Ascendas REIT’s move into Australia opens doors to accretive acquisitions

It mitigates uncertainties in the cyclical real estate space.

Amid mounting headwinds faced by Singapore office rental space market, Ascendas REIT stands out as the ideal pick for investors on the prowl for exposure to both organic growth and resilience.

According to a report by RHB, Ascendas REIT is the only REIT that has a high exposure to the business park space with a wide tenant base diversity.

RHB also forecasts positive rental reversion for Ascendas REIT as expiring rental rates are below current market rate. Most of the renewals, in terms of area, would be done within the logistics and distribution segment, which has the widest spread from the current market rate.

RHB further asserts that while the median expiring rate for business park space demand is close to current market rate, demand for such space will likely persist in 2016.

Ascendas also gets plus points for its opportunistic move into Australia, as growth within the local industrial market is limited. Not only can Ascendas REIT easily conduct accretive acquisitions in Australia, the region’s assets typically also provide stability with their triple net lease structure and a built-in annual rental escalation of 3-4% pa. This mitigates uncertainties in the cyclical real estate business.

Additionally, RHB expects organic growth as its average expiring rental state for the following financial year is far below the current market. For investors, this spells a great blend of exposure to both resilience and growth.