Ascendas REIT looks to sponsor's new Business Parks for medium-term growth

As acquisition driven growth mellows.

In DBS Group's outlook for Ascendas REIT (A-REIT), the research firm said A-REIT will be focused on improving portfolio returns but will likely have to lean on its sponsor, Ascendas Group's pipeline, composed mostly of business park assets, to sustain its medium-term growth.

will be renewing close to 10.5% and 22.4% of its income in FY14F and15F respectively, of which expiring rents are 11%-41% below current market levels, and which will likely be complemented by the progressive completion of various developments and asset enhancement projects.

A-REIT has a visible pipeline of projects amounting to S$136.9m (out of which S$73m remains unfunded). Gearing is estimated to remain conservative at c31.5% even after accounting for these developments.

Acquisition driven growth is expected to be more selective given a competitive industrial market. That said, opportunities to grow in the medium term are likely to come from its sponsor, Ascendas Group‘s pipeline of largely Business Park assets, which is understood to be worth up to S$1bn.