CapitaLand Ascendas REIT - UOB Kay Hian 2024-08-12: Backfilling Vacant Space At Changi Business Park

• CapitaLand Ascendas REIT (SGX:A17U) reported DPU of 7.524 cents for 1H24 (-2.5% y-o-y), which is in line with our expectations. The REIT has a resilient balance sheet with average debt maturity at 3.7 years. Management plans to scale up in new economy assets such as data centres.
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Generating steady growth.

• Gross revenue increased 7.2% y-o-y in 1H24, driven by acquisitions completed in 2023 and newly completed properties. NPI grew 3.9% y-o-y, while NPI margin narrowed 2.3ppt y-o-y to 68.6%. Finance costs increased 16.3% y-o-y.

Maintaining positive rental reversion.

• CapitaLand Ascendas REIT achieved positive rental reversion of 11.7% for leases that were renewed in multi-tenant buildings in 2Q24 (Singapore: +11.9%, Australia: +7.7%, UK/Europe: +10.1% and US: +11.9%).
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Portfolio occupancy eased 0.2ppt q-o-q to 93.1%.

• Occupancy for Singapore eased slightly by 0.3ppt q-o-q to 92.0% in 2Q24 due to lower occupancy for the logistics property at 40 Penjuru Lane.
• Occupancy for the US eased 1.8ppt q-o-q to 87.7% due to the expiration of leases for two single-tenant properties at Lackman Business Centre 4 in Kansas City (logistics) and 9405 Gemini in Portland (business space).
• Occupancy for Australia was stable at 96.8% with higher occupancy for business space properties.

Prudent capital management.

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Jonathan KOH CFA UOB Kay Hian Research | https://research.uobkayhian.com/ 2024-08-12 SGinvestors.io

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