Ascendas REIT - Maybank Kim Eng 2020-10-27: Keeping The Faith

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

Ascendas REIT - Keeping The Faith


Another steady quarter, top sector pick

  • Ascendas REIT (SGX:A17U) delivered better occupancies in 3Q20, underpinned by demand for its Singapore business park and logistics properties. Rental reversions were weaker q-o-q, but remain in line with guidance, and set for growth in FY20.
  • We maintain our forecasts with drivers intact in this operational update.
  • Fundamentals remain strong, supported by scale, concentrated Singapore business parks portfolio, and DPU upside from further overseas diversification. Valuations are demanding at 5.4% FY21 yield. Maintain BUY.



Better occupancies in Singapore

  • Ascendas REIT's portfolio occupancy improved q-o-q from 91.5% to 91.9% as of end-Sep 2020, as better occupancies in Singapore (from 87.9% to 88.8%), mainly due its business park (Cintech II) and logistics asset (at 40 Penjuru Lane) which offset lower occupancies in Australia (98.4% to 97.5%) with a non-renewal at 92 Sandstone Place in Brisbane.
  • Government-related and logistics & supply chain management tenancies accounted for the largest 60.1% and 12.5% of new demand in 3Q20 by gross rental income.


Maintaining full-year rental reversion guidance

  • Ascendas REIT's portfolio achieved a -2.3% rental reversion in 3Q20, vs +4.3% in 2Q20, as reversion was weaker in Singapore (at -2.8% from +4.0%), but stronger in the US (at +11.5% vs +16.2%). Its Singapore business & science parks performed better at +4.5% while the logistics & distribution centres reported a -16.2% reversion.
  • Management kept its guidance to achieve a low single-digit positive reversion for 2020.
  • We remain optimistic on its rental growth outlook, as its business parks remain under-rented and should deliver stronger (high single-digit) reversion into 4Q20.

Growth levers from AEIs, redevelopment, deals






Chua Su Tye Maybank Kim Eng Research | https://www.maybank-ke.com.sg/ 2020-10-27
SGX Stock Analyst Report BUY MAINTAIN BUY 4.000 SAME 4.000



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