Ascendas REIT - OCBC Investment 2019-01-31: Grab It When Opportunity Arises

ASCENDAS REAL ESTATE INV TRUST (SGX:A17U) | SGinvestors.io ASCENDAS REAL ESTATE INV TRUST (SGX:A17U)

Ascendas REIT - Grab It When Opportunity Arises

  • Ascendas REIT’s 3QFY19 DPU +0.7% y-o-y.
  • Portfolio rental reversions of +3.2%.
  • New Build-To-Suit project for Grab.


3QFY19 results in-line with our expectations

  • ASCENDAS REAL ESTATE INV TRUST (SGX:A17U, Ascendas REIT) reported its 3QFY19 results which met our expectations. Gross revenue and NPI grew 4.2% and 6.6% y-o-y to S$226.4m and S$168.0m, respectively. Growth was driven largely by acquisitions and lower property tax expenses, but partially offset by the non-renewals at certain properties in Singapore. DPU inched up 0.7% y-o-y to 3.998 S cents due to higher management fees and finance costs, coupled with an enlarged unit base.
  • For 9MFY19, Ascendas REIT’s gross revenue rose 2.3% to S$661.1m and NPI increased by 3.1% to S$486.1m. DPU of 11.887 S cents represented a decline of 1.6%, and this constituted 74.3% of our FY19 forecast.


Slightly higher occupancy; positive rental reversions

  • Operationally, Ascendas REIT’s portfolio occupancy improved slightly by 0.7 ppt q-o-q to 91.3%, as higher occupancy in Singapore helped to offset the decline in Australia. Its UK properties remained fully occupied.
  • Rental reversions were firm, coming in positive at 3.2% overall and for Singapore, as there were no renewals in Australia and UK in 3QFY19.
  • The positive rental uplift was broad-based across the various asset classes, led by Integrated Development, Amenities & Retail (+10.3%), Business & Science Parks (+5.4%) and Light Industrial and Flatted Factories (+4.5%).



Secures new Build-to-Suit project for Grab’s new headquarters

  • Separately, Ascendas REIT also announced that it has signed an agreement to design and build Grab’s new headquarters in Singapore. This Build-to-Suit project will be located within the one-north business park, have an estimated GFA of 42,310 sqm and is expected to complete in 4QCY20. The total development cost is estimated to be S$181.2m, with an expected stabilised NPI yield of 6.4%. This project provides Ascendas REIT with strong visibility, given the long 11 years lease term with annual rental escalations (renewal option of a further 5 years).
  • We maintain our forecasts and S$2.64 fair value estimate on Ascendas REIT.





Andy Wong Teck Ching CFA OCBC Investment Research | https://www.iocbc.com/ 2019-01-31
SGX Stock Analyst Report HOLD MAINTAIN HOLD 2.640 SAME 2.640



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