Singapore-listed industrial REIT, Ascendas REIT (SGX:A17U), announced on 22 January that it has achieved a distribution per unit (DPU) of 3.946 Singapore cents for its 3Q FY15/16, an increase of 9.9% from the 3.590 cents paid in FY 14/15.

This came on the back of an increase in the total amount available for distribution that grew 11.7% year-on year to SGD96.6 million.

Occupancy rates for the overall portfolio improved to 89.2% from 89.0% in September 2015. “This was mainly attributable to the high occupancy of 94.4% achieved by the recently acquired Australian logistics property portfolio”, said the REIT.

However the Ascendas REIT pointed out that its Singapore portfolio occupancy declined to 88.9% from 89.8% in September 2015 mainly due to the recently completed new block at 40 Penjuru Lane that added 22,966 square metres of space or about 0.97%-point to the Singapore portfolio net lettable area.

“The manager is in negotiation with potential tenants for about half of the space in the new block”, said the REIT. Portfolio weighted average lease to expiry (WALE) is at 3.7 years.

“With 10.8% vacant space in Ascendas REIT’s portfolio, there could be potential upside when some of the space is leased, the speed of which will largely depend on prevailing market conditions”, said Ascendas REIT.

“However, the industrial property market conditions in Singapore are expected to remain challenging”, said the REIT. “With significant new supply and tepid economic growth both in Singapore and globally, there may be pressure on occupancy growth in Singapore”, it said. But REIT also pointed out that it expects demand for industrial space in Australia to be strong.

“Barring any unforeseen events and any weakening of the economic environment, the manager expects Ascendas REIT to maintain a stable performance for the balance of the financial year ending 31 March 2016”, the REIT concluded.