Ascendas REIT's property in Changi Business Park, One@Changi City. (Photo: REITsWeek)

Singapore-listed industrial landlord Ascendas REIT has announced a DPU of 3.993 Singapore cents for its 3Q FY16/17 , a 1.2% increase from the 3.946 cents achieved in the corresponding period of the previous financial year.

Gross revenue for the period increased by 7.6% to SGD208.6 million (USD147 million) while net property income grew by 9% to SGD155 million.

“This was mainly attributable to contributions from the acquisition of the Australian portfolio and ONE@Changi City, partially offset by the loss of income from the divestments of A-REIT City @Jinqiao, Ascendas Z-Link and Four Acres Singapore”, said the REIT in a statement on the results.

Ascendas REIT’s overall portfolio occupancy rate improved to 90.2% as at 31 December 2016 from 89.1% as at 30 September 2016, with a portfolio weighted average lease expiry (WALE) of about 3.7 years.

Despite headwinds in the Singapore industrial sector, its portfolio occupancy for the country improved to 88.1% as at 31 December 2016 from 87.9% as at 30 September 2016, mainly due to new take-up and expansion at two logistics properties, 40 Penjuru Lane and Pioneer Hub.

Positive rent reversion of about 3.0% was also achieved for leases renewed in Singapore during 3Q FY16/17, said the REIT.

Ascendas REIT’s Australia portfolio occupancy also improved to 97.5% from 94.2% in September 2016.

As at 31 December 2016, aggregate leverage stood at 31.8% and weighted average all-in cost of borrowing at 3.0%.

Ascendas REIT has however warned that leasing demand for industrial property space is expected to remain subdued in Singapore.

“In addition, island-wide vacancy for industrial property has risen to 10.9% as at December 2016”, said the REIT, citing statistics from JTC.

“New supply of about 2.2 million [square metres]of industrial space in 2017 will put further pressure on occupancy and rental rates”, the REIT added.

“To enhance the stability and sustainability of returns, we plan to continue to invest in properties with long remaining land lease tenures”, said Ascendas REIT.

Units of Ascendas REIT finished the trading day about 0.4% lower from its previous close on the Singapore Exchange to end at SGD2.40.

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.