size: S$16.4 billion
- 3.7 Weighted Years Average Lease To Expiry (by Gross Revenue)
Ascendas REIT’s Gross Revenue & Net Property Income
Gross Revenue for FY21 rose to S$1.22 billion from FY20 S$1.05 billion. The Compound Annual Growth Rate (CAGR) of A REIT’s Gross Revenue over 5 years amounted to 9.21%. Gross Revenue by geography from its properties are 64.4% in Singapore, 12.0% in Australia, 9.93% in Europe and 13.7% in USA as at FY21.
Net Property Income (NPI) for FY21 rose to S$920.8 million from FY20 S$776.2 million. Both increase in Gross Revenue and Net Property Income (NPI) for FY21 was largely attributable to the acquisition of 11 data centers in Europe and 11 Logistic properties in Kansas City, USA. The Compound Annual Growth Rate (CAGR) of A REIT’s NPI over 5 years amounted to 9.97%.
Ascendas REIT’s Distributable Income & Distribution Per Unit
Distributable Income for FY21 increased slightly to S$630 million from FY20 S$538.4 million. The Compound Annual Growth Rate (CAGR) of A REIT’s Distributable Income over 5 years amounted to 7.71%.
A REIT’s Distribution Per Unit (DPU) has climbed by a remarkable 187% since its inception in FY2003. It has been providing a steady average DPU of 13.61 cents per annum. For the 2008 Global Financial Crisis and recent 2020 Coronavirus, it was able to provide a decent dividend. This signifies its ability to weather through the markets up and down.
Ascendas REIT’s Gearing Ratio & Property Yield
Gearing Ratio rose to 35.9% ($6.14 billion) for FY21 from 32.8% in FY20. This is due to a S$2.1 billion property investment that the company took to expand the business. As of December 31, 2021, it had a value gain of $2.6 billion (14.7%) on the overall portfolio. This demonstrated that A REIT is financially sound. It has $4.8 billion in debt headroom before meeting its 50% gearing limits respectively. On April 16, 2020, MAS raised the leverage ceiling for S-REITs from 45 percent to 50 percent.
Similarly, A REIT property yield rose slightly due to increase in property income from their new investments. As a result, the property yield in FY21 increased to 5.2% from 5.1% in FY20.
Ascendas REIT’s Occupancy Rate
Occupancy rates have increased to 93.20% (FY21) from 91.5% (FY17). This is attributed to improved occupancy of the Business & Science Park segment, completion of Grab Headquarters and acquisition of Galaxis.
Ascendas REIT’s Interest Coverage Ratio
A REIT debts are evenly spread out across the next decade. The Weighted Average Debt Term decreased from 3.7 years to 3.5 years (as of December 31, 2021). A REIT has an impressive interest coverage ratio of 5.7 times, demonstrating its solid financial health.
Currently, its portfolio has 1570 tenants with the Top 10 customers accounting 18.3% of monthly portfolio gross revenue. Its portfolio weighted average lease expiry (WALE) stands at 3.8 years. Rental reversion for FY22 is expected to be in the positive low single-digit range due to current market uncertainties. Thus, its rental reversion portfolios demonstrate that rent will continue to rise gradually to keep inflation at bay.
Their portfolio are geared towards growing in the technology, life sciences, data centers and logistics sectors.
With the growth in Digitalisation, Cloud computing and Life Science, demand for such facilities will begin to rise. As a result, A REIT will be in a great position to benefit from these favourable conditions due to their investments.
Ascendas REIT’s Dividend Yield
Dividend Yield (5 Year)
The current Dividend Yield A REIT stands at 5.47%,it’s 5-year Avg Yield stands at 5.22%
Dividend Yield (1 Year)
The current Dividend Yield A REIT stands at 5.47%,it’s 1-year Avg Yield stands at 5.14%
A REIT has been one of the best performing REITs since its inception. The company has also built a long-term track record of delivering.
- Strong historical growth in Gross Revenue, NPI and DPU
- Favorable Lease Arrangements – Long Lease Tenure, Guaranteed Rent Increments
- Strong tailwinds for future growth
A REIT, despite its strong fundamentals, nevertheless appears fairly valued to me, with a current dividend yield of 5.47%. Before investing, I would prefer a bigger margin of safety and a yield of about ~6-7% yield. If you are keen to learn more about other good REITs in Singapore, head over to our analysis on Parkway Life REIT and MapleTree Industrial Trust.