SG business park, high-specs continue to shine

• Ascendas REIT's Singapore occupancy improved from 88.3% to 88.9% with new take-ups.
• Ascendas REIT reported a headline +2.7% rental reversion for leases renewed during the quarter, which was down from a +6.6% in its 4Q18/19. Positive reversions were achieved across its Singapore business/ science parks (+3.7%), high-specs (+3.3%), and light industrial/ flatted factories (+2.2%) segments. Its logistics/ distribution centres recorded a +2.6% reversion, versus +9.7% earlier, in line with a weaker performance across the sub-sector.
• Tenants from the transport/ storage sectors contributed the largest 28.9% of new demand. A light industrial property divestment of No. 8 Loyang Way for SGD27.0m (at 14.4% above valuation) is expected to complete in the current quarter.

Transitory vacancies in Australia

• Ascendas REIT's overseas assets, with their long WALEs (Australia: 4.3 years, UK: 9.1 years) were 18.8% of its NPI, and set to grow. Its UK portfolio remained fully-occupied, while it dipped in Australia from 98.0% to 92.3% - partly due to transitory vacancies as its largest asset at 94 Lenore Drive in Sydney has been 100% leased from Jul 2019.
• Reversions were +0.2%, and we continue to see strong demand fundamentals; 5.8% of its gross rental income is due for renewal in FY19 with the bulk of its assets in Sydney.