CapitaLand Ascendas REIT 1H Net Property Income Up 3.9% on Acquisitions, Completions

CapitaLand Ascendas REIT (CLAR)’s net property income increased 3.9 percent year-on-year to S$528.4 million during the first six months of the year, with the trust’s manager attributing the growth to contributions from last year’s acquisitions and newly completed properties.

SGX-listed CLAR, which owns a portfolio which combines business parks and life science facilities with workshops, warehouses and data centres worth S$16.9 billion as of June, booked gross revenue of S$770.1 million in the first half of the year, an increase of 7.2 percent from the corresponding period last year.

“Our well-diversified portfolio and diverse tenant mix continues to deliver a solid financial and operational performance in 1H 2024,” William Tay, CEO and executive director of CLAR’s manager said in a release on Tuesday. “This growth is attributable to the higher revenue and net property income, as well as a stable cost of debt.”

Total distributable income edged up 1.0 percent to S$330.8 million over the same period, while distribution per unit declined by 2.5 percent to 7.524 Singapore cents.

Acquisitions and New Completions

CLAR achieved positive average rental reversion of 13.4 percent for leases renewed in the first half of the year, while overall portfolio occupancy stood at 93.1 percent as of June, compared to 94.2 percent as of December.

The REIT’s manager, which is owned by Temasek-controlled CapitaLand Investment, expects rental reversion for 2024 to be in the “positive high-single digit range”.

The trust’s performance in the period was boosted by last year’s acquisitions of The Shugart business park and R&D facility in Singapore and The Chess Building data centre in northwest London, as well as the completion of the MQX4 suburban office in Sydney and a life sciences property at 6055 Lusk Boulevard in San Diego. CLAR’s manager affirmed its commitment to continue growing the portfolio through acquisitions and new developments.

“Besides driving organic growth, we are committed to growing our portfolio prudently through acquisitions and developments that are DPU-accretive,” said Tay. “With our robust balance sheet and investment grade credit rating, we are in a strong position to seize growth opportunities to strengthen our portfolio.”

Adding to its 226 properties as of 30 June, the trust’s manager is undertaking redevelopment of a trio of properties in Singapore at an estimated total cost of S$543.6 million, with the projects set to complete between the second quarter of 2025 and the first quarter of 2026.

By asset value, 64 percent of CLAR’s 5.3 million square metres of investment properties were located in Singapore as of June, followed by 14 percent in Australia, 12 percent in the US, and 10 percent in the UK and continental Europe.

Positive Rental Reversion

CLAR’s assets in the UK and Europe registered overall occupancy of 99.3 percent as of June, the highest among the trust’s four markets, followed by Australia (96.8 percent), Singapore (92.0 percent), and the US (87.7 percent).

All four markets posted positive rental reversions, with the trust’s logistics assets in Singapore and the US logging average reversions of 24.9 percent and 13.5 percent, respectively.

Tenants in the engineering industry made up the largest source of new leases in the trust’s Singapore portfolio in the first half of the year, accounting for 23.5 percent of gross rental income during the period. Among the trust’s other markets, financial and professional services firms represented 39.7 percent of new leases over the same period.

CLAR’s portfolio had an overall weighted average lease expiry (WALE) of 3.8 years at the end of the second quarter. The UK and Europe logged the longest WALE at 6.0 years, followed by 4.3 years in the US, 3.5 years in Singapore and 2.9 years in Australia.

The REIT’s finance costs climbed 16.3 percent year-on-year to S$123.3 million, with the trust’s managers attributing the increase to higher interest expenses in an elevated rate environment as well as to increased borrowings.

The trust had S$6.7 billion of total debt as of June, representing an aggregate leverage ratio of 37.8 percent, while its weighted average all-in cost of debt stood at 3.7 percent.