Ascendas REIT - Maybank Kim Eng 2021-04-25: Recovery On Track

ASCENDAS REAL ESTATE INV TRUST (SGX:A17U)

Ascendas REIT - Recovery On Track

Ascendas REIT (SGX:A17U) achieved stronger portfolio rental reversions in 1Q21 of +3.0%, led by its Singapore business & science parks (+2.8%), and logistics & distribution centres (+5.6%). While its portfolio occupancy fell due to non-renewals, rental recovery in 2021 remains underway. We raised DPU forecast by 1.3% with the added European data centre portfolio.

Ascendas REIT's fundamentals are strong, backed by scale, rising DPU visibility, upside from deals and/or redevelopments, and further overseas diversification.
Valuations are demanding at 5.1% FY21 yield. Maintain BUY, with higher DDM-based S$3.65 target price (COE: 6.4%, LTG: 2.0%).

Ascendas REIT's portfolio occupancy fell q-o-q to 90.6% (from 91.7%), due mainly to weaker occupancies in Singapore (from 99.4% to 86.9%) and Australia (97.4% to 94.9%), with non-renewals at TUV SUD PSB Building and 138 Depot Road (in Singapore) and 1 Distribution Place (Sydney) and 62 Stradbroke Street (Brisbane).
Tenants from the biomedical, electronics, and distributor trade segments accounted for the highest proportion of new demand in 1Q21 by gross rental income at ~34%, 29% and 10% respectively.

Ascendas REIT's portfolio delivered a distribution centres at +5.6% (from - 7.1%), while rental reversions maintain an optimistic outlook for Ascendas REIT's rental growth, which we believe will likely be led by its business parks, suburban office and logistics space (now 79% of its AUM).

Ascendas REIT's AUM jumped its leverage rose to 38.0% (from 32.8%).
Ascendas REIT's deal pipeline includes S$251.2m in Australia over the next two years, which suggests a further S$3.6b debt headroom (at 50% limit). We believe Ascendas REIT could revisit its sponsor’s S$1b pipeline at Singapore’s Science Park in the medium term.
See Ascendas REIT Share Price; Ascendas REIT Target Price; Ascendas REIT Analyst Reports; Ascendas REIT Dividend History; Ascendas REIT Announcements; Ascendas REIT Latest News.

Chua Su Tye Maybank Kim Eng Research | https://www.maybank-ke.com.sg/ 2021-04-25

SGX Stock Analyst Report BUY MAINTAIN BUY 3.65 UP 3.600