On 28 April 2025, CapitaLand Ascendas Real Estate Investment Trust (“CLAR”) have announced their first quarter business update for FY2025. It is noted that there is a significant decrease in their occupancy rate across their portfolio. The top tenant in the previous quarter, Singapore Telecommunications Limited, which accounted for 3.1% of the monthly portfolio gross revenue as of 31 December 2024, have decreased their contribution to 1.5% as of 31 March 2025.
There was also a noted increase in gearing ratio this quarter, with increase in borrowings disclosed in the presentation slides. The combined decrease in occupancy rate and gearing ratio may result in a decrease in DPU during this period. Investors will need to monitor for the next financial update to determine if there is any impact.
Disclaimer: Not financial advice. All data and information provided on this site is for informational purposes only.
Website: General Announcement::Business Update For The First Quarter Ended 31 March 2025
Financial Highlights
Distribution Per Unit (“DPU”)
| Metrics | Current | Previous |
|---|---|---|
| Distribution Per Unit | No Update | +2.1% |
| Rating | Favorable | Favorable |
Based on the announcement on 28 April 2025, DPU was not included in the business update for the first quarter of FY2025.
The metric was Favorable in the previous quarter update as 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.
Occupancy
| Metrics | Current | Previous |
|---|---|---|
| Occupancy | 91.5% | 92.8% |
| Rating | Unfavorable | Neutral |
Occupancy rate as of 31 March 2025 has decreased to 91.5%. Management have disclosed that this was due to decrease in occupancy rate across the portfolio. This metric has shifted towards Unfavorable as it is significantly below my expected healthy occupancy rate of 95%.
Gearing ratio
| Metrics | Current | Previous |
|---|---|---|
| Gearing Ratio | 38.9% | 37.7% |
| Rating | Neutral | Favorable |
Gearing ratio as of 31 March 2025 has increased to 38.9%. From the business update, noted that total borrowings have increased to SGD6.9 billion, compared to SGD6.7 billion in the previous quarter. This metric has shifted back to the Neutral.
Interest coverage
| Metrics | Current | Previous |
|---|---|---|
| Interest Coverage | 3.6x | 3.6x |
| Rating | Favorable | Favorable |
The adjusted interest coverage as of 31 March 2025 remain unchanged at 3.6 times. 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 | 3.1 years | 3.5 years |
| Rating | Favorable | Favorable |
Weighted average term to maturity of their debt as of 31 March 2025 has shortened to 3.1 years. This metric remains Favorable as there is still sufficient time to refinance their debts as they fall due. Do note that approximately 28.0% of their debt will mature by the end of FY2026.
Price to Book Ratio
| Metrics | Current | Previous |
|---|---|---|
| Price to Book Ratio | 1.14 | 1.16 |
| Rating | Neutral | Neutral |
Based on the announcement on 28 April 2025, net asset value (“NAV”) was not included in the business update for the first quarter of FY2025.
The Price to Book (“P/B”) ratio has become cheaper at 1.14. This was computed using the closing share price of SGD2.59 as of 23 May 2025 and net asset value per share of SGD2.27 as of 31 December 2024. The P/B ratio remains Neutral.
As of 23 May 2025, the Market Capitalization is approximately SGD11,397 million.
Website: Yahoo Finance: CapitaLand Ascendas REIT (A17U.SI)
Dividend
| Year | Yield | Total |
|---|---|---|
| 2025 | 2.97% | SGD 0.077 |
| 2024 | 5.78% | SGD 0.150 |
| 2023 | 6.04% | SGD 0.156 |
| 2022 | 5.98% | SGD 0.155 |
| 2021 | 3.59% | SGD 0.093 |
| 2020 | 6.37% | SGD 0.165 |
There was no additional dividend payout in this business update. 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 SGD2.59 on 23 May 2025, this translates to a dividend yield of 5.78%. 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 2025Q2 – 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 7.3% to SGD2.40.
| Yield | Share Price | Downside |
|---|---|---|
| Current | 2.59 | – |
| 6.25% | 2.40 | -7.3% |
| 7.25% | 2.07 | -20.1% |
Interest Rate Sensitivity
The Federal Reserve on 8 May 2025 have kept interest rates unchanged at a range of 4.25% to 4.50%, despite pressure from Trump to lower borrowing costs. The US central bank has warned that President Donald Trump’s tariffs have created “so much uncertainty” that it is unsure what to do about interest rates. The chairman Jerome Powell said the economic fallout from Trump’s tariffs meant it was “not at all clear” what the bank should do next.
Website: Fed holds rates because of tariff ‘uncertainty’
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 2.7%.
| Change in Interest Rates | Change in Distributable Income (SGD’000) | Change as % of FY2024 Distribution |
|---|---|---|
| 50 bps | $9,100 | 1.4% |
| 100 bps | $18,100 | 2.7% |
| 150 bps | $27,200 | 4.1% |
| 200 bps | $36,300 | 5.4% |
Other metrics
Tenant profile
CLAR has a well-diversified tenant profile of 1,780 tenants with the top 10 customers as of 31 March 2025 only account for about 15.1% of monthly portfolio gross revenue. Furthermore, no single customer accounts for more than 2.1% of CLAR’s monthly gross revenue. This is Favorable as CLAR will not be too reliant on any single tenant for income.
Do note that the top tenant in the previous quarter was Singapore Telecommunications Limited which accounted for 3.1% of the monthly portfolio gross revenue as of 31 December 2024. Their contribution has decreased to 1.5% as of 31 March 2025.
Summary
| Metrics | Financials | Rating |
|---|---|---|
| Distribution Per Unit | No Update | Favorable |
| Occupancy | 91.5% | Unfavorable |
| Gearing Ratio | 38.9% | Neutral |
| Interest Coverage | 3.6x | Favorable |
| Debt Maturity Profile | 3.1 years | Favorable |
| Price to Book Ratio | 1.14 | Neutral |
| Overall | Neutral |
The overall metrics has shifted towards Neutral to invest in CLAR. The portfolio seems to have weakened notably this quarter. Do note that DPU is marked as favorable based on the previous quarter, which may change in the next financial update if there are negative impacts from the decrease in occupancy and increase in gearing ratio. Investors will need to monitor for any updates while waiting for the half year financial results for clarity.
Background
CapitaLand Ascendas REIT (“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.
Previous Post
Website: CapitaLand Ascendas Real Estate Investment Trust (SGX: A17U): 2024 Full Year Result
One thought on “CapitaLand Ascendas Real Estate Investment Trust (SGX: A17U): 2025 First Quarter Business Update”
Comments are closed.