Current location site: Global

• 1H 2024 net property income grew 3.9% year-on-year to S$528.4 million, underpinned by contributions from acquisitions and newly completed properties in FY2023. 
• Stable portfolio occupancy of 93.1% and high positive average rental reversion of 13.4% for leases renewed in 1H 2024.
• Healthy aggregate leverage of 37.8% and stable cost of debt of 3.7% for 1H 2024. 

Summary of CapitaLand Ascendas REIT Group Results

Notes:

1. Included taxable, tax exempt and capital distributions of 6.062, 0.669 and 0.793 cents, respectively.
2. Included taxable, tax exempt and capital distributions of 5.870, 0.571 and 1.278 cents, respectively, including the advanced distribution for period from 1 January 2023 to 24 May 2023 of 6.141 cents paid on 26 June 2023.
3. Arising from the issuance of new Units for the payment of 20% of the base management fee for the period from 1 December 2023 to 31 May 2024.
4. As of 30 June 2024, CapitaLand Ascendas REIT had 97 properties in Singapore (including 27 IBP and 5 Toh Guan Road East), 34 properties in Australia, 48 properties in the US, and 50 properties in the UK/Europe (including Welwyn Garden City).

Singapore, 30 July 2024 – 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 the period from 1 January 2024 to 30 June 2024 (1H 2024) rose by 7.2% year-on-year (y-o-y) to S$770.1 million. The better performance was driven by acquisitions and newly completed properties in FY2023. The increase in revenue was partially offset by higher property operating expenses as a result of an enlarged portfolio. Consequently, net property income (NPI) rose by 3.9% y-o-y to S$528.4 million.

Finance costs¹ increased 16.3% y-o-y to S$123.3 million mainly due to higher interest expenses in an elevated interest rate environment as well as higher borrowings. Nonetheless, the total amount available for distribution increased by 1.0% y-o-y to S$330.8 million. Distribution Per Unit (DPU) declined by 2.5% to 7.524 Singapore cents on account of an enlarged unit base.

Value-adding Initiatives

The Manager commenced two new asset enhancement initiatives (AEIs) in Singapore with a total investment of S$24.2 million.

The S$22.7 million AEI at Aperia, a high-specifications industrial development with complementary retail space located at Kallang Avenue, will upgrade the drop-off point and entrances to enhance tenants’ and visitors’ arrival experience. Improvements will also be made to the retail mall layout and tenant mix to increase footfall. The AEI is expected to complete in 4Q 2025.

The S$1.5 million refurbishment at ONE@Changi City, a business space property located in Changi Business Park, will modernise the interior of the South Tower lobby to create a welcoming waiting area and collaborative discussion space for tenants and visitors. The AEI is expected to complete in 3Q 2024.  

Including the two new AEIs, there are a total of six ongoing redevelopments and AEIs worth S$572.8 million. These projects are scheduled to be completed between 3Q 2024 and 1Q 2026. The Manager will continue to identify and undertake redevelopments and AEIs to maximise returns from the existing portfolio.

Mr Tay added: “To further enhance our portfolio, we embarked on two asset enhancement initiatives at Aperia and ONE@Changi City in Singapore to optimise returns and improve the value of the properties. Besides driving organic growth, we are committed to growing our portfolio prudently through acquisitions and developments that are DPU-accretive. With our robust balance sheet and investment grade credit rating, we are in a strong position to seize growth opportunities to strengthen our portfolio.” 

A positive average rental reversion4 of 11.7% was achieved for leases that were renewed in multi-tenant buildings in 2Q 2024. Both Singapore and the US recorded average rental reversions of +11.9%, while Australia and the UK/Europe registered average rental reversions of +7.7% and +10.1% respectively. The average rental reversion for leases signed in 1H 2024 was +13.4%. The average rental reversion for FY 2024 is expected to be in the positive high-single digit range.

The largest sources of new demand by gross rental income in 1H 2024 were the Engineering, IT & Data Centres, Government & International Organisations / Non-governmental Organisations / Non-profit Organisations sectors.

The weighted average lease expiry (WALE) period of the portfolio stands at 3.8 years. Less than 7% of CLAR’s gross rental income is due for renewal for the remainder of 2024.

Proactive Capital Management

In 1H 2024, CLAR obtained a S$300 million 7-year green loan and issued a S$300 million 10-year green bond to refinance existing borrowings. With these new facilities, CLAR’s total green financing has increased to approximately S$2.7 billion or about 39% of its total borrowings⁵.

As of 30 June 2024, the weighted average term of debt has lengthened to 3.7 years (31 March 2024: 3.4 years; 31 December 2023: 3.4 years) following the recent refinancing activities.

CLAR’s aggregate leverage remained at a healthy 37.8% (31 March 2024: 38.3%; 31 December 2023: 37.9%). Together with a high proportion of fixed rate debt at 83.0% and a well-spread debt maturity profile, CLAR’s weighted average all-in cost of borrowing is stable at 3.7% (31 March 2024: 3.8%; 31 December 2023: 3.5%).

CLAR continues to enjoy the A3 credit rating by Moody’s, underpinned by its robust balance sheet. This strong financial position acts as a safeguard for CLAR, ensuring the resilience of its financial ratios and compliance with bank covenants.

The Manager will maintain a proactive and disciplined approach to capital management.

Continued Sustainable Impact

The Manager has set a target to source 45% of the landlord’s electricity consumption for its owned and managed properties from renewable sources by 2030. In Singapore, solar panels were installed at three more properties6 in 1H 2024, bringing the total number of properties with solar panels to 25. The projected total solar power generated is expected to be capable of powering more than 6,000 four-room Housing & Development Board flats in Singapore annually. In Australia, solar panels were installed at two more properties7 in 1H 2024. In addition to these initiatives, CLAR prioritises the use of green energy wherever feasible on a commercial basis. Notably, all co-location data centres in the UK and Europe, including the newly-acquired The Chess Building, are 100% powered by renewable energy.

In 1H 2024, two properties in Australia obtained green certifications. MQX4, a new business space property, achieved the 6-Star Green Star Design & As-Built Rating, while 500 Green Road, a logistics property, achieved the 5-Star Green Star Design & As-Built Rating. As of 30 June 2024, 47% of CLAR’s portfolio, based on gross floor area, comprises properties that are green certified.

Sustainability involves the collaborative efforts of all stakeholders, and the Manager encourages tenants to commit to green leases as well as environmentally friendly products and business practices in their operations. As of 30 June 2024, the green lease coverage by net lettable area of CLAR’s portfolio has increased to 49% (31 December 2023: 45%).

CLAR will continue to explore and implement initiatives that promote sustainability, such as green building certifications, green leases, the deployment and/or utilisation of renewable energy and the embrace of other feasible technological solutions.

Outlook

According to the International Monetary Fund (IMF), global growth is expected to be at 3.2% in 2024 and 3.3% in 2025, a similar pace as 2023 (source: IMF July 2024 report). The stable but slow outlook reflects resilient economic activity amidst continued restrictive monetary policies to fight inflation, post-COVID withdrawal of fiscal support as well as low underlying productivity growth.

Conclusion

Uncertainties surrounding the inflation trend, the pace and timing of monetary policy easing, as well as the intensity of ongoing geopolitical conflicts will continue to pose challenges to tenants’ businesses and CLAR’s operating costs.

Leveraging on our resilient and well-diversified portfolio, strong balance sheet and investment grade credit rating, CLAR is well-positioned to seize growth opportunities to deliver sustainable returns and greater value to Unitholders. 

<sub>--------------------------------
1. Excluding finance costs on lease liabilities.
2. Excluding two properties in Singapore and one property in the UK which are under redevelopment.
3. Excluding Welwyn Garden City.
4. 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.
5. Includes Green Perpetual Securities of S$300 million.
6. Nucleos, 12 Woodlands Loop and Giant Hypermart.
7. 52 Fox Drive and 700-718 Kororoit Creek Road.
8. CBRE Industrial & Logistics Australia Figures Q2 2024.</sub>