CapitaLand Ascendas REIT (A17U) Q3 2024 TU earnings summary

Executive summary

• Aggregate leverage increased to 38.9% as of 30 Sep 2024, up from 37.8% at 30 Jun 2024, with a stable cost of debt at 3.7% and a robust A3 credit rating.

• Portfolio occupancy declined to 92.1% from 93.1% in the previous quarter, with notable drops in Australia and the US, but UK/Europe occupancy remained high at 99.3%.

• Achieved a strong average portfolio rental reversion of +14.4% for leases renewed in 3Q 2024.

• Announced the divestment of a logistics property in Singapore for S$112.8m, at a significant premium to both original purchase price and recent valuation.

• Completed two asset enhancement initiatives in Singapore totaling S$3.9m, with six ongoing projects worth S$572.6m to further improve portfolio quality.

Financial highlights

• Aggregate leverage at 38.9% and interest cover ratio at 3.7x as of 30 Sep 2024.

• Net debt/annualised EBITDA increased to 7.8x from 7.6x sequentially.

• 80.2% of borrowings are on fixed rates, with a weighted average debt maturity of 3.3 years.

• Green financing accounts for about 38% of total borrowings, totaling S$2.6b.

Outlook and guidance

• Global growth expected to remain stable at 3.2% in 2024 and 2025, but risks are tilted to the downside due to geopolitical and economic uncertainties.

• Singapore GDP growth forecasted at the upper end of 2-3% for 2024, with inflation rising to 2.8% in Sep 2024.

• US and Australia portfolios expected to generate stable returns, though Australia may see short-term logistics occupancy fluctuations.

• UK/Europe portfolio benefits from long WALE and strong e-commerce/digitalisation trends.

• Rental reversion for FY2024 expected to remain in the positive high-single digit range.