Ascendas REIT - Maybank Kim Eng 2021-08-03: Growth & Resilience; Still Our Top Pick

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

Ascendas REIT - Growth & Resilience; Still Our Top Pick

  • Ascendas REIT (SGX:A17U) achieved DPU growth of 5.4% y-o-y and 3.3% h-o-h in 1H21, with stronger portfolio rental reversions in 2Q21, which were under-pinned by its under-rented US business park assets, and growth from its Singapore portfolio. Its occupancy improved in Singapore and Australia, with rental recovery into FY21 well underway.
  • We have kept our forecasts intact. Ascendas REIT's fundamentals remain strong, backed by scale, rising DPU visibility, upside from acquisitions and/or redevelopments, and further overseas diversification.
  • Ascendas REIT's valuations are undemanding at 5.1% FY21 yield. Maintain BUY, with S$3.65 DDM-based target price (COE: 6.2%, LTG: 2.0%).



Ascendas REIT reported better occupancies in Singapore, Australia

  • Ascendas REIT's portfolio occupancy improved q-o-q to 91.3% (from 90.6% in 1Q21) as better occupancies in Singapore (86.9% to 87.9%) and Australia (94.9% to 98.4%) offset a dip in the UK/ Europe (from 98.6% to 97.5%), due to transitory downtime. Tenants in the biomedical, IT/ data centres, and lifestyle/ retail/ consumer trade segments accounted for the highest proportion of new demand by gross rental income in 1H21, at ~34%, ~20% and ~9% respectively.
  • Expansion activity in Singapore saw a single tenant fully lease a light industrial property (at 31 Joo Koon Circle) on a 20-year term.


Rental reversion strong at +8.9%

  • Ascendas REIT's portfolio delivered a +8.9% rental US properties being under-rented by 10-30%, we maintain an optimistic outlook for its rental growth, with reversions tracking to its low single-digit positive guidance for 2021.


An AUM boost, redevelopment upside






Chua Su Tye Maybank Kim Eng Research | https://www.maybank-ke.com.sg/ 2021-08-03
SGX Stock Analyst Report BUY MAINTAIN BUY 3.650 SAME 3.650



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