Ascendas REIT (SGX:A17U), one of the blue-chip REITs I have in my long-term investment portfolio (you can check out a list of all the companies I have invested in here), have just released its business updates for the third quarter of FY2021 ended 30 September 2021.

In case you’re not already aware, since last year, the REIT have switched to reporting its financial results on a half-yearly basis (as they are no longer mandated to do so on a quarterly-basis.) Along with this change, it has also changed the frequency of its distribution payout to once every half-yearly – as such, there are no distribution payouts being declared for the current quarter under review.

In this post, you will read about a summary of the blue-chip REIT’s debt and portfolio occupancy profile (where I will be taking the statistics reported and compare against that reported in the previous quarter 3 months ago – i.e. Q2 FY2021 ended 30 June 2021) to find out whether it have improved, deteriorated, or stayed largely the same.

Let’s begin…

Portfolio Occupancy (Q2 FY2021 vs. Q3 FY2021)

My Observations: On the whole, Ascendas REIT’s portfolio occupancy profile have continued to remain resilient – the 0.4 percentage points (pp) increase in its portfolio occupancy can be attributed to an improvement in the occupancy rate of its Singapore portfolio (from 87.9% in Q2 FY2021 to 88.5% to Q3 FY2021 due to higher occupancy at 21 Changi South Ave 2, Techplace I, 9 Woodlands Terrace, and also the handover of the fully-occupied Grab Headquarters to Grab in July 2021), as well as in its Australia portfolio (from 95.8% in Q2 FY2021 to 97.5% in Q3 FY2021, contributed by a new lease secured at 1 Distribution Place, along with the divestment of 62 Stradbroke Street in July 2021 – where the property was just 61.7% occupied as at 30 June 2021).

No doubt its rental reversion (for new and renewed leases) have dropped, but given the current headwinds posed as a result of the ongoing pandemic, personally, I am encouraged to note that the REIT still manage to maintain a positive rental reversion.

In terms of lease expiry, only 2.7% of the leases will be up for renewal in the remaining months of FY2021 – which in my opinion is minimal.

Debt Profile (Q2 FY2021 vs. Q3 FY2021)

My Observations: Personally, I felt that the latest set of statistics reported by the REIT (for Q3 FY2021) continued to remain healthy when compared against the previous quarter 3 months ago (i.e. Q2 FY2021.):

In terms of its aggregate leverage, at 37.4%, has about a debt headroom of S$4.2b before it reaches the regulatory limit of 50.0%.

On its debt maturity profile, it is also well spread out – where only $687m (or about 11%) of its borrowings are due in the remaining months of the current financial year.

Also, for those of you who are concerned about interest rate fluctuations, I learned that the REIT have also achieved a relative high level of hedge to minimise the effects of any adverse interest rate fluctuations – for Australian Dollar borrowings, it is at 75.9%, for United States Dollar borrowings, it is at 88.4%, for the United Kingdom Pounds, it is at 70.3%, and for the Euro Dollar, it is at 100.0%.

Closing Thoughts

Ascendas REIT’s latest portfolio occupancy and debt profile certainly did not disappoint (at least in my personal opinion.) In terms of portfolio occupancy, they continue to be maintained at high levels, and that I like the REIT for the fact that they still managed to maintain a positive rental reversion for new and renewed leases. Also, its debt profile continue to remain healthy, with ample of debt headroom for the REIT to make further yield-accretive acquisitions before it reaches the regulatory limit of 50.0%.

With that, I have come to the end of my highlight on Ascendas REIT’s latest third quarter update. As always, do take note that everything you have just read above (including my personal opinions) are purely for educational purposes only, and that they do not represent any buy or sell calls for the REIT’s units. Please do your own due diligence before you make any investment decisions.

Related Documents

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Disclaimer: At the time of writing, I am a unitholder of Ascendas REIT.