INDUSTRIAL property player CapitaLand Ascendas Reit (Clar) saw distributions per unit (DPU) fall 2.5 per cent for the half-year ended June, amid an enlarged unit base and higher finance costs.
The lower DPU came even as H1 gross revenue was up 7.2 per cent year on year to S$770.1 million, while net property income (NPI) rose 3.9 per cent to S$528.4 million.
The growth was driven by acquisitions and newly completed properties in FY2023, although NPI was slightly weighed down by higher operating expenses with a larger portfolio.
Clar also saw finance costs up 16.3 per cent to S$123.3 million, due to higher interest expenses. The total amount available for distribution only increased by 1 per cent to S$330.8 million.
William Tay, chief executive of Clar’s manager, nevertheless noted that distributable income was up despite the high interest rate environment. “This growth is attributable to the higher revenue and net property income, as well as a stable cost of debt,” he said in a Tuesday (Jul 30) press release.
The average rental reversion for leases signed in H1 was positive at 13.4 per cent. Clar expects the average rental reversion for FY2024 to be in the “positive high single-digit range”.
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Clar has 226 investment properties across three segments: business space and life sciences; industrial and data centres and logistics. Its portfolio – spanning Singapore, Australia, the US, the UK and Europe – was worth S$16.9 billion as at Jun 30.
The Reit’s portfolio occupancy rate stood at 93.1 per cent as at Jun 30. While stable in Singapore, Australia and Europe, the occupancy rate in the US portfolio fell to 87.7 per cent, from 89.5 per cent in end-March, due to the expiration of leases at two single-tenant properties.
Looking ahead, Clar is focused on identifying and undertaking redevelopments and asset enhancement initiatives (AEIs) to “maximise returns”. It has six such ongoing projects worth S$572.8 million.
One of them is the S$22.7 million AEI at Aperia, an industrial development with complementary retail space located at Kallang Avenue, that will be completed in the fourth quarter of 2025. Another project is the S$1.5 million refurbishment of ONE@Changi City, a business space property, which is expected to be completed in Q3 this year.
Clar also wants to grow its portfolio “prudently through acquisitions and developments that are DPU-accretive”, said Tay. “With our robust balance sheet and investment grade credit rating, we are in a strong position to seize growth opportunities to strengthen our portfolio,” he added.
Clar ended Tuesday at S$2.68, up 0.4 per cent or S$0.01.
