SINGAPORE - Rising interest rates weighed on CapitaLand Ascendas Reit (Clar), as the business and industrial property player saw distribution per unit (DPU) fall 6.1 per cent year on year to 7.441 cents for the six months ended Dec 31, 2023.
The DPU decline came even as the Reit’s gross revenue for the second half of the year rose 11 per cent to $761.7 million, while net property income (NPI) was up 4.6 per cent to $514.3 million.
For financial year 2023 overall, Clar’s DPU was down 4 per cent year on year to 15.16 cents, on the back of a 1.4 per cent fall in the amount available for distribution to $654.4 million. The Reit attributed this to higher interest expenses, amid the rising rate environment.
“The uncertain outlook for inflation, geopolitical tensions and risk of faltering growth in China will continue to pose challenges to tenants’ businesses and Clar’s operating costs,” the Reit said in its earnings statement on Feb 1.
Clar’s full-year revenue was up 9.4 per cent to $1.5 billion, driven by acquisitions completed in FY2023 and the prior year. Higher occupancy and positive rental reversions in the Singapore portfolio also lifted full-year revenue. The Reit saw a positive average rental reversion of 13.4 per cent for leases that were renewed in FY2023.
The Reit had completed three Singapore acquisitions in FY2023 – 622 Toa Payoh Lorong 1, 1 Buroh Lane and The Shugart – and bought The Chess Building in Britain. It also completed a development in Australia, MQX4, for $161 million.
Despite higher utility expenses and property taxes in the Singapore portfolio, Clar’s FY2023 NPI rose 5.6 per cent to $1 billion. For FY2023, the largest sources of new demand by gross rental income were logistics and supply chain management, engineering and the biomedical, as well as agriculture and aquaculture sectors.
The Reit has a portfolio of 227 investment properties in three key segments: business space and life sciences, industrial and data centres, as well as logistics – mainly in Singapore, but also in Australia, the United States and Britain. Total occupancy stood at 94.2 per cent as at Dec 31.
The weighted average lease expiry of Clar’s portfolio stood at 3.9 years. About 14.6 per cent of its gross rental income will be due for renewal in FY2024. As at Dec 31, the Reit had an aggregate leverage ratio of 37.9 per cent, higher than the 36.3 per cent ratio the year before.
Clar ended Feb 2 at $2.87, up three cents, or 1.06 per cent. THE BUSINESS TIMES
