Ascendas REIT

Ascendas REIT

Postby winston » Mon May 12, 2008 8:21 am

SINGAPORE, May 12 (Reuters) - Ascendas Real Estate Investment Trust may be in focus on Monday after it agreed to buy a business park building owned by Creative Technology for S$246.8 million ($181 million).
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Re: Ascendas REIT

Postby winston » Mon Jun 09, 2008 12:09 pm

Not vested. From UOB-Kay Hian

Ascendas REIT (BUY/S$2.44/Target: S$3.00)

A-REIT has benefitted from strong demand for suburban office space as business & science parks accounted for 25% of its portfolio by property value. The renewal rate for business & science parks was S$3.76psf pm in 4QFY08, 68.8% higher on a yoy basis.

A-REIT had a portfolio of 84 properties and total assets of S$4.2b as at Mar 08. The weighted average lease to expiry is 5.9 years.

A-REIT has a well-diversified tenant base of over 790 international and local companies.
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Re: Ascendas REIT

Postby ishak » Sat Jul 19, 2008 2:23 am

1Q 08 Results - Released 17 July 2008
http://info.sgx.com/webcoranncatth.nsf/ ... penelement
Key Highlights
• 1QFY2008/09 DPU of 3.89 cents, up 15.4% year-on-year (yoy); 5.4% quarter-on-quarter
• 1Q FY2008/09 net income available for distribution of $51.8 m, up 15.9% yoy
• Portfolio occupancy at 98.6% on 30 June 2008 vs 97.2% at 30 June 2007. Occupancy for MTB properties was 96.8% vs 95.0% a year ago.
• Acquired 31 International Business Park and 8 Loyang Way 1 for a total of $271.8 million
• Total assets of $4.5 bn as at 30 June 2008 compared to $3.3bn as at 30 June 2007
• Aggregate Leverage at 40.5%

Organic Growth – Rental Rate Improvements
• Built-in Rental Growth
• 50% of A-REIT’s portfolio by value are results of sale-&-leaseback which are typically long term leases
• Incorporates stepped annual rental increment, providing growth in earnings
• Over 63% (by total gross revenue pa) of such leases are incorporated with a fixed percentage stepped up rental while 34.2% of the leases (by total gross revenue pa) are pegged to CPI
• Positive Rental Reversion
• The other 50% of A-REIT’s portfolio are multi-tenanted buildings where rental rates are marked to market at renewal
• Business & Science Parks and Hi-Tech Industrial properties registered 69.3% and 44.4% respectively in renewal rates over preceding contract rates

Outlook for Industrial Property Market
Outlook for Science & Business Parks and Hi-tech Industrial sectors continue to be healthy
• Limited new supply in the next two years.
• Expect to achieve positive organic reversion albeit at a lower rate.
• 68% of science and business park sector & 61% of hi-tech industrial sector are on short term leases which could benefit of positive rental reversions
• Outlook for light industrial sector moderate
• New supply in next 2 years is not significant compared to logistics sector. New supply are either own-occupied development or intended for strata title sale
• Rental growth rate is expected to be in line with traditional sector performance
• 83% of portfolio are long term committed leases
• Outlook for logistics sector subdued
• Significant new supply of about 604,000 sqm expected for the next two years
• New demand rental rates may be dampened
• However, 73% of lease in this sector are long term committed leases
• Obsolete stock being redeveloped will mitigate the supply situation
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Ascendas REIT

Postby ishak » Fri Aug 22, 2008 2:24 am

A-Reit awards S$76.5m Changi Business Park contract
By UMA SHANKARI, Business Times

The building will be on land with an area of over 28,000 sq metres - one of the biggest developments there, Lum Chang said. The project is due to be completed by October 2009.

The contract marks the second time that A-Reit has appointed homegrown construction company Lum Chang for a Changi Business Park development.

The first project was awarded in 2007, is progressing well and is on track for completion in the first quarter of 2009.
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Ascendas REIT - Analyst CIMB

Postby ishak » Mon Aug 25, 2008 2:29 pm

OUTPERFORM Maintained Ascendas REIT S$2.30 Target: S$2.60
22 August 2008

Demand for industrial space to stay resilient. A-REIT expects demand for industrial space in the near to medium term to stay resilient even if the economy slows further. Management explained that occupancy costs for industrial tenants typically form not more than 5% of their total operating costs. Moreover, the early termination of leases does not exempt tenants from rent payment for the remaining portions of their leases. Thus, companies typically resort to reducing shift work and labour costs before cutting back on their demand for space. The lag time is typically 18-24 months, from a business slowdown to the pinch on real-estate demand. Hence, it will take a recession exceeding 18 months or so for demand for industrial space to be hurt. Additionally, tenants in manufacturing industries account for only 24% of A-REIT’s portfolio and default payments have been minimal at 0.5% of gross revenue so far (vs. 1.8% during the recession in 2004).

Pre-commitments for projects under development add certainty to earnings. All of A-REIT’s projects under development have been built to suit tenants. To date, more than 75% of pre-commitments have been secured, and construction costs locked in prior to commencement, adding certainty to earnings in the mid-term.

More room for rental reversions in Science & Business Park and Hi-Tech segments. Historically, rents of these two segments (catering to R&D and high-valueadded manufacturing) are about half of prime office rents. With the sharp jump in office rents, rents in these segments are now at less than 25% of prime office rents. Management expects office rents to normalise over the next 1-2 years and the ratio to return to the historical 50%. Thus, even if prime office rents fall to S$10-12psf, there is upside for rents in these segments from their current S$3.50-4.00 psf. Demand is likely to be supported by high-value-added manufacturing (including R&D), which is close to the government’s heart. Growth for light industrial space is expected to be stable with most leases being sale-and-leaseback leases incorporating either a fixed portion of stepped-up rent or rental increases pegged to the CPI. Rental growth for logistics space is expected to be flat as strong upcoming supply is likely to affect rate increases for new take-up.

Expansion plans
Acquisition opportunities in Singapore still available
. Management shared that there are still sizeable acquisition opportunities in Singapore, with about 6m sq m of investment-grade industrial space (or 17% of islandwide industrial space supply) not held by REITs. Yields for logistics and light industrial space have trended moderately up to 6.7-7.0%, above A-REIT’s trading yield of 6.7%. Gearing limitations and rising
interest rates have attenuated competition for assets from other REITs and opportunistic funds.

Venturing overseas? A-REIT is unlikely to acquire overseas assets in the near term in view of the sufficient domestic opportunities and development projects in progress. In the medium term, if it acquires outside Singapore, it is likely to begin with South-East Asia.

Capital management
Ease of fund access
. Management is in the process of completing a S$1bn mediumterm note programme (estimated in October). Short-term debt of S$255.4m forms 14% of its total debt of S$1,841m, and should be refinanced with existing bank lines. AREIT’s weighted average cost of debt had declined from 3.42% in Jun 07 to 3.16% in Jun 08, reflecting its ability to secure favourable rates even in the current environment.

Asset leverage to stay within 45%. Management intends to keep asset leverage at a self-imposed 45% and rules out any rights issue in this financial year.

Valuation and recommendation
No surprises; maintain Outperform
. We continue to like A-REIT for its long lease tenures and earnings visibility in the medium term, as well as the relative resilience of the industrial sector to slowing macro conditions. No change to our FY08-10 estimates and DDM-derived target price of S$2.60 (discount rate 9.6%).
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Ascendas REIT - Analyst UOBKH

Postby ishak » Wed Sep 03, 2008 10:06 am

Prime beneficiary of migration to suburban office space
03 Sep 2008

Benefitting from positive rental reversion. The renewal rate for business & science parks was S$4.09psf pm in 1QFY09, an increase of 45% yoy. The renewal rate for hitech industrial space in the quarter was S$3.11psf pm, an increase of 35% yoy. The business & science park and hi-tech industrial segments accounted for 30% and 22% of its portfolio by value respectively. A-REIT will benefit from positive rental reversion as business & science parks and hi-tech industrial segments account for 29.9% and 40.1% of leases expiring in FY09 respectively. Existing contract rates are only S$2.30psf pm for business & science parks and S$1.90psf pm for hi-tech industrial space, much lower than current market rates.

Maximising distribution yield through development projects. Ascendas REIT (AREIT) is developing two build-to-suit facilities and a multi-tenanted block with combined floor space of 803,600sf at Plot 8 Changi Business Park, which is scheduled for completion in phases from 4QFY09 to 3QFY11. Citigroup has committed to a seven-year lease for 400,000sf space at the build-to-suit facilities for its international technology office supporting its consumer businesses, regional processing centres for securities & funds administration and regional technology infrastructure support. Credit Suisse has also taken up a three-year lease for 26,600sf space at [email protected], a seven-storey build-to-suit building completed in Jan 08. Development projects provide yields of 8-9% compared with 6-7% for acquisitions.

A-REIT is the largest industrial REIT in Singapore and is rated A3 with a stable outlook by Moody's Investors Service. Sponsor Ascendas is a subsidiary of Jurong Town Corporation, the government agency responsible for developing industrial infrastructure to support economic growth. Our target price of S$2.95 is based on a two-stage dividend discount model (required rate of return: 8.5%, growth: 3.2%).
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Re: Ascendas REIT

Postby LenaHuat » Wed Sep 03, 2008 10:09 am

Wow, Ishak is back in action oredi. Thanks a million for your generous sharing, Ishak.

The Changi Biz Park is very promising given that the 4th state-sponsored university will be next to it. Sleepy Changi will be transformed in 3 year's time :)
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Ascendas REIT

Postby ishak » Wed Sep 24, 2008 10:12 am

$2.00 | Buy
ABN Amro commence coverage with a price target of $2.40. ABN likes the Reit’s long-term lease profile of five-and-a-half years versus an average of three years for commercial properties as “it lends stability to revenues
in turbulent times”. Singapore prime office rents in 2Q08 are 500 per cent more than those for high-tech space.
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Re: Ascendas REIT

Postby winston » Fri Sep 26, 2008 8:29 am

Not vested.

RESEARCH ALERT-Goldman says Ascendas a "conviction sell"

SINGAPORE, Sept 26 (Reuters) - Goldman Sachs on Friday said that Singapore industrial property trust Ascendas Real Estate Investment Trust was one of its "conviction sells" with a target price of S$1.70.

Goldman previously had a price target of S$2.68 for Ascendas, which closed at S$2.05 on Thursday.

"We have turned more bearish on our industrial sector outlook on the back of our economists' lower GDP growth projections for Singapore in 08/09, due largely to manufacturing sector weakness," Goldman analyst Paul Lian said in a report.

Ascendas has also outperformed the overall Singapore real estate investment trust as well as the Straits Times Index so far this year, and was thus relatively expensive to the rest of the market, he added.
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Re: Ascendas REIT

Postby winston » Fri Oct 03, 2008 12:03 pm

Not vested. From UOB-Kay Hian:-

Ascendas REIT: Target: S$2.90
− Yield 9-10%
− Suburban office space accounting for 52% of its asset portfolio and is rated A3 with stable outlook and backed by the government-linked sponsor Ascendas.
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