Introduction

CapitaLand Ascendas REIT (CLAR) and its peers in the real estate investment trust (REIT) sector have shown resilience amid market fluctuations. This report delves into CLAR’s performance, alongside a detailed analysis of its peers across various sectors—hospitality, industrial, office, retail, and overseas-centric REITs. The report also sheds light on ESG performance and key financial indicators to guide investors in making informed decisions.

CapitaLand Ascendas REIT (CLAR)

Performance Highlights

CapitaLand Ascendas REIT reported a steady growth trajectory in its 2H/FY24 results. Despite a 1.1% decline in gross revenue, net property income (NPI) rose by 1.4% year-on-year to S\$521.5 million, driven by lower operating expenses and strategic asset divestments. Distribution income grew 3.4% year-on-year to S\$338 million, translating to a distribution per unit (DPU) of 7.68 Singapore cents, an increase of 3.2% year-on-year.

Portfolio occupancy improved to 92.8% at the end of FY24, with Singapore contributing a 92.5% occupancy rate. Rental reversions averaged an impressive +11.6% for FY24, with the logistics sector in Singapore achieving +31.4%. Overseas, the Australia portfolio showed a +12.9% rental reversion, led by logistics (+48.4%). The US portfolio saw a healthy +20.9% rent reversion, supported by logistics properties in Kansas City. CLAR also added two logistics assets in the US, valued at S\$248.2 million, expected to yield 7.2-7.4%.

Key Developments

• Aggregate leverage reduced to 37.7% by end-FY24, with an average funding cost stable at 3.7%.
• Total redevelopment/asset enhancement initiatives in Singapore amounted to approximately S\$707 million, with projects slated for completion between 1Q25F and 1Q28F.
• Management expects rental reversions in the mid-single digits for FY25F.

Analyst Recommendation

The report reiterates an “Add” rating for CLAR with a target price of S\$3.10, reflecting a 19.5% upside. The REIT is praised for its diversified and resilient portfolio, underpinned by a healthy balance sheet. Potential catalysts include asset enhancement completions and accretive acquisitions. However, downside risks include economic downturns that could affect rental pricing.

Peer Analysis: Sector-Wise Breakdown

Hospitality REITs

• CapitaLand Ascott Trust (CLAS SP): Rated “Add” with a target price of S\$1.18. Dividend yields are projected at 7.1%-7.9% for FY24F-FY26F.
• CDL Hospitality Trust (CDREIT SP): Rated “Add” with a target price of S\$1.07. Dividend yields range from 6.5% to 7.7% over FY24F-FY26F.
• Far East Hospitality Trust (FEHT SP): Rated “Add” with a target price of S\$0.78. Dividend yields are stable at 7% across FY24F-FY26F.
• Frasers Hospitality Trust (FHT SP): Not rated. Dividend yields range from 4.1% to 4.8% over FY24F-FY26F.

Industrial REITs

• AIMS AMP Capital Industrial REIT (AAREIT SP): Not rated. Dividend yields stand at 7.3%-7.5% for FY24F-FY26F.
• ESR-REIT (EREIT SP): Rated “Add” with a target price of S\$0.36. High dividend yields of 8.6%-9.2% are projected.
• Frasers Logistics & Commercial Trust (FLT SP): Rated “Add” with a target price of S\$1.35. Dividend yields are expected to hover around 7.6%-7.8%.
• Keppel DC REIT (KDCREIT SP): Rated “Add” with a target price of S\$2.48. Lower dividend yields of 4.3%-4.7% reflect its premium valuation.
• Mapletree Industrial Trust (MINT SP): Rated “Add” with a target price of S\$2.82. Dividend yields are projected at 6.3%-6.7% for FY24F-FY26F.
• Mapletree Logistics Trust (MLT SP): Rated “Add” with a target price of S\$1.73. Dividend yields range from 6.1%-7.3% over FY24F-FY26F.

Office REITs

• Keppel REIT (KREIT SP): Rated “Add” with a target price of S\$1.09. Dividend yields range from 6.8%-7.2% for FY24F-FY26F.
• OUE Commercial REIT (OUEREIT SP): Rated “Hold” with a target price of S\$0.32. Dividend yields range from 7.1%-7.5%.
• Suntec REIT (SUN SP): Rated “Hold” with a target price of S\$1.33. Dividend yields are projected between 5.3%-5.8% over FY24F-FY26F.

Retail REITs

• CapitaLand Integrated Commercial Trust (CICT SP): Rated “Add” with a target price of S\$2.45. Dividend yields range from 5.5%-6.0% for FY24F-FY26F.
• Frasers Centrepoint Trust (FCT SP): Rated “Add” with a target price of S\$2.68. Dividend yields are stable at 5.6%-5.8%.
• Lendlease Global Commercial REIT (LREIT SP): Rated “Add” with a target price of S\$0.69. Dividend yields are projected at 7.4%-7.6% for FY24F-FY26F.
• Mapletree Pan Asia Commercial Trust (MPACT SP): Rated “Add” with a target price of S\$1.53. Dividend yields range from 6.8%-7.5%.
• Paragon REIT (PGNREIT SP): Rated “Hold” with a target price of S\$0.92. Dividend yields are steady at 4.9%-5.5% over FY24F-FY26F.

Overseas-Centric REITs

• CapitaLand China Trust (CLCT SP): Not rated. Dividend yields are around 8.4%-8.6% for FY24F-FY26F.
• Elite UK Commercial REIT (ELITE SP): Rated “Add” with a target price of S\$0.34. High dividend yields of 9.3%-9.7% are projected.
• Sasseur REIT (SASSR SP): Rated “Add” with a target price of S\$0.93. Dividend yields are expected to range from 9.0%-9.9%.

Conclusion

CapitaLand Ascendas REIT continues to stand out as a diversified and resilient investment in the Singapore REIT space. Along with its peers, it offers opportunities across various sectors, each catering to specific investor appetites. With strong financial metrics, robust ESG initiatives, and promising redevelopment projects, CLAR and its counterparts remain attractive for long-term investors.