Ascendas REIT - Solid Performance In 1H22
- Ascendas REIT (SGX:A17U) reported a 13.7% y-o-y rise in 1H22 gross revenue to S$666.5m, thanks to contributions from its European data centres and US logistics properties, and income from Galaxis, Grab HQ and UBIX in Singapore, partly offset by asset divestments. However, NPI rose a smaller 7% y-o-y to S$476.9m due to higher utilities expenses from its Singapore properties.
- Ascendas REIT's 1H22 DPU of 7.873 cents is broadly in line, at 48% of our FY22 forecast.
- While Ascendas REIT has significant debt headroom, management indicated that Ascendas REIT is unlikely to reach its stated S$1bn acquisition target for FY22, as it expects deals take longer to conclude in this rising interest rate environment.
- An estimated 80% of its borrowings are in fixed rates; management guided that a 25bp change in average funding cost would only impact DPU by 0.07 cents.
- Ascendas REIT's Singapore portfolio achieved a +13% rental reversion in 2Q22, led by uplifts at business and science parks, industrial and data centres, as well as logistics segments. Management raised its guidance for portfolio rental reversions to be in the positive mid-single-digit range for FY22 (vs. its previous guidance of a low single-digit).
- In terms of redevelopment and asset enhancement opportunities, Ascendas REIT has a pipeline of S$405m worth of projects, to be gradually completed over 4Q22-2Q25F.
- In 2Q22, Ascendas REIT enjoyed rental reversions of +15.2%/15.3%/11.7% in Australia/US/UK and Europe amid rising occupancy.
- We leave our FY22-24F DPU estimates for Ascendas REIT unchanged and retain our DDM-based target price at S$3.20. Ascendas REIT is currently trading at 5.6% FY22F yield.
Above is the excerpt from research report by CGS-CIMB.
Clients of CGS-CIMB may access the full report in PDF @ https://www.itradecimb.com.sg/.
LOCK Mun Yee CGS-CIMB Research | https://www.cgs-cimb.com 2022-08-03 2022-08-03
Previous report by CGS-CIMB:
2022-02-08 Ascendas REIT - Strength Through Diversification
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