Ascendas Reit H1 DPU rises 5.4% to S$0.0766; manager eyes redevelopment of TÜV SÜD PSB building

ASCENDAS Real Estate Investment Trust (Ascendas Reit) has bumped up its distribution per unit (DPU) to 7.66 Singapore cents for the first-half ended June 30, up 5.4 per cent from 7.27 cents a year ago.

Distributable income rose 18.2 per cent to S$311.0 million, which the manager attributed mainly to contributions from its newly acquired properties.

However, the biggest revelation of the day came as the manager hinted at potential redevelopment plans for the TÜV SÜD PSB Building at Singapore Science Park 1.

"With regard to the Science Park redevelopment, I suppose that is one key interest since the TÜV SÜD or PSB Building has become vacant this year," said William Tay, chief executive officer and executive director of the Reit manager, in a briefing following the release of results after market close on Monday. 

"We are happy with the non-renewal so we can proceed with the redevelopment," he added. 

Mr Tay announced that it has approval from the authorities to increase the plot ratio at the property by some three-and-a-half times to a gross floor area of around 112,000 square metres, up from around 32,000 sq m currently.

A NEWSLETTER FOR YOU

Tuesday, 12 pm

Property Insights

Get an exclusive analysis of real estate and property news in Singapore and beyond.

Sign Up

According to Mr Tay, the redevelopment could cost "between S$800 million and S$1 billion".

"It’s huge, (compared) to the proportion of the development limit that we have,” Mr Tay said. “We are seriously considering a joint venture … (which) will actually help us to be able to reduce our development limit, allowing us some headroom to capture other demands."

More details would be made known "probably" in Q4, the manager said.

For now, Ascendas Reit's net property income in H1 grew 14.8 per cent to S$445.6 million, as gross revenue increased 12.4 per cent to S$586.0 million.

The boost in gross revenue was mainly due to contributions from its new properties - two office properties in San Francisco, and one suburban office property in Sydney, as well as the 11 newly acquired data centre properties across Europe. However, the increase in gross revenue was partially offset by the absence of S$10.3 million in grant income recorded in the first half of FY2020 from property tax rebates received during the Covid-19 pandemic.

During the first half, Ascendas Reit completed S$1.72 billion worth of acquisitions, which it said increased its exposure to data centres and business spaces to 59 per cent as at June 30.

The acquisitions included the remaining 75 per cent stake in Galaxis in one-north for S$534.4 million, 11 data centres across Europe for S$904.6 million, as well as a suburban office property in Sydney for S$284.0 million. Following these acquisitions, the Reit's total portfolio value grew by approximately 15.7 per cent to S$15.9 billion since Dec 31, 2020.

Singapore now accounts for 62 per cent or S$9.8 billion of the total portfolio. The remaining 38 per cent comprises properties in Australia, the US and the UK.

As at June 30, the Reit's portfolio had a occupancy rate of 91.3 per cent; its portfolio weighted average lease expiry (WALE) stood at 4.0 years. For the first half, the average positive rental reversion for the portfolio was 6.4 per cent.

Meanwhile, four properties in Australia and Singapore have been divested for S$144.7 million since the start of 2021, in order to "improve the quality of its portfolio and optimise returns for unitholders", it said.

The Reit also completed and on July 30 handed over the built-to-suit business park property for Grab’s Headquarters. Located at one-north, the property is fully leased to Grab for 11 years.

"With business spaces, logistics and data centres now making up 80 per cent of our S$15.9 billion portfolio, Ascendas Reit is well placed to benefit," Mr Tay said.

Looking ahead, the manager said Ascendas Reit aims to expand its footprint in each of the markets it has presence, especially in the asset class it has in each country, such as logistics and data centres in Europe and the UK, tech in the US, and business parks in Singapore.

"The asset classes that we go after, which we’ve identified, are the asset classes that support the driver of the economy," Mr Tay said.

On the outlook, Mr Tay said: "It’s still a very mixed feeling when our leasing managers talk to tenants … (but) over the course of the past six months, I would say that sentiment has become better."

The counter ended flat at S$3.120 before the results were released.