• Ascendas REIT’s 1Q19 DPU in line with estimates; positive read-through in results.
• Improving portfolio metrics; rental reversion surprises at +10.5%.
• Deepens presence in Australia, new portfolio in the UK represents a plethora of opportunities to grow inorganically.
• Manager disciplined in approaching new markets like the UK while pipeline of opportunities in Singapore remains to be tapped.

What’s New

Gross Revenues and net property income ended the quarter higher.

Ascendas REIT reported 1Q19 revenues and net property income of S$216.6m and S$159.2m, which were 1.5% and 3.8% higher y-o-y respectively. 

The higher revenues were achieved through an active portfolio reconstitution where the manager shifted the portfolio mix towards higher yield assets, as well as contribution from the acquisition of 3 properties in Australia, and completion of redevelopment works at 50 Kallang Avenue, which had offset 3 divested properties in Singapore. 

Distributable income fell by 3.8% to S$117.3m, translating to a DPU of 4.002 Scts. The drop was largely due to a reversal of a tax credit from the divestment of its China property – Ascendas Z-Link. On a q-o-q basis, DPU was up 2.4%, implying a steady growth profile.

Source: DBS Research - 31 Jul 2018