CapitaLand Ascendas REIT - UOB Kay Hian 2023-08-03: 1H23 In Line; BUY For Excellence In Execution

• CapitaLand Ascendas REIT (SGX:A17U)’s 1H23 results were in line with our expectations.

Growth from acquisitions in Singapore and the US.

• Gross revenue grew 7.7% y-o-y in 1H23 with contributions from three newly-acquired properties in Singapore in 1H23 (622 Toa Payoh Lorong 1 – high-tech industrial, 1 Buroh Lane – cold storage facility and The Shugart – business park property) and in the US during 2022.
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• CapitaLand Ascendas REIT's 1H23 DPU declined by 2.0% to 7.719 cents due to enlarged unit base following the private placement in May 23. See CapitaLand Ascendas REIT's distribution dates.

Stable occupancies in Singapore, Australia and UK/Europe.

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• Occupancy rate for the US declined 3.2ppt y-o-y to 92.1% due to lower occupancies recorded at business space properties in Raleigh.

Strong positive rental reversion from Singapore.

• CapitaLand Ascendas REIT recorded positive rental reversion of +18.0% for leases renewed in multi-tenant buildings during 2Q23 (Singapore: +19.5%, US: +11.0% and Australia: +12.9%).
• In Singapore, CapitaLand Ascendas REIT registered exceptionally strong rental reversion of +39.1% for logistics properties due to limited supply and adoption of just-in-case supply chain management. Rental reversion for business space & life science was equally impressive at +17.9%.

Coping with higher cost of debt.

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Jonathan KOH CFA UOB Kay Hian Research | https://research.uobkayhian.com/ 2023-08-03 SGinvestors.io

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