Ascendas REIT reports fiscal 1Q net property income rose 12 percent on new acquisitions

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Ascendas REIT reported Monday its fiscal first quarter net property income rose 11.5 percent on-year to S$177.5 million on new acquisitions in the U.K. and Australia during the previous financial year. The figure beat a forecast from Daiwa.

Gross revenue for the quarter ended 30 June was S$229.7 million, up 6.1 percent on-year, the REIT said in a filing to SGX.

The distribution per unit (DPU) was 4.005 Singapore cents for the quarter, up 0.1 percent from 4.002 in the year-ago period, the filing said.

Daiwa had forecast net property income of S$169.3 million on revenue of S$230 million, with a DPU of 4.02 Singapore cents.

“In view of the weak economic outlook, demand for industrial space in Singapore remains muted. However, Ascendas Reit’s stable performance in the first quarter of 2019 reflects the resilience of its large and diversified portfolio,” William Tay, CEO and executive director of the REIT’s manager, said in the statement.

“This resilient performance was underpinned by proactive asset management as well as prudent diversification executed in the value-add
strategy,” Tay added.

Portfolio occupancy was 91.1 percent as of 30 June, down from 91.9 percent in the previous quarter, mainly on a lower portfolio occupancy rate in Australia, where it fell to 92.3 percent from 98 percent at end-March, Ascendas REIT said.

That was due to a non-renewal of a lease at a logistics property in Sydney, but a new tenant has already begun a five-year lease on the property, effective in July, the REIT said.

The U.K. portfolio occupancy rate remained at 100 percent in the quarter, while the Singapore occupancy rate improved to 88.9 percent from 88.3 percent at end-March, the filing said.

The REIT reported positive rental reversions of 2.7 percent for leases renewed in the quarter.

The REIT’s portfolio had 98 properties in Singapore, 35 in Australia and 38 in the U.K. as of end-June, the filing said.

Property operating expenses fell 9.0 percent on-year in the quarter to S$52.2 million on changes to accounting for leases, the filing said.

The REIT issued a cautious outlook.

“The global economic outlook continues to weaken amid uncertainties arising from the ongoing trade frictions, political tensions and Brexit negotiations. Some central banks have signaled that they are prepared to lower interest rates to support economic growth,” the filing said.

Within Singapore, “in view of the uncertain economic outlook, businesses are likely to remain conservative with their capital investments and expansion plans,” the REIT said. “Rental rates are expected to remain subdued, in view of the available industrial supply and moderated economic growth.”

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