CGS International
August 5, 2025
CapitaLand Ascendas REIT: Acquisition-Fueled Growth to Drive 2025 Performance
Strong Fundamentals and Strategic Acquisitions Set Up 2H25 Growth
CapitaLand Ascendas REIT (CLAR), one of Singapore’s largest and most diversified real estate investment trusts, is poised for an earnings uplift in the second half of 2025. Recent results and forward guidance highlight the impact of strategic acquisitions, robust rental reversions, and continued asset enhancement initiatives. This in-depth review covers every aspect of CLAR’s recent performance, portfolio moves, and outlook, alongside detailed comparisons with sector peers.
1H25 Financial and Operational Highlights
1H25 Distribution Per Unit (DPU): 7.477 Singapore cents, broadly in line at 48.5% of the full-year forecast.
Revenue and Net Property Income (NPI): Both declined slightly by 2% and 0.9% year-on-year (yoy) due to asset divestments and decommissioning, partially offset by new US logistics contributions.
DPU dipped by 0.6% yoy, reflecting a larger unit base after a S$500m equity fund-raising exercise in June 2025.
Aggregate leverage: 37.4% at end-1H25.
Average funding cost: 3.7%, with 75.9% of debt on fixed rates.
Portfolio occupancy: Improved 0.3 percentage points quarter-on-quarter (qoq) to 91.8%, driven by a 3.9 percentage point uplift in Australia.
Portfolio Performance: Rental Reversions and Occupancy
Singapore occupancy: 91.2%, down 0.4 percentage points qoq, mainly due to a tenant departure at Serangoon North Ave 5.
US portfolio occupancy: Fell 0.7 percentage points qoq due to tenant exit in Kansas City, partly offset by higher Portland take-up.
Australia led the occupancy recovery, helping CLAR achieve an overall +8% rental reversion in 2Q25 (+9.5% for 1H25).
Rent reversions by segment in 2Q25:
Australia logistics: +18.6%
US business space: +11%
Singapore: +5.9% to +9.5% across all segments
8.9% of leases expiring in 2H25, mainly in Singapore; outlook remains for positive rental reversions for the remainder of FY25.
Acquisitions and Redevelopment: Building for the Future
Completed acquisition of a US logistics property and redevelopment of 1 Science Park Drive (34% stake) in Singapore in 1H25.
May 2025: Announced the acquisition of a Singapore data centre and science park property for c.S$725m, with net yields of 6.1-7.2%, partially funded by the S$500m equity raise.
Ongoing redevelopments and asset enhancement initiatives (AEIs) worth c.S$500m in Singapore, scheduled for completion from 4Q25 to 1Q28.
These moves are expected to progressively bolster CLAR’s income visibility and growth medium term.
Revised Guidance and Target Price
FY25 DPU guidance cut by 0.6%, but FY26-27 DPU guidance raised by 0.71%-2.59% to reflect acquisition contributions and equity fund-raising adjustments.
DDM-based Target Price (TP) upgraded to S$3.15 (cost of equity: 7.68%), up from S$3.10. Current price stands at S$2.80, implying a 12.4% upside.
ADD rating maintained, reflecting confidence in CLAR’s diversified, resilient portfolio and healthy balance sheet.
Key re-rating catalysts: Completion of AEIs and redevelopments, faster-than-expected global recovery, and accretive new acquisitions.
Risks: Prolonged economic downturn could impact rental pricing and reversions.
CLAR Financial Summary Table
| Year |
Gross Property Revenue (S\$m) |
Net Property Income (S\$m) |
Net Profit (S\$m) |
Distributable Profit (S\$m) |
Core EPS (S\$) |
Core EPS Growth |
FD Core P/E (x) |
DPS (S\$) |
Dividend Yield |
Asset Leverage |
BVPS (S\$) |
P/BV (x) |
| Dec-23A |
1,480 |
1,023 |
137.3 |
654.4 |
0.16 |
8.3% |
17.64 |
0.15 |
5.41% |
35.7% |
2.33 |
1.20 |
| Dec-24A |
1,523 |
1,050 |
790.0 |
668.8 |
0.17 |
6.6% |
16.55 |
0.15 |
5.43% |
35.7% |
2.34 |
1.20 |
| Dec-25F |
1,557 |
1,103 |
680.6 |
689.8 |
0.15 |
(10.7%) |
18.53 |
0.15 |
5.47% |
35.7% |
2.36 |
1.19 |
| Dec-26F |
1,647 |
1,136 |
727.2 |
736.5 |
0.16 |
4.4% |
17.76 |
0.16 |
5.70% |
36.0% |
2.35 |
1.19 |
| Dec-27F |
1,687 |
1,155 |
745.1 |
772.3 |
0.16 |
2.3% |
17.35 |
0.17 |
5.97% |
36.3% |
2.35 |
1.19 |
Peer Comparison Across S-REIT Sectors
Hospitality REITs
| Company |
Ticker |
Rec. |
Price (LC) |
Target Price (LC) |
Market Cap (US\$m) |
Asset Leverage |
P/BV |
Dividend Yield (FY25F) |
Dividend Yield (FY26F) |
Dividend Yield (FY27F) |
| CapitaLand Ascott Trust |
CLAS SP |
Add |
0.91 |
1.13 |
2,686 |
39.6% |
1.12 |
6.8% |
7.0% |
7.0% |
| CDL Hospitality Trust |
CDREIT SP |
Hold |
0.80 |
0.75 |
784 |
42.0% |
1.48 |
5.3% |
6.0% |
6.5% |
| Far East Hospitality Trust |
FEHT SP |
Add |
0.60 |
0.74 |
943 |
32.8% |
0.92 |
6.3% |
6.5% |
6.8% |
| Frasers Hospitality Trust |
FHT SP |
NR |
0.71 |
NA |
1,048 |
35.0% |
0.64 |
4.6% |
5.0% |
5.2% |
Industrial REITs
| Company |
Ticker |
Rec. |
Price (LC) |
Target Price (LC) |
Market Cap (US\$m) |
Asset Leverage |
P/BV |
Dividend Yield (FY25F) |
Dividend Yield (FY26F) |
Dividend Yield (FY27F) |
| AIMS AMP |
AAREIT SP |
NR |
1.36 |
NA |
825 |
28.9% |
1.22 |
7.4% |
7.4% |
7.5% |
| CapitaLand Ascendas REIT |
CLAR SP |
Add |
2.80 |
3.15 |
10,021 |
37.4% |
2.20 |
5.5% |
5.7% |
6.0% |
| ESR-REIT |
EREIT SP |
Add |
2.79 |
3.55 |
1,739 |
42.6% |
2.66 |
7.8% |
8.1% |
8.2% |
| Frasers Logistics & Commercial Trust |
FLT SP |
Add |
0.88 |
1.11 |
2,563 |
36.8% |
1.08 |
6.5% |
6.2% |
6.2% |
| Keppel DC REIT |
KDCREIT SP |
Add |
2.33 |
2.48 |
4,085 |
30.0% |
1.58 |
4.3% |
4.4% |
4.6% |
| Mapletree Industrial Trust |
MINT SP |
Add |
2.01 |
2.49 |
4,454 |
40.1% |
1.69 |
6.8% |
6.4% |
6.5% |
| Mapletree Logistics Trust |
MLT SP |
Add |
1.17 |
1.63 |
4,614 |
41.2% |
1.26 |
6.9% |
6.4% |
6.3% |
| Stoneweg Europe Stapled Trust |
SERT SP |
Add |
1.59 |
1.93 |
1,032 |
42.9% |
1.98 |
8.3% |
8.5% |
8.9% |
Office, Retail, Overseas-Centric, and Healthcare REITs
– Office: Notable names include Keppel REIT (KREIT SP), OUE REIT (OUEREIT SP), and Suntec REIT (SUN SP), with dividend yields ranging from 5.3% to 7.5%. – Retail: CapitaLand Integrated Commercial Trust (CICT SP), Frasers Centrepoint Trust (FCT SP), Lendlease Global Commercial REIT (LREIT SP), Mapletree Pan Asia Commercial Trust (MPACT SP), and Starhill Global REIT (SGREIT SP) are key players with yields generally between 5.0% and 7.1%. – Overseas-centric: CapitaLand China Trust (CLCT SP), Elite UK REIT (ELITE SP), Manulife US REIT (MUST SP), Sasseur REIT (SASSR SP) represent the international S-REIT cohort, showing higher dividend yields in certain cases. – Healthcare: Parkway Life REIT (PREIT SP) stands out with a lower yield but high governance scores.
ESG Performance and Sustainability Initiatives
CLAR maintains a B+ LSEG ESG score for 2024, with a strong A- in Environmental, B- in Social, and B+ in Governance. Highlights include:
2.8% decline in energy intensity portfolio-wide in 2023.
2.5% decrease in Scope 1 & 2 emissions intensity.
Renewable energy consumption in 2023 increased to 17.7 GWh, with a target of 100% renewable energy usage for Singapore Science Park I common facilities by 2025.
As of end-2023, 46% of portfolio (by GFA) is green-certified, and 67.8% of Singapore’s net lettable area is under green leases.
Ranked 39th among Singapore companies and 12th among real estate peers for ESG performance.
Key areas for improvement: CSR strategy (D-), resource use (C+), and product responsibility (C).
Financials: By the Numbers
Rolling P/BV and asset leverage remain stable, with asset leverage forecast to rise to 37% by Jan-26.
Dividend yield projected to rise to 5.8% by Jan-26, with net DPS steadily increasing.
Strong free cash flow generation expected to continue, with 2026 and 2027 free cash flow to equity projected at S$683.6m and S$765.1m, respectively.
Conclusion: Outlook and Investment Case
CapitaLand Ascendas REIT stands out for its diversified, high-quality portfolio and disciplined growth strategy. New acquisitions and ongoing asset enhancement efforts are set to drive income and distribution per unit higher in the years ahead. The REIT’s prudent financial management, strong ESG focus, and attractive valuations versus peers reinforce its appeal for investors seeking stable yields and growth in Singapore’s REIT market.
With a robust pipeline of redevelopment and acquisition opportunities, CLAR is well-positioned to navigate challenging market conditions and capture upside from any global economic recovery. The ADD rating and raised target price reflect a positive outlook as the REIT continues to execute on its strategic priorities.
