Ascendas REIT's NPI up 3.2% to $649.58m in FY2018/2019

Its UK and Australia properties boosted income.

Ascendas real estate investment trust (REIT) ended FY2018/2019 on a high note after its net property income (NPI) edged up 3.2% YoY to $649.58m from $629.4m in FY2017/2018, an announcement revealed. Revenue also rose 2.8% YoY from $862.11m to $886.17m.

Key contributors were its newly acquired properties in the UK (38 logistics properties acquired in August 2018 and October 2018), and Australia (100 and 108 Wickham Street, 169-177 Australis Drive and Cargo Business Park acquired in September 2017, December 2017, June 2018 and August 2018 respectively), and two redeveloped properties in Singapore (Schneider Electric Building and 20 Tuas Avenue 1 completed in June 2017 and April 2018, respectively).

These income contributions were partially offset by nonrenewals and downsizing by tenants in certain Singapore properties during the year.

Also read: Ascendas REIT NPI edged up 6.6% to $168.03m in Q3

Total amount available for distribution grew 3.8% YoY from $468.05m to $485.68m, whilst distribution per unit (DPU) advanced 0.3% YoY to $0.16 from $0.159.

During the year, Ascendas REIT expanded its overseas portfolio via the acquisitions of $948m worth of properties. As at 31 March 2019, the customer base of about 1,360 tenants is spread over 98 properties in Singapore, 35 properties in Australia and 38 properties in the UK. Singapore accounted for 79% of Ascendas REIT’s portfolio by asset value whilst Australia and the UK made up 14% and 7%, respectively.

Overall portfolio occupancy rate rose QoQ and YoY to 91.9%, according to the firm’s financial statement. The Singapore portfolio occupancy rate improved QoQ to 88.3% mainly due to new take-ups and expansions at logistics properties, 20 Tuas Avenue 1, 4 Changi South Lane and 9 Changi South Street 3. The Australian and UK portfolio occupancy rates remained high at 98.0% and 100%, respectively.

Also read: UK acquisitions could boost Ascendas REIT

In FY2018/201919, Ascendas REIT completed approximately $97.9m worth of asset enhancement and redevelopment projects across eight properties in Singapore. The largest project was the redevelopment of 20 Tuas Avenue 1, worth $61.4m, into a modern three-storey ramp-up logistics property. Within a year of completion, 20 Tuas Avenue 1 has achieved an occupancy of 91.1%.

Some of the completed enhancement initiatives in Q4 FY2018/2019 included Nordic European Centre and Aperia Mall, which has a new food street catering to the tenants and the surrounding communities.

Ascendas Funds Management is reportedly undertaking new asset enhancement initiatives at four properties and one redevelopment project worth a total of $58.1m in Singapore. Enhancement works will be carried out at 52 and 53 Serangoon North Avenue 4 (two light industrial properties), as well as Plaza 8 and ONE@Changi City (two business park properties) to upgrade specifications and rejuvenate the properties.

Two light industrial buildings, located at 25 and 27 Ubi Road 4, will also be redeveloped and repositioned into a single high-specifications industrial property to maximise the potential of the site.

Based on new leases signed, tenants from the transport and storage sector accounted for the largest proportion of new demand by gross rental income in FY18/19 (36.7%). About 16.3% of Ascendas REIT’s gross rental income will be due for renewal in FY19/20.

“Of these expiring leases, 1.6% are from single-tenant buildings and 14.7% are from multi-tenant buildings. The Manager has been proactively working on the renewal of the leases and marketing the vacant space to maximise returns from its portfolio,” the firm highlighted.