Current location site: Global

• FY2022 Distribution per Unit (DPU) rose by 3.5% y-o-y to 15.798 cents. The increase in DPU was underpinned by robust operational performance, with portfolio occupancy reaching a 10-year high of 94.6%, positive average rent reversion of 8.0% achieved for leases that were renewed during FY2022 and contributions from acquisitions and developments completed during FY2021 and FY2022.
  
• A healthy leverage of 36.3% and a high proportion of fixed rate debt of 79% enabled us to moderate our interest expense despite the rise in global interest rates.
• There was no significant change in the valuation of our property portfolio. Same-store portfolio valuation was stable at S$16.1 billion.

Summary of CapitaLand Ascendas REIT Group Results

Notes:

1. Included taxable, tax exempt and capital distributions of 11.507, 1.681 and 2.610 cents, respectively.
2. Included taxable, tax exempt and capital distributions of 11.028, 0.233 and 3.997 cents, respectively. For information only, DPU before performance fee is 15.438 cents.
3. Included taxable, tax exempt and capital distributions of 5.735, 1.309 and 0.881 cents, respectively.
4. Included taxable, tax exempt and capital distributions of 5.499, 0.188 and 1.911 cents, respectively. For information only, DPU before performance fee is 7.778 cents.
5. Arising from the issuance of new Units for the payment of 20% of the base management fee during FY2022
6. As of 31 December 2022, CapitaLand Ascendas REIT had 95 properties in Singapore (including iQuest@IBP), 48 properties in the US, 36 properties in Australia, and 49 properties in the UK/Europe.

2 February 2023, Singapore – The Board of Directors of CapitaLand Ascendas REIT Management Limited (the Manager), the Manager of CapitaLand Ascendas REIT (CLAR), is pleased to report that gross revenue for FY2022 rose by 10.3% y-o-y to S$1.35 billion. The increase was mainly attributed to contributions from a built-to-suit development in Singapore, as well as newly acquired properties in Singapore, the UK/Europe, the US, and Australia during FY2021 and FY2022.

Net property income (NPI) rose by 5.2% y-o-y to S$968.8 million despite cost pressures. The total amount available for distribution rose 5.4% y-o-y to S$663.9 million. DPU rose 3.5% to 15.798 Singapore cents for FY2022 due to the increase in NPI and the absence of the Manager’s performance fee, which was partially offset by an increase in borrowing costs. 

Value-adding Investments

CLAR completed S$223.4 million of acquisitions in 2022. The funds were deployed into the robust logistics sector in the US and Australia. In Australia, two newly developed logistics properties, 500 Green Road (S$69.1 million) located in Brisbane, and 7 Kiora Crescent (S$21.1 million) located in Sydney, were acquired in February 2022. In the US, seven last-mile logistics properties located in Chicago were acquired for S$133.2 million in June 2022. 

During 2022, AEIs were also undertaken at Changi Logistics Centre and 17 Changi Business Park Central, both in Singapore, for a total of S$16.3 million.

There are five on-going development and AEI projects worth S$617.4 million which are expected to complete between 2Q 2023 and 2Q 2025.

Post FY2022, two acquisitions with an aggregate purchase consideration of S$296.7 million were completed in Singapore: a high-tech industrial property at 622 Toa Payoh Lorong 1 (S$104.8 million) and a cold storage facility at 1 Buroh Lane (S$191.9 million). 

A Diversified and Resilient Portfolio

As of 31 December 2022, CLAR’s S$16.4 billion portfolio had a customer base of more than 1,720 tenants. The portfolio is diversified geographically across the developed markets of Singapore (62%), the US (15%), Australia (14%), and the UK/Europe (9%). Our 227 investment properties span across three key segments: Business Space and Life Sciences (48%), Logistics (25%), and Industrial and Data Centres (27%).

Overall, the portfolio occupancy rate recorded a 10-year high of 94.6% (30 September 2022: 94.5%) driven by improvements in Singapore and Australia.

The occupancy rate of the Singapore portfolio rose to 92.1% as of 31 December 2022 from 91.8% a quarter ago. This was mainly attributed to new leases executed at its logistics and industrial properties.

In the US, occupancy rate of the portfolio remained healthy at 94.0% as of 31 December 2022 (30 September 2022: 94.8%) although lower occupancies were recorded at its business space properties in Portland and Raleigh.

The portfolio in Australia recorded an improved occupancy of 99.4% as of 31 December 2022 (30 September 2022: 99.1%) largely due to positive leasing momentum of the business space properties in Sydney.

The occupancy rate of the UK/Europe portfolio remained unchanged at 99.4% as of 31 December 2022 compared to a quarter ago.

A positive average rental reversion^[1] of 8.0% was achieved for leases that were renewed in multi-tenant buildings during 2022. Average rental reversions of +7.0%, +29.2%, +14.2%, and +11.7% were achieved in Singapore, the US, Australia, and the UK/Europe respectively. The average rental reversion for leases signed in 4Q FY2022 was +8.0%.

The Logistics & Supply Chain Management, Information Technology & Data Centres, Engineering and Biomedical & Agri/Aquaculture sectors were the largest sources of new demand by gross rental income in FY2022.

The portfolio’s weighted average lease expiry (WALE) period stood at 3.8 years and about 21.0% of CLAR’s gross rental income will be due for renewal in FY2023.

Stable Valuation

As of 31 December 2022, CLAR owned 227 investment properties worth S$16.4 billion. This comprised S$10.1 billion (61.5%) of investment properties in Singapore, S$2.5 billion (15.3%) in the US, S$2.3 billion (14.2%) in Australia and S$1.5 billion (9.0%) in the UK/Europe.

On a same-store basis, there was no significant change in the valuation of our portfolio. The same-store valuation^[2] was stable at S$16.1 billion as of 31 December 2022, underpinned by a resilient and diversified portfolio. In local currency terms, higher valuations were achieved for our portfolio in Singapore, Australia, and the US. Although the valuations for data centres in the UK/Europe declined, these data centres only accounted for about 4.4% of the total asset value of S$16.4 billion.

Proactive Capital Management

As of 31 December 2022, the aggregate leverage remained healthy at 36.3% (31 December 2021: 35.9%). With a high proportion of about 79% of borrowings on fixed rate, CLAR’s weighted average all-in cost of borrowing increased to 2.5% in FY2022 from 2.2% in FY2021 despite a sharper increase in interest rates globally.

During the year, we proactively termed out about S$1.3 billion in debt with fresh tenors ranging from five to 10 years. The weighted average tenor of debt outstanding increased to 3.7 years (FY2021: 3.5 years) and the debt maturity profile remained well-spread out with less than 20% of debt due for renewal in any one year to minimise refinancing risks.

A high level of natural hedge of about 74% was maintained for the overseas investments to minimise the effects of any adverse exchange rate fluctuations.

CLAR continues to enjoy the A3 credit rating by Moody’s.

We will continue to adopt a proactive and disciplined approach to capital management.

Sustainability Efforts

CLAR is committed to improving the environmental sustainability of its portfolio. As of 31 December 2022, 76% of its managed properties by gross floor area were green certified.

During the year, an additional 10 properties in Singapore were fitted with solar panels, in line with our aim to reduce carbon footprint. CLAR’s combined rooftop solar installations at its 17 properties is estimated to generate over 18 GWh of renewable energy annually and will help to avoid over 7,466 tonnes of carbon emissions. This is equivalent to the carbon emissions from the electricity consumption of about 4,059 households annually^[3].

In 2022, CLAR completed its maiden participation in the GRESB Real Estate Assessment and achieved a 3-star rating. For GRESB Public Disclosure, CLAR has achieved an “A” Rating for three consecutive years.

Outlook

Rising interest rates and inflation have caused recession concerns to dominate global markets. These have been exacerbated by the ongoing Russian-Ukraine war.

According to the International Monetary Fund (IMF), global growth is projected to slow from 3.4% in 2022 to 2.9% in 2023, and then rise to 3.1% in 2024 (source: IMF January 2023 report).

Conclusion

We continue to face challenges from rising interest rates, inflation, and global economic uncertainties. These ongoing issues may have some impact on tenants’ businesses as well as on CLAR’s operating costs. The Manager will proactively manage these challenges in a prudent manner and is well-positioned to leverage on CLAR’s strong financial position to take advantage of any growth opportunities should they arise to deliver sustainable returns to Unitholders. 

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[1] Percentage change of the average gross rent over the lease period of the renewed leases against the preceding average gross rent from lease start date. This takes into account renewed leases that were signed in the respective period and average gross rents are weighted by area renewed.
[2] Same-store valuation comprises 217 properties, excluding newly acquired/completed properties and properties under redevelopment during FY2022. 
[3] Average annual consumption of a four-room HDB household is based on Singapore’s Energy Market Authority’s 2022 Singapore Energy Statistics, page 45}