One of 26 Australian properties being acquired by Ascendas REITOne of 26 Australian properties being acquired by Ascendas REIT

Moody's Investors Service has affirmed Singapore-listed Ascendas REIT’s A3 issuer and senior unsecured ratings with an outlook of stable, the ratings agency announced on 21 September.

Moody’s has attributed the ratings to the industrial REIT’s proposed acquisition of a portfolio of logistics properties in Australia, for AUD1 billion (SGD1 billion) announced on 18 September.

"While the acquisition will result in an increase in Ascendas REIT's debt level such that its adjusted debt-to-deposited assets ratio rises to 41%-42%, the risks are partially mitigated by the management's commitment to deleverage over the next six months and the diversification benefits of expanding into the matured Australian industrial real estate market," says Jacintha Poh, a Moody's assistant vice president and analyst.

Ascendas REIT has indicated that it plans to fund the acquisition using approximately AUD600 million of debt from banks and perpetual securities.

"We expect Ascendas REIT's leverage to improve to 38%-40% by the end of this financial year. While this is weaker than its past performance, we draw some comfort from the trust's strong market position, good quality assets and good access to capital markets," says Poh, who is also Moody’s lead analyst for Ascendas REIT.

"We expect Ascendas REIT to exercise discipline in financing future acquisitions as there is limited headroom for any further erosion in its financial metrics”, Poh added.

Units of Ascendas REIT are currently listed on the Singapore Exchange at SGD2.26, up 1.35% from its previous close.

By Ridzwan Rahmat

Ridzwan has been analysing REITs and business trusts since 2008, and personally manages a portfolio comprising mainly of SGX-listed REITs. He founded REITsWeek in 2013.