The manager of Ascendas REIT (A-REIT) has reported distribution per unit (DPU) of 7.27 cents for 1H20 ended June, which represents a 10.8% decline from the DPU of 8.153 cents posted a year ago.
Total income available for distribution rose 3.7% to $263.2 million for 1H20, from $253.7 million in 1H19.
Despite the increase in distributable income, which was primarily attributable to contributions from the REIT’s newly acquired properties in December 2019, DPU for the period fell due to the enlarged number of units after the rights issue in the same month last year.
The number of units for the computation of DPU for 1H20 stood at 3.6 billion, compared to the 3.1 billion units registered in 1H19.
DPU in 1H19 also included the distribution of rollover adjustments from previous years, which amount to $7.8 million (representing an increase of 0.250 cents in DPU).
Excluding the rollover adjustments, DPU for 1H20 would have decreased by 8.0%.
1H20 gross revenue rose 14.6% y-o-y to $521.2 million mainly on the back of contributions by the REIT’s US portfolio that comprises 28 business park properties, and two Singapore business park properties. The 30 properties were acquired in December 2019.
The increase was partially offset by the rent relief support provided to the REIT’s tenants on the back of the Covid-19 pandemic, the divestment of Wisma Gulab in January 2020, and lower occupancies of certain properties.
A-REIT recorded a total of $10.3 million in grant income in 1H20, which represents the property tax rebate passed on to eligible tenants in Singapore.
1H20 property operating expenses increased by 26.1% y-o-y to $133.2 million mainly due to the newly-acquired US portfolio. The expenses recorded in 1H19 were also lower due to the retrospective downward revisions in the annual value of certain properties.
On that, net property income (NPI) rose by 11.2% y-o-y to $263.2 million.
As at June 30, cash and cash equivalents stood at $361.3 million.
Overall portfolio occupancy rate remained stable at 91.5% as at June 30, 2020, with the portfolio’s weighted average lease expiry (WALE) at 3.9 years.
About 8.2% of the REIT’s gross rental income will be due for renewal in FY20.
In 1H20, A-REIT acquired a 25% stake in Galaxis for $102.9 million in March 2020.
See also: Ascendas REIT acquires 25% stake in business park property Galaxis for $102.9 mil
Four Asset Enhancement Initiatives (AEI) were also completed at a total cost of $22.9 million to upgrade building specifications and improve amenities to add vibrancy to the properties.
In 2Q20, the REIT commenced new AEIs of some $16.3 million across four properties.
In its outlook statement, A-REIT says it has provided some $20 million in rent waivers to eligible tenants year-to-date, in addition to the property tax rebates and cash grants from the government, which will be fully passed through to them.
The REIT also expects “subdued” rental growth and demand for industrial space due to excess supply in some segments of the industrial market.
“We continue to expect challenges in the months ahead which could impact the performance of Ascendas Reit. However, our well-diversified portfolio and tenant base should help us to mitigate the challenges ahead. We will continue to work closely with our tenants to ride out this uncertain period together,” says William Tay, Chief Executive Officer and executive director of the manager.
Units in A-REIT closed 9 cents higher, or 2.7% up, at $3.43 on Thursday, prior to the announcement.
