Following CapitaLand India Trust (you can read my review of its business update for Q3 and 9M FY2024 here), CapitaLand Ascendas REIT (SGX: A17U), or CLAR for short, was the second of the trio of CapitaLand REITs and business trust I have in my investment portfolio (you can check out a list of companies I have invested in here) to release its business update earlier this evening (25 October). The other CapitaLand REIT in my portfolio (in CapitaLand Integrated Commercial Trust) will be releasing its business update next Tuesday (05 November) evening.

Before I begin, a quick introduction – back when it was listed on the Singapore Exchange in November 2002, CLAR was the country's first and largest business space and industrial REIT, with its investment focus on properties serving the 3 segments: business spaces and life sciences, industrial and data centres, and logistics. As of 30 June 2024, it owns 229 properties in the developed markets of Singapore, the United States, Australia, as well as the United Kingdom/Europe valued at S$16.9 billion.

As CLAR has switched to half-yearly reporting of its financial results, it only updated its portfolio occupancy and debt profile – both of which you will find a review to in this post:

Portfolio Occupancy Profile (Q2 FY2024 vs. Q3 FY2024)

One thing about CLAR’s portfolio occupancy profile that stood out is the high portfolio occupancy rate (at above 90%), along with its positive rental reversions for new and/or renewed leases.

In the table below, you will find a comparison of the REIT’s portfolio occupancy profile recorded for the current quarter under review (i.e., Q3 FY2024 ended 30 September) against that recoded in the previous quarter 3 months ago (i.e., Q2 FY2024 ended 30 June 2024) to find out if this trend has managed to continue:

My Observations: The 1.0 percentage point (pp) dip in CLAR's portfolio occupancy was due to a slight decline in the occupancy rate of its properties in the United States (from 87.7% in Q2 FY2024 to 87.1% in Q3 FY2024), as well as in Australia (from 96.8% in Q2 FY2024 to 91.7% in Q3 FY2024).

Occupancy rates of its properties in Singapore, as well as in the United Kingdom/Europe were at 92.0% and 99.3% respectively – which is very strong in my opinion.

Rental reversions for new and/or renewed leases improved by another 2.7pp from +11.7% in Q2 FY2024 to +14.4% in Q3 FY2024 – particularly, rental reversions for Singapore, United States, and Australia all went up by double-digit percentages.

Finally, lease expiries are also very well-spread out, with 2.0% of leases due for renewal in the final quarter of FY2024. Between FY2025 and FY2027 (3 financial years) ahead, it has an average of 20.0% of leases due for renewal each year. 37.9% of leases will only be due for renewal only in FY2028 or later.

Debt Profile (Q2 FY2024 vs. Q3 FY2024)

CLAR also has a very healthy debt profile, with its aggregate leverage maintained at under 40%, as well as having more than 80% of its borrowings hedged at fixed rates – which helped to mitigate some of the negative impacts the rising interest rate environment have on its distribution payout.

Just like how I have reviewed its portfolio occupancy profile in the previous section, in the table below, you will find a comparison of CLAR's debt profile for Q3 FY2024 ended 30 September compared against Q2 FY2024 ended 30 June to find out if it has continued to remain healthy:

My Observations: Despite a slight 1.1pp increase in its aggregate leverage to 38.9%, it is still at a very healthy level to the regulatory limit of 50.0%. Apart from that, the other statistics are more or less similar to the previous quarter.

In terms of debt maturity, it has 11% of borrowings due for refinancing in the remaining quarter of FY2024, with about 13% of borrowings due for refinancing each year between FY2025 and FY2027. The remaining 50% of borrowings will be due for refinancing only in FY2028 or later.

Closing Thoughts

To round up, CLAR's portfolio occupancy have continued to remain at a very high level – apart from the occupancy of its properties in the United States (at 87.1% as of 30 September 2024), the occupancy rates of its properties in Singapore, Australia, as well as in the United Kingdom/Europe are all above 90%.

Additionally, the REIT have also reported a very good positive rental reversion for the quarter – with Singapore at +12.2%, United States at +22.9%, and Australia at +14.9% – which will positively contribute to its financial results in the coming quarters ahead.

For its debt profile, even though its aggregate leverage have inched up slightly, but at 38.9% as of 30 September 2024, it is at a very healthy level.

Finally, as CLAR has a half-yearly distribution policy (once when it releases its results for the 2nd quarter, and another when it releases its results for the 4th quarter), for the current quarter under review, no distribution payouts are declared.

With that, I have come to the end of my review of CapitaLand Ascendas REIT's latest business update for the 3rd quarter of FY2024. I hope you have found the contents presented in this post useful. However, do note that all the opinions expressed above are purely mine which I'm sharing for educational purposes only. They do not constitute as any buy or sell calls for the REIT's units. You should always 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 CapitaLand Ascendas REIT.

The post Key Highlights from CapitaLand Ascendas REIT's Q3 FY2024 Business Update first appeared on The Singaporean Investor.