- CapitaLand Ascendas REIT (SGX:A17U) reported 1H23 DPU of S$0.0772, -2.6% h-o-h/-2% y-o-y. Contributions from acquisitions were offset by lower margins, higher borrowing cost and an enlarged base of units. See CapitaLand Ascendas REIT's distribution date.
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- We lower our forecasts and DDM-based target price for CapitaLand Ascendas REIT to S$2.65 from S$2.75 and maintain HOLD.
Borrowing cost erodes top line growth
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- Higher utilities income and service charge also contributed to the revenue increase. However, borrowing cost rose 80bps h-o-h/120 bps y-o-y to 3.3%, eroding top line growth.
- Gearing was 36.7% and NAV notably fell 2.1% h-o-h/2.9% y-o-y despite no revaluation of properties.
- On investments, CapitaLand Ascendas REIT's management mentioned that the potential acquisition in Europe is on track. Further, CapitaLand Ascendas REIT also identified 5 Toh Guan Road East as the logistics asset to be redeveloped into a ramp-up facility. We estimate underwriting rent of S$1.6 psf pm vs median-signing rent of S$2.1 psf. pm (JTC) for the micro market for 2Q23.
Positive reversions, lower occupancy
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