CapitaLand Ascendas REIT's 2H FY24 Result Review

REIT_TIREMENT
02-20

$CapLand Ascendas REIT(A17U.SI)$

Basic Profile & Key Statistics

Key Indicators

Performance Highlight

CapitaLand Ascendas REIT (CLAR) reported a slight decline in gross revenue, primarily due to multiple divestments in 2024 and the decommissioning of Welwyn Garden City (UK) in June 2024 and 5 Toh Guan Road East (Singapore) in November 2023. However, this was partially offset by contributions from the newly completed MQX4 development and the convert-to-suit project at 6055 Lusk Boulevard (US) in 4Q 2024. Despite the revenue decline, net property income (NPI) improved slightly due to lower operating expenses. Coupled with lower interest expenses, both distributable income and DPU saw an improvement.

Rental Reversion

CLAR achieved strong rental reversions, with portfolio rental reversion at 8.6% for 4Q and 14.4% for 3Q, bringing the full-year average rental reversion to 11.6%.

Acquisition

On January 15, 2025, CLAR completed the acquisition of DHL Indianapolis Logistics Center. Additionally, the Summerville Logistics Center acquisition under development is expected to be completed in 4Q 2025.

Divestment

On November 28, 2024, CLAR completed the divestment of 21 Jalan Buroh in Singapore at a premium to both book value and purchase price.

Development

CLAR is currently undertaking four redevelopment projects, with 1 Science Park Drive expected to be completed in 1Q 2025. The remaining three projects are targeted for completion between 4Q 2025 and 1Q 2028.

Asset Enhancement Initiative

During 2H FY24, CLAR completed AEIs at Pacific Tech Center and ONE @ Changi City. Currently, three AEIs are ongoing—80 Bendemeer Road and Perimeter Two are expected to be completed in 1Q 2025, while Aperia is slated for completion in 4Q 2025.

Related Parties Shareholding

  • REIT Sponsor's Shareholding: Less Favorable

  • REIT Manager's Shareholding: Less Favorable

  • Directors of REIT Manager's Shareholding: Less Favorable

Lease Profile

  • Committed Occupancy: Moderate

  • Highest Annual Lease Expiry in 4 Years: Moderate

  • WALE: Moderate

  • Weighted Average Land Lease Expiry: Less Favorable

Debt Profile

  • Adjusted Interest Coverage Ratio: Favorable

  • Cost of Debt: Moderate

  • Gearing Ratio: Moderate

  • Fixed Rate Debt Proportion: Favorable

  • Unsecured Debt Proportion: Favorable

  • Highest Annual Debt Maturity in 4 Years: Favorable

  • WADM: Favorable

Diversification Profile

  • Major Sector Weightage: Favorable

  • Top Geographical Weightage: Less Favorable

  • Top Property Weightage: Moderate

  • Top 5 Properties' Weightage: Favorable

  • Top Tenant Weightage: Moderate

  • Top 10 Tenants' Weightage: Favorable

Key Financial Metrics

  • Property Yield: Moderate

  • Operating Distributable Income over Manager's Fees: Favorable

  • Operating Distributable Income on Capital: Favorable

  • Operating Distributable Income Margin: Favorable

  • Operating Distribution Proportion: Moderate

DPU Breakdown

  • TTM Distribution Breakdown:96.6% from Operation2.6% from Management Fees Paid in Units0.8% from Income Support

Trends (Up to 10 Years)

  • Uptrend: NAV per Unit, Committed Occupancy

  • Slight Uptrend: None

  • Flat: DPU from Operations, Property Yield, Operating Distribution Proportion

  • Slight Downtrend: None

  • Downtrend: Adjusted Interest Coverage Ratio, Top 5 Properties' Weightage, Top 10 Tenants' Weightage, Operating Distributable Income over Manager's Fees, Operating Distributable Income on Capital, Operating Distributable Income Margin

Price Range & Relative Valuation Metrics

  • Dividend Yield: Above +1SD for 1y, 3y & 5y; Average for 10y

  • P/NAV: Below -1SD for 1y, 3y, 5y & 10y

Author's Opinion

Compared to the previous half-year, CLAR’s revenue and NPI declined slightly due to divestments, including 77 Logistics Place, 62 Sandstone Place, and 92 Sandstone Place (Australia) in February 2024, and 21 Jalan Buroh (Singapore) in November 2024, as well as lower utilities income. However, distributable income and DPU improved, driven by lower interest expenses. On the debt front, 13% of CLAR’s debt is set to mature in 2025.

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*Disclaimer: The information presented on this blog is for educational and informational purposes only. The materials, including research and opinions, are based solely on my own findings and should not be considered as professional financial advice or a definitive statement of fact. I cannot guarantee the accuracy, completeness, or reliability of the information provided. I shall not be held liable for any errors, omissions, or losses that may occur as a result of using the information presented on this blog. It should be noted that the information presented on this blog does not constitute a buy, sell, or hold recommendation for any security. It is crucial to conduct your own thorough research and due diligence before making any investment decision.

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Comments

  • tiger_cc
    02-20
    tiger_cc
    Thanks for sharing!
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