Ascendas REIT reports fiscal 3Q net property income rose on UK and Australia acquisitions

Singapore one dollar bill

Ascendas REIT reported on Wednesday its fiscal third quarter net property income increased 6.6 percent on-year to S$168.0 million on contributions from newly acquired and redeveloped properties and lower property tax expenses. The results missed forecasts from Daiwa.

Gross revenue for the quarter ended 31 December rose 4.2 percent on-year to S$226.4 million, Ascendas REIT said in a filing to SGX after the market close on Wednesday.

The distribution per unit (DPU) for the quarter was 3.998 Singapore cents, up 0.7 percent from 3.97 Singapore cents in the year-ago quarter, it said.

Daiwa had forecast net property income of S$179.2 million on revenue of S$238.0 million, with a DPU of 4.18 Singapore cents.

William Tay, CEO and executive director of Ascendas Funds Management (S), the REIT’s manager, said the Singapore performance was fairly stable in the quarter despite a more uncertain outlook from the ongoing U.S.-China trade tensions.

“We have strengthened our portfolio with new acquisitions in the United Kingdom and in Australia, and these new investments have contributed significantly to the overall performance of the trust,” Tay said. “In Singapore, we are excited to develop Grab’s headquarters in one-north business park, which will further enhance our business park portfolio.”

The key contributors to the revenue increase came from the 38 U.K. logistics properties acquired in August and October, and from the properties acquired in Australia at 108 Wickham Street, Cargo Business Park and 169-177 Australis Drive in December 2017 and in August and June 2018, the REIT said.

It also redeveloped a property in Singapore at 20 Tuas Avenue 1, which was completed in April, the REIT said.

In its outlook, the REIT noted that uncertainties over trade tensions and Brexit have clouded the economic outlook.

Within Singapore, the amount of new industrial property being completed has tapered, but businesses remain cautious amid an uncertain economic outlook.

It added that subsidiaries of troubled water-infrastructure company Hyflux had vacated space at two of the REIT’s properties and it was exploring options. Hyflux leases had contributed around 1.2 percent of the REIT’s gross revenue year-to-date, it said.

Despite concerns over the potential economic impact of Brexit, the REIT remained positive on the outlook for the U.K., pointing to the domestic nature of its tenants’ logistics business.

“The strong penetration of e-commerce has been a key driver of occupier demand for logistics space in the U.K. With a tight supply of available space supporting rental growth, the logistics market has continued to outperform the wider U.K. market,” Ascendas REIT said, adding it would continue to look for acquisitions to expand its U.K. footprint.

Ascendas REIT has a portfolio of 98 properties, across Singapore, Australia and the U.K., as of end-December.

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