A-REIT posts 12.6% increase in distributable income

Ascendas Real Estate Investment Trust (A-REIT) has booked a 12.6 per cent increase in distributable income to nearly S$211 million for the financial year ended March 31.

It also reported a net property income of S$296.6 million, up 21.8 per cent on-year.

And though it said that 2009 will be a difficult year, it expects to maintain a similar level of income for the current financial year.

This is because it has locked in a high occupancy rate and is confident of strong rental renewals going forward.

From storage and distribution, to electronics, fashion and textiles, A-REIT has a highly diversified mix of tenants in its properties.

The trust has a healthy portfolio occupancy rate of 97.8 per cent.

And with S$200 million worth of new loans secured, the trust is in a good position to weather the turbulent year ahead.

A-REIT also raised S$408 million of new equity in January and February of this year to strengthen its balance sheet and fund committed developments.

However, analysts said that one of the main challenges for A-REIT will be to maintain its customer base in a competitive market.

Brandon Lee, investment analyst, DMG & Partners, said: “Everything is still pretty okay for A-REIT, except I think that going forward, it is going to focus a lot on retaining the tenants, especially for the 12 per cent that it has to renew for the entire year going forward. But I believe that A-REIT is probably going to go at all cost to maintain its high occupancy levels because that is going to underline its stable payouts.”

Some analysts said that industrial rents could decrease in the region of 10 to 20 per cent this year. However, A-REIT’s competitive pricing and locked-in contracts are expected to mitigate high exposure to price fluctuations.

A-REIT said it will not be cancelling any projects already under construction, but could postpone those projects that have yet to be started amid the current difficult environment.

It said that it is still open to new projects, but will take a cautious approach.

A-REIT said that the outlook for the current financial year will depend largely on the impact of the global economic recession on its existing tenants. However, it does note that there are still some pockets of growth.

Tan Ser Ping, CEO, A-REIT, said: “We are still seeing some pockets of new demand, but of course compared to six months or one year ago, the percentage of new demand is significantly lower. There are some new activities in for example R&D areas, green technology (and) aerospace.”

Distribution per unit for the year increased by 7.4 per cent for the year to 15.8 cents per unit.

Source : Channel NewsAsia – 17 Apr 2009

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