Ascendas REIT (A-REIT) reported a 4.0% YoY increase in 3QFY13 DPU to 3.62 S cents. This brings the 9MFY13 DPU to 10.68 S cents (+6.2%), forming 76% of both our and consensus full-year DPU projection. The strong performance, we note, was driven by recognition of full-quarter rental income earned from completed development projects and new acquisitions over the past year. Portfolio occupancy as at 31 Dec 2012 was also stable at 94.0% on a sequential basis. In addition, A-REIT continued to achieve positive rental reversions averaging 18.5% across all its property types in 3Q. While A-REIT has been quiet on its acquisition front in FY13, it continues to be actively involved in asset enhancement (AEI) / development activities to boost its returns on its portfolio. This should sustain its growth profile in our view. We are maintaining our HOLD rating with an unchanged fair value of S$2.43 as the stock appears fairly priced at current level.
No surprises in 3QFY13 results
Ascendas REIT (A-REIT) released its 3QFY13 results yesterday. NPI rose by 11.5% YoY to S$104.7m while distributable income increased by 13.5% to S$81.1m. DPU for the quarter saw a 4.0% YoY increase to 3.62 S cents. For 9MFY13, NPI and distributable income amounted to S$308.7m and S$235.7m, representing a rise of 13.0% and 14.5% respectively. In addition, DPU came in at 10.68 S cents, up 6.2%. This forms 76% of both our and consensus full-year DPU projection.
Robust portfolio performance
The strong performance, we note, was driven by a full-quarter recognition of rental income earned from completed development projects and new acquisitions made over the past year. Portfolio occupancy as at 31 Dec 2012 was also stable at 94.0% (multi-tenanted buildings: 89.6%) on a sequential basis. A-REIT continued to achieve positive rental reversions averaging 18.5% across all its property types in 3Q, which was higher than that clocked in previous two quarters (1Q: 11.6%, 2Q: 12.8%). For FY14, management disclosed that current market rents are still 24-25% higher than the passing rents for area due for renewal. This is consistent with our view that the positive reversion trend is likely to continue.
Boosting returns organically
While A-REIT has been quiet on its acquisition front in FY13, it continues to be actively involved in asset enhancement (AEI) / development activities to boost its returns on its portfolio. During the quarter, management announced another AEI for 31 International Business Park to convert the building for multi-tenancy usage and upgrade its specifications. We understand that the estimated cost is S$13.2m and the completion is expected to be in 2QFY14. This initiative, together with previously announced projects, should sustain its growth profile in our view. Moreover, A-REIT had made significant headways at Nexus@one-north by securing 31% pre-commitment for its lettable space (up from 0% in prior quarter). We maintain HOLD with an unchanged fair value of S$2.43 as the stock appears fairly priced at current level.
Ascendas REIT (A-REIT) released its 3QFY13 results yesterday. NPI rose by 11.5% YoY to S$104.7m while distributable income increased by 13.5% to S$81.1m. DPU for the quarter saw a 4.0% YoY increase to 3.62 S cents. For 9MFY13, NPI and distributable income amounted to S$308.7m and S$235.7m, representing a rise of 13.0% and 14.5% respectively. In addition, DPU came in at 10.68 S cents, up 6.2%. This forms 76% of both our and consensus full-year DPU projection.
Robust portfolio performance
The strong performance, we note, was driven by a full-quarter recognition of rental income earned from completed development projects and new acquisitions made over the past year. Portfolio occupancy as at 31 Dec 2012 was also stable at 94.0% (multi-tenanted buildings: 89.6%) on a sequential basis. A-REIT continued to achieve positive rental reversions averaging 18.5% across all its property types in 3Q, which was higher than that clocked in previous two quarters (1Q: 11.6%, 2Q: 12.8%). For FY14, management disclosed that current market rents are still 24-25% higher than the passing rents for area due for renewal. This is consistent with our view that the positive reversion trend is likely to continue.
Boosting returns organically
While A-REIT has been quiet on its acquisition front in FY13, it continues to be actively involved in asset enhancement (AEI) / development activities to boost its returns on its portfolio. During the quarter, management announced another AEI for 31 International Business Park to convert the building for multi-tenancy usage and upgrade its specifications. We understand that the estimated cost is S$13.2m and the completion is expected to be in 2QFY14. This initiative, together with previously announced projects, should sustain its growth profile in our view. Moreover, A-REIT had made significant headways at Nexus@one-north by securing 31% pre-commitment for its lettable space (up from 0% in prior quarter). We maintain HOLD with an unchanged fair value of S$2.43 as the stock appears fairly priced at current level.
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