Ascendas Reit H1 DPU rises 2.8% to 7.873 Singapore cents

ASCENDAS Real Estate Investment Trust (A-Reit) on Tuesday (Aug 2) posted a distribution per unit (DPU) of 7.873 cents for its first half ended Jun 30, 2022, up 2.8 per cent from a DPU of 7.66 cents a year ago.

“This is one exceptional quarter. We have capitalised very much on this and pushed rental up as high as possible, to what is acceptable,” said William Tay, chief executive officer of the real estate investment trust (Reit) manager, at a briefing delivered with the announcement of the results. “Generally, the market has moved up, and enquiries have strengthened.”

A-Reit’s average rental reversion for the second quarter ended June came in at a strong 13.2 per cent across its portfolio. This brought rental reversion for H1 to 9.4 per cent.

The Reit manager has raised its guidance for rental reversion for the full year to be in the “positive mid-single-digit range”.

“Other than this quarter, moving forward, we’ll still be expecting the 3-5 per cent rental reversion in Singapore, which is quite typical. And given the fact that the economy is still growing, I think we should be able to hit that kind of numbers,” Tay said.

Gross revenue was up 13.7 per cent to S$666.5 million for the half-year period, from S$586 million a year ago.

The increase was mainly attributable to contributions from newly acquired properties in Singapore, the United Kingdom and Europe, the United States and Australia, as well as a built-to-suit development in Singapore during FY 2021 and H1 2022, the Reit manager said in a regulatory filing.

Net property income (NPI) grew at a slower pace of 7 per cent on the year to S$476.9 million for the half year, from S$445.6 million a year ago, as higher net utilities expenses from the Singapore properties partially offset the increase in gross revenue.

Total amount available for distribution rose 6.3 per cent year on year to S$330.7 million, from S$311 million.

As previously guided, Tay said utility costs for FY2022 are expected to be 50-70 per cent higher than a year ago.

He explained that utilities costs accounted for about 20 per cent of operating expenses in FY2021.

“In this half – possibly because of the reopening – consumption has gone up. Total utilities is about 23 per cent of operating expenses, with 6 per cent relating to landlord’s costs,” Tay said.

He added that A-Reit is raising its service charges from October to mitigate the impact of rising utilities costs.

As at end June, A-Reit’s overall portfolio occupancy rate improved to 94 per cent, from 92.6 per cent at end March. This was driven by improvements in Singapore, the US and the UK and Europe.

In response to questions from analysts and the media, Tay said A-Reit was “unlikely” to hit S$1 billion worth of acquisitions this year.

The Reit completed S$223.4 million of acquisitions in the first half of FY2022.

“We are still in the market looking for inorganic growth, but it is likely to be in smaller chunks,” Tay said.

The distribution of 7.873 cents per unit for the period Jan 1 to Jun 30, 2022 will be paid on Sep 5 after the books are closed on Aug 11.

Units of A-Reit closed S$2.96 on Tuesday, down 0.3 per cent or S$0.01 before the results release.