Ascendas Reit H2 DPU up 2.4%; manager continues to eye overseas growth opportunities

THE manager of Ascendas Reit is planning to deepen its presence in the US and Europe markets as the real estate investment trust (Reit) continues to seek growth. But chief executive of the Reit manager William Tay believes it is "tough" to exceed the pace of acquisitions completed in FY2021.

Ascendas Reit completed S$2.12 billion worth of acquisitions and developments in FY2021, including the purchase of 11 data centres in Europe and 11 logistics properties in the US.

"S$1-2 billion is something that we want to be able to work on (in FY2022)," Tay said at a briefing following its FY2021 results announcement on Tuesday (Feb 8). "(The acquisitions) first of all must be meaningful, but we would not be shy in even making small, single acquisitions and bulk up in certain locations that we find attractive."

He added that Ascendas Reit will continue to look at its existing markets, including deepening its presence in the US and Europe.

"The US and Europe are big markets and we have enough opportunities to scale up here. We want to be able to scale up and be meaningful instead of opening up another new market," Tay said.

"In terms of priority, I would say that overseas markets do give us better opportunities right now. You've seen us acquiring more overseas in the past 1-2 years," he added.

However, given the size of the Reit, Tay said that even if overseas acquisitions continue to outpace those in Singapore, Ascendas Reit will continue to be "very much a Singapore-focused Reit".

Some 61 per cent of the Reit's S$16.3 billion portfolio is currently based in Singapore, with the US and Australia each accounting for 14 per cent and the remaining 11 per cent comprising properties in the UK and Europe.

At the same time, Tay noted that there are still growth opportunities for the Reit in Singapore, including at the Science Park Drive development.

He added that Ascendas Reit will also look for opportunities to boost its data centre portfolio following the lifting of the data centre moratorium in Singapore. This could include the potential re-positioning of some light industrial assets into data centre facilities, Tay said.

Ascendas Reit's aggregate leverage stood at 35.9 per cent as at Dec 31, 2021, giving it debt headroom of S$4.8 billion to the regulatory cap of 50 per cent.

For the second half ended Dec, 31, 2021, Ascendas Reit posted a distribution per unit (DPU) of 7.598 Singapore cents, up 2.4 per cent from 7.418 cents a year ago.

Gross revenue rose 21.3 per cent to S$640.5 million while net property income (NPI) was 22.4 per cent higher at S$475.2 million on the back of contributions from acquisitions made in FY2021. The total amount available for distribution came to S$319 million or 15.9 per cent more than the corresponding period in 2020.

For FY2021 as a whole, gross revenue rose 16.9 per cent to S$1.2 billion, lifted by contributions from newly acquired properties and completed developments in FY2020 and FY2021. As a result, NPI increased 18.6 per cent to S$920.8 million, while the total amount available for distribution was up 17 per cent to S$630 million.

DPU for FY2021 came to 15.258 cents, 3.9 per cent more than the 14.688 cents paid out in FY2020. In view of the Covid-19 rental rebates required by the government which led to a lower FY20 DPU, the Reit's manager has made a voluntary one-off waiver of its entitled performance fee to the extent of the rental rebates. (see amendment note)

Its portfolio occupancy rate stood at 93.2 per cent as at Dec, 31 2021 and a positive average rent reversion of 4.5 per cent was achieved for leases that were renewed during FY21.

"Properties in new economy sectors such as technology, life science, data centre and logistics now represent a significant 81 per cent of Ascendas Reit's total assets under management and contributed 78 per cent to FY21's total gross revenue. Ascendas Reit is well-positioned to capture growth in the new economy," Tay said.

The DPU is payable on Mar 11.

Units in Ascendas Reit closed at S$2.80 on Tuesday, up 2 cents or 0.72 per cent, before the results were released.

Amendment note: An earlier version of the article said the Reit's manager made a one-off voluntary waiver of its S$15.8 million performance fee for FY21 after the rental rebates mandated by the government due to the pandemic led to a lower DPU in FY2020. It was actually a one-off waiver of its entitled performance fee to the extent of the effect of the rental rebates. The article has been amended to reflect this change.