Ascendas REIT - Maybank Kim Eng 2019-07-30: Recovery Underway

ASCENDAS REAL ESTATE INV TRUST (SGX:A17U) | SGinvestors.io 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 | https://www.maybank-ke.com.sg/ 2019-07-30
SGX Stock Analyst Report BUY MAINTAIN BUY 3.300 SAME 3.300



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