ASCENDAS REAL ESTATE INV TRUST (SGX:A17U)
Ascendas REIT - Recovery Underway
In line, still our top pick
- Ascendas REIT (SGX:A17U)’s DPU was stable (+0.1% y-o-y) during its Jun 2019 quarter (1Q19), with contributions from its Australian and UK has guided for flat reversions in FY19 on high supply, while we expect a steady recovery in business park and high-specs rents given higher 67-100% pre-commitment levels.
- Our DPUs are unchanged and DDM-based Target Price SGD3.30 (COE: 6.9%, LTG: 2.0%).
- Ascendas REIT’s fundamentals are well supported by its scale, concentrated Singapore business parks/high-specs portfolio, and DPU upside from its overseas diversification.
- We remain positive on S-REITs with downside risk from lower interest rates on slowing economic growth. Ascendas REIT is best placed as the sector’s largest, most liquid proxy.
SG business park, high-specs continue to shine
- Ascendas REIT's Singapore 88.3% to 88.9% with new take-ups.
- Ascendas REIT Singapore business/ science flatted factories (+2.2%) segments. Its logistics/ distribution centres recorded a +2.6% reversion, versus +9.7% earlier, in line with a weaker performance across the sub-sector.
- Tenants from the transport/ storage sectors contributed the largest 28.9% of new demand. A light industrial property divestment of No. 8 Loyang Way for SGD27.0m (at 14.4% above valuation) is expected to complete in the current quarter.
Transitory vacancies in Australia
- Ascendas REIT's overseas dipped in Australia from 98.0% to 92.3% - partly due to transitory vacancies as its largest asset at 94 Lenore Drive in Sydney has been 100% leased from Jul 2019.
- Reversions were +0.2%, and we continue renewal in FY19 with the bulk of its assets in Sydney.
Chua Su Tye
Maybank Kim Eng Research
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https://www.maybank-ke.com.sg/
2019-07-30
SGX Stock
Analyst Report
3.300
SAME
3.300
