CapitaLand Ascendas Reit H2 DPU rises 3.2% to S$0.07681

THE distribution per unit (DPU) of CapitaLand Ascendas Real Estate Investment Trust (Clar) for the second half ended Dec 31, 2024, was S$0.07681 – 3.2 per cent higher than S$0.07441 from the corresponding year-ago period, its manager said on Thursday (Feb 6).

Distributable income rose 3.4 per cent year on year (yoy) to S$338 million, from S$326.9 million. The distribution will be paid on Mar 11, after the record date of Feb 14.

These increases came even as Clar’s H2 revenue dropped 1.1 per cent to S$753 million, from S$761.7 million. This was mainly attributed to divestments of four properties in Australia and Singapore, and lower utilities income. It was partially offset by the completion of an office building in Australia and a convert-to-suit project of another office building in the US.

Despite the revenue fall, net property income rose 1.4 per cent on-year to S$521.5 million, from S$514.3 million.

On a full-year basis, DPU was up 0.3 per cent at S$0.15205 in FY2024, from S$0.1516 in FY2023. Distributable income increased 2.2 per cent to S$668.8 million, from S$654.4 million.

Revenue for the year climbed 2.9 per cent to S$1.52 billion, from S$1.48 billion. Net property income expanded 2.6 per cent on-year to S$1.05 billion, from S$1.02 billion. The gains in revenue and net property income were driven by full-year contributions from properties acquired and completed in FY2023, as well as “robust operations” from the portfolio’s assets.

William Tay, chief executive of the manager, said during the results briefing that Clar will continue looking for redevelopment opportunities in the coming year, especially in Singapore, the US and Europe.

Its newest redevelopment project, Logis Hub in Singapore, will be transformed into a seven-storey ramp-up logistic property, with power provision for cold storage. It is expected to cost S$136.2 million and be completed by Q1 2028. 

Construction will begin in end-2025, said Tay.  

Including Logis Hub, he said Clar has S$800 million worth of redevelopment projects on hand. Some S$500 million will be “turned on” for income this year. 

In the next two to three years, Tay said the manager intends to have around S$1.5 billion worth of redevelopment projects, giving the real estate investment trust (Reit) a “good bump” in revenue of 3 to 4 per cent.

He added that in the nearer term, there may be some “occupancy challenges” in the US and Australia due to downsizing.

Still, the chief executive pointed out that the occupancy rate of 88.9 per cent in the US is “fairly healthy and strong” when compared to the general market. The portfolio’s overall occupancy rate also remained “high” at 92.8 per cent as at Dec 31, 2024.

The Reit saw a positive average rental reversion of 11.6 per cent for leases that were renewed in FY2024. It is guiding for positive mid-single-digit rental reversion in the coming year. 

Clar’s weighted average all-in cost of debt was 3.7 per cent. It has S$835 million in borrowings due to be refinanced in FY2025, and an average debt maturity of 3.5 years. 

The cost of debt is likely to increase this year but remain below 4 per cent, said Tay. “We believe that with our rental reversion, occupancy and... the performance of our assets, we will be able to withstand the interest rate movement.” 

He added: “Given our strong foundation, we can push the envelope to be more aggressive in redevelopments, as well as prepare (the balance sheet) for any acquisitions that may come our way.” 

Units of Clar closed at S$2.59, up 0.8 per cent or S$0.02, on Thursday before the results were released.