On 6 February 2025, CapitaLand Ascendas Real Estate Investment Trust (“CLAR”) have announced their full year result for FY2024. The metrics have notably improved this quarter, with DPU increasing for this half the year. This was contributed by lower finance costs, which management have disclosed that the driver was due to lower interest rates. Combined with the trend of lower gearing and increase in occupancy rate, DPU may continue to increase over the next few quarters.
Disclaimer: Not financial advice. All data and information provided on this site is for informational purposes only.
Website: Financial Statements And Related Announcement::Full Yearly Results
Financial Highlights
Distribution Per Unit (“DPU”)
| Metrics | Current | Previous |
|---|---|---|
| Distribution Per Unit | +2.1% | No Update |
| Rating | Favorable | Unfavorable |
With effect from February 2025, I will be using the half year on half year DPU changes as references for CLAR. This is due to REITs are usually not as affected by seasonal changes.
DPU for the second half of FY2024 increased by 2.1% to SGD0.07681 per unit from SGD0.07524 per unit in the first half of FY2024. Management have disclosed that the DPU increase mainly arose from the lower interest expense, which was able to offset the decrease in net property income. The metric has shifted towards Favorable.
Occupancy
| Metrics | Current | Previous |
|---|---|---|
| Occupancy | 92.8% | 92.1% |
| Rating | Neutral | Unfavorable |
Occupancy rate as of 31 December 2024 increased slightly to 92.8%, contributed by improvements noted across the portfolio. This metric has shifted towards Neutral as it is an improvement towards my expected healthy occupancy rate of 95%.
Gearing ratio
| Metrics | Current | Previous |
|---|---|---|
| Gearing Ratio | 37.7% | 38.9% |
| Rating | Favorable | Neutral |
Gearing ratio has decreased to 37.7% as of 31 December 2024. This has shifted back to the Favorable territory as there is a larger buffer now from the MAS limit.
Interest coverage
| Metrics | Current | Previous |
|---|---|---|
| Interest Coverage | 3.6x | 3.5x |
| Rating | Favorable | Favorable |
The adjusted interest coverage for the trailing 12 months remains relatively unchanged at 3.6 times as of 31 December 2024. This metric remains Favorable as the coverage ratio is above my preferred coverage of 3.0 times in the current high-interest rate environment.
Debt maturity profile
| Metrics | Current | Previous |
|---|---|---|
| Debt Maturity Profile | 3.5 years | 3.4 years |
| Rating | Favorable | Favorable |
Weighted average term to maturity of their debt remained relatively unchanged at 3.5 years as of 31 December 2024. This metric remains Favorable and it allows them sufficient time to refinance their debts as they fall due.
Price to Book Ratio
| Metrics | Current | Previous |
|---|---|---|
| Price to Book Ratio | 1.16 | 1.18 |
| Rating | Neutral | Neutral |
The Price to Book (“P/B”) ratio currently stands at 1.16. This was computed using the closing share price of SGD2.64 as of 7 February 2025 and net asset value per share of SGD2.27 as of 31 December 2024. The P/B ratio remains Neutral.
As of 7 February 2025, the Market Capitalization is approximately SGD11,617 million.
Website: Yahoo Finance: CapitaLand Ascendas REIT (A17U.SI)
Dividend
| Year | Yield | Total |
|---|---|---|
| 2025 | 2.91% | SGD 0.077 |
| 2024 | 5.67% | SGD 0.150 |
| 2023 | 5.93% | SGD 0.156 |
| 2022 | 5.87% | SGD 0.155 |
| 2021 | 3.52% | SGD 0.093 |
| 2020 | 6.25% | SGD 0.165 |
With the first dividend payout of SGD0.077 per unit in the calendar year 2025, when extrapolated it is higher than the payout in the calendar year 2024. As a conservative measure, will be using the dividend payout of SGD0.150 per unit for the calendar year 2024 as a benchmark.
With a closing price of SGD2.64 on 7 February 2025, this translates to a dividend yield of 5.67%. For my benchmark, a general reasonable yield would be around 5.25%. As CLAR is trading above my benchmark, the dividend yield is Favorable.
Website: Reasonable Dividend Yield 2025Q1 – 5.25%
In the event that the required dividend yield increases to 6.25% as a benchmark, based on the dividend of SGD0.150 there is potential for CLAR to see its share price drop by 9.1% to SGD2.40.
| Yield | Share Price | Downside |
|---|---|---|
| Current | 2.64 | – |
| 6.25% | 2.40 | -9.1% |
| 7.25% | 2.07 | -21.6% |
Interest Rate Sensitivity
The Federal Reserve on 30 January 2025 have kept interest rates unchanged at a range of 4.25% to 4.50%. This is due to significant uncertainty in the U.S. economic landscape, with a healthy set of macroeconomic fundamentals that have changed little in recent months, but coming decisions from the Trump administration on immigration, tariffs, taxes and other areas that could prove disruptive.
Website: Fed leaves rates unchanged, sees no hurry to cut again
CLAR have provided the interest rate sensitivity analysis as below. Should the interest rate change by another 1.0%, using FY2024 distribution as a base, distribution is expected to change by 1.7%.
| Change in Interest Rates | Change in Distributable Income (SGD’000) | Change as % of FY2024 Distribution |
|---|---|---|
| 50 bps | $5,700 | 0.9% |
| 100 bps | $11,400 | 1.7% |
| 150 bps | $17,200 | 2.6% |
| 200 bps | $22,900 | 3.4% |
Other metrics
Tenant profile
CLAR has a well-diversified tenant profile of 1,790 tenants with the top 10 customers as of 31 December 2024 only account for about 16.2% of monthly portfolio gross revenue. Furthermore, no single customer accounts for more than 3.1% of CLAR’s monthly gross revenue. This is Favorable as CLAR will not be too reliant on any single tenant for income.
Summary
| Metrics | Financials | Rating |
|---|---|---|
| Distribution Per Unit | +2.1% | Favorable |
| Occupancy | 92.8% | Neutral |
| Gearing Ratio | 37.7% | Favorable |
| Interest Coverage | 3.6x | Favorable |
| Debt Maturity Profile | 3.5 years | Favorable |
| Price to Book Ratio | 1.16 | Neutral |
| Overall | Favorable |
The overall metrics indicate that it has shifted towards being Favorable to invest in CLAR. The improvement in DPU as well as healthier financial position provides a stronger stability. This can provide investors with assurance, though CLAR is still trading at a premium from its book value.
Background
CLAR is Singapore’s first and largest listed business space and industrial Real Estate Investment Trust (“REIT”). It was listed on the Singapore Exchange Securities Trading Limited (SGX-ST) in November 2002.
It has since grown to be a global REIT anchored in Singapore, with a strong focus on tech and logistics properties in developed markets. It owns properties across three key segments, namely, 1) Business Space and Life Sciences, 2) Logistics, and 3) Industrial and Data Centres in the developed markets of Singapore, Australia, the United States and the United Kingdom/Europe.
CapitaLand Ascendas REIT is listed on several indices. These include the FTSE Straits Times Index, the Morgan Stanley Capital International, Inc (MSCI) Index, the European Public Real Estate Association/National Association of Real Estate Investment Trusts (EPRA/NAREIT) Global Real Estate Index and Global Property Research (GPR) Asia 250. CapitaLand Ascendas REIT has an issuer rating of ‘A3’ by Moody’s Investors Services.
CLAR is managed by CapitaLand Ascendas REIT Management Limited, a wholly owned subsidiary of Singapore-listed CapitaLand Investment Limited, a leading global real estate investment manager with a strong Asian foothold.
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