In this series, we will feature one Singapore-listed company each time as a quick guide to everything you should know about it in 60 seconds.
In this instalment, we have Ascendas Real Estate Investment Trust (SGX: A17U). Previously, we featured Singapore Telecommunications Limited (SGX: Z74), Singapore’s largest telco.
What’s Ascendas REIT’s Business About?Â
Ascendas REIT prides itself in being Singapore’s first and largest listed business space and industrial real estate investment trust (REIT). Currently, Ascendas REIT is the largest REIT in Singapore in terms of market capitalisation.
As of 30 September 2019, Ascendas REIT’s portfolio value stood at S$11.1 billion, consisting of 97 properties in Singapore, 35 in Australia, and 38 in the United Kingdom.
The REIT’s portfolio includes business and science parks, suburban office properties, and high-specification industrial properties, among others.
Ascendas REIT is managed by Ascendas Funds Management (S) Limited, a wholly-owned subsidiary of CapitaLand Limited (SGX: C31), one of the largest diversified real estate outfits in Asia.
Ascendas REIT’s Financial HighlightsÂ
Ascendas REIT has been growing steadily from FY14/15 to FY18/19 (the REIT had a 31 March year-end, but has changed it to 31 December with effect from March 2019), as seen from the table below:
| FY14/15 | FY15/16 | FY16/17 | FY17/18 | FY18/19 | |
|---|---|---|---|---|---|
| Gross revenue (S$' million) | 673.5 | 761.0 | 830.6 | 862.1 | 886.2 |
| Net property income (S$' million) | 462.7 | 553.7 | 611.0 | 629.4 | 649.6 |
| Total amount available for distribution (S$' million) | 351.1 | 378.3 | 446.3 | 468.0 | 485.7 |
The REIT’s gross revenue has increased from S$673.5 million to S$886.2 million over the past five years, representing an annualised growth rate of 7.1%. With that, net property income (NPI) rose 8.9% per year from S$462.7 million to S$649.6 million.
NPI is derived after deducting property operating expenses such as land rent, property tax, and utilities. Since NPI climbed at a faster rate than gross revenue did, it shows that the REIT is prudent at managing its property expenses.
Ascendas REIT’s Distribution Per Unit History
With the consistent rise in gross revenue, NPI, and distributable income, distribution per unit (DPU) has stepped up over the years as well.
| Year | Distribution per unit (S$) |
|---|---|
| FY14/15 | 14.600 |
| FY15/16 | 15.357 |
| FY16/17 | 15.743 |
| FY17/18 | 15.988 |
| FY18/19 | 16.035 |
DPU grew 2.4% per annum from FY14/15 to FY18/19.
Major Risk For Ascendas REIT To Take Note Of
Since the bulk of Ascendas REIT’s properties are based in Singapore (79% of total portfolio value), weakening of the Singapore economy could consequently affect the REIT.
Ascendas REIT’s Unit Price And Valuation
Ascendas REIT’s units have grown 34% in all over the last five years. The strong growth in unit price over the long-term showcases the resiliency and strength of the REIT.
At the time of writing, Ascendas REIT’s unit price is at S$3.03. At that price, it has a price-to-book ratio of 1.4 and a distribution yield of 5.3%.
Disclaimer: The information provided by Seedly serves as an educational piece and is not intended to be personalised investment advice. ​Readers should always do their own due diligence and consider their financial goals before investing in any stock.
