by winston » Wed Apr 29, 2020 9:43 am
not vested
Ascendas REIT: Looks good for now, but mindful of challenges ahead
Ascendas REIT’s (AREIT) 1Q20 operational updates were encouraging, as portfolio occupancy rose 0.6 ppt QoQ to 91.7% and average portfolio rental reversion of +8.0% was achieved for leases renewed.
Besides fully passing on the property tax rebates to its tenants in Singapore, AREIT will also provide additional rent relief to its F&B/retail/amenities and food factory tenants (<4% of Singapore portfolio by rental income) for the months of Apr and May.
SMEs contribute less than 20% of its revenue in Singapore.
In Australia, management has suspended rent collection from retail/F&B tenants (<1% of Australia portfolio by rental income) from Apr until restrictions are lifted.
To-date, no rent rebates have been given in the UK and US, and none of AREIT’s tenants in all its markets have indicated that they intend to pre-terminate in the near term, although the leasing environment has become challenging.
Although we like AREIT’s strong financial position and diversified portfolio, we see the need to pare our FY20 and FY21 DPU forecasts by 3.1% and 4.5%, respectively.
This is to account for softer occupancy and rental assumptions, coupled with a weaker AUD relative to the SGD. Our fair value estimate declines from S$3.59 to S$3.52. BUY.
Source: OCBC
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