CapitaLand Ascendas REIT - Robust Operations In 3Q22
- CapitaLand Ascendas REIT (SGX:A17U) reported a 0.5%-point q-o-q improvement in portfolio occupancy to 94.5%, led by higher take-up in Australia and the UK, on the back of positive leasing momentum for logistics space, in its 3Q22 business update. See CapitaLand Ascendas REIT's announcements.
- Portfolio rental reversion remained positive (at +5.4% in 3Q and +8% year-to-date), although at a slower pace vs 2Q’s +13.2%.
- Singapore portfolio occupancy was relatively stable q-o-q, at 91.8% in 3Q. Meanwhile, CapitaLand Ascendas REIT achieved positive rental reversion of 4.4% in Singapore, led by a strong rental reversion of +14.6% at its logistics properties. CapitaLand Ascendas REIT has a remaining 3% and 27.4% of leases to be renewed in Singapore in 4Q22F/FY23F.
- Occupancy for Australia portfolio ticked up to 99.1% due to positive leasing momentum for logistics spaces, such as 92 Sandstone Place and 162 Australis Drive, which achieved 100% occupancy in 3Q. CapitaLand Ascendas REIT has 1.4% and 23.4% of leases due to be re-contracted in 4Q22F and FY23F, the bulk of which are logistics spaces in Sydney and Brisbane.
- US portfolio occupancy slipped slightly to 94.8% in 3Q, due to lower occupancies within its business space portfolio. That said, it enjoyed strong rental reversions of +10.6%/+60% for its business and logistics spaces in 3Q. It has a minimal 7.3%/7.7% of leases to be renewed in 4Q22-FY23F.
- UK/Europe occupancy grew to 99.4%; there was no lease expiry in 3Q and only 7%/3.1% of leases expiring in 4Q22-FY23F.
- CapitaLand Ascendas REIT's aggregate leverage stood at 37.3% as at end-3Q. Interest cost rose slightly q-o-q to 2.2%, with 78% of debt hedged into fixed rates. CapitaLand Ascendas REIT estimates that a 50bp rise in interest rates could impact its DPU by S$0.0017.
- In 3Q22, CapitaLand Ascendas REIT announced the proposed acquisitions of 622 Toa Payoh Lorong 1 and 1 Buroh Lane for a total of ~S$297m, or a net yield of 6.8-6.9%. These transactions are expected to boost contributions when acquired by 1Q23F.
- We leave our FY22-24F DPU estimates for CapitaLand Ascendas REIT unchanged but tweak down our DDM-based target price to S$2.98 on the back of a higher cost of equity assumption of 7.94% (vs. 7.4% previously).
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 | Natalie ONG CGS-CIMB Research | https://www.cgs-cimb.com 2022-10-31 2022-10-31
Previous report by CGS-CIMB:
2022-09-14 Ascendas REIT - Acquiring Cold Storage Logistics Facility.