UOB Kay Hian
Date of Report: 7 August 2025
CapitaLand Ascendas REIT: Poised for Growth with New Acquisitions and Resilient Portfolio in 2025
Overview: Strong Buy Recommendation with Significant Upside
UOB Kay Hian maintains a BUY call on CapitaLand Ascendas REIT (CLAR), citing robust growth prospects, prudent capital management, and a diversified, high-quality portfolio. With a share price of S\$2.71 and a target price of S\$4.02, the upside potential stands at an impressive 48.3%. CLAR’s extensive portfolio includes business and science parks, life sciences, suburban office, high-specification industrial, data centres, light industrial, and logistics properties, spanning Singapore, Australia, Europe, the UK, and the US. As of December 2024, its asset base reached S\$16.8 billion across 229 properties.
Key Stock Data and Ownership
- GICS sector: Real Estate
- Market Cap: S\$12,483 million (US\$9,694.8 million)
- Shares Issued: 4,606.3 million
- 52-week High/Low: S\$2.99/S\$2.40
- Major Shareholder: Temasek Holdings (19.6%)
- FY25 NAV/Share: S\$2.27
- FY25 Net Debt/Share: S\$1.51
1H25 Performance: Resilient Results Amid Portfolio Rebalancing
CLAR reported a Distribution Per Unit (DPU) of 7.477 Singapore cents for 1H25, representing a slight year-on-year dip of 0.6%. Although just below expectations, the result reflects resilience amid asset recycling and higher operating efficiency.
| Metric |
1H25 (S\$m) |
YoY % Change |
Remarks |
| Gross Revenue |
754.8 |
-2.0% |
Divestment of five properties in Australia, Singapore and US |
| Net Property Income (NPI) |
523.4 |
-0.9% |
Decommissioned Welwyn Garden City for redevelopment |
| Distributable Income |
331.1 |
+0.1% |
Operating expenses declined 6.2%, finance costs dropped 6.5% |
| DPU (S cents) |
7.477 |
-0.6% |
Number of units increased 0.7% yoy |
Occupancy and Rental Reversions: Positive Momentum
- Portfolio Occupancy: Rose 0.3ppt quarter-on-quarter to 91.8% by June 2025.
- Australia: Improved to 93.1% (+0.9ppt qoq) thanks to successful backfilling of logistics assets in Sydney.
- Singapore: Declined by 0.4ppt to 91.2% due to a non-renewal at 9 Serangoon North Avenue 5.
- US: Dipped 0.7ppt to 87.3% due to a non-renewal in Kansas City.
- Rental Reversions: Average positive reversion of 8% in 2Q25, with 7.8% in Singapore, 10.9% in the US, and 3.5% in Australia.
- Sectoral Demand: Logistics & Supply Chain Management led new demand, accounting for 27% of gross rental income in Singapore and 58% overseas.
Strategic Acquisitions and Expansion
- Acquired a Tier III colocation data centre at 9 Tai Seng Drive (9TSD) and a premium business space at 5 Science Park Drive (5SPD) in Singapore for S\$725 million (completed August 2025).
- Acquired DHL Indianapolis Logistics Center in the US for S\$153 million (completed January 2025).
- Total acquisitions year-to-date: S\$878 million.
- 9TSD offers an attractive NPI yield of 7.1% and is 30% under-rented, providing significant rental uplift potential.
- 5SPD could see a 15% positive rental reversion when Shopee extends its lease at the end of 2026.
Financial Highlights and Forecasts
| Year |
2023 |
2024 |
2025F |
2026F |
2027F |
| Net Turnover (S\$m) |
1,480 |
1,523 |
1,587 |
1,704 |
1,745 |
| EBITDA (S\$m) |
920 |
951 |
976 |
1,053 |
1,081 |
| Net Profit (Adj., S\$m) |
671 |
698 |
663 |
729 |
751 |
| EPU (S cents) |
15.5 |
15.9 |
14.7 |
15.8 |
16.3 |
| DPU (S cents) |
15.2 |
15.2 |
15.4 |
16.5 |
16.9 |
| DPU Yield (%) |
5.6 |
5.6 |
5.7 |
6.1 |
6.3 |
| PE (x) |
17.4 |
17.1 |
18.4 |
17.2 |
16.7 |
| P/B (x) |
1.2 |
1.2 |
1.2 |
1.2 |
1.2 |
| Net Debt/Equity (%) |
62.2 |
61.7 |
64.6 |
65.7 |
66.8 |
| Interest Coverage (x) |
3.6 |
3.5 |
3.4 |
3.6 |
3.6 |
| ROE (%) |
1.6 |
7.0 |
6.3 |
6.8 |
7.0 |
Prudent Capital Management
- Aggregate Leverage: Stable at 37.4% as of June 2025.
- Interest Coverage Ratio: 3.7x, indicating strong debt service capability.
- Average Cost of Debt: 3.7% in 2Q25.
Strategic Developments and Redevelopment Projects
- CLAR is recycling Singapore assets and repositioning towards technology, logistics, and biomedical science properties.
- UK/Europe properties offer stable income due to a long Weighted Average Lease Expiry (WALE) of 5.5 years.
- Redevelopment of a data centre at Welwyn Garden City is underway.
- Australian logistics demand has normalized, with leasing downtime reverting to the usual 6–12 months.
- US business parks may see lower occupancy due to persistent work-from-home trends.
Key Development and Redevelopment Initiatives
- Geneo at 1 Science Park Drive: A life science and innovation campus (34% stake), comprising three Grade A buildings. 71% of space is biomedical R&D-ready; 76% of NLA pre-committed, 19% in advanced negotiations. Tenant move-in starts mid-August 2025.
- Summerville Logistics Center, South Carolina: New logistics development (NLA: 548,862 sf), completion expected 4Q25.
- 27 IBP Redevelopment: Increasing GFA by 129,167 sf to 265,233 sf; enhanced amenities including a gym, skydeck, and food court. Completion: 1Q26. Connectivity to improve with Jurong Region Line in 2028.
- 5 Toh Guan Road East Redevelopment: Upgrading two warehouse blocks to a six-storey ramp-up logistics facility, optimized for cold storage and last-mile delivery. Completion: 4Q25.
- LogisHub @ Clementi Redevelopment: Transforms a four-storey warehouse into a seven-storey ramp-up logistics facility, increasing GFA by 122% to 633,133 sf, supporting cold storage and large floor plates. Completion: 1Q28.
Portfolio Valuation and Geographic Exposure
- By Geography: Singapore (65.5%), Australia (12.5%), UK/Europe (10.1%), United States (11.9%)
- By Asset Class: Business Space (36%), Life Sciences (9%), Logistics (26%), Industrial (20%), Data Centre (9%)
Operating Metrics Snapshot
| Metric |
2Q24 |
3Q24 |
4Q24 |
1Q25 |
2Q25 |
YoY % Chg |
QoQ % Chg |
| DPU (S cents) |
7.52 |
n.a. |
7.68 |
n.a. |
7.48 |
-0.6% |
-2.7% |
| Occupancy |
93.1% |
92.1% |
92.8% |
91.5% |
91.8% |
-1.3ppt |
0.3ppt |
| Aggregate Leverage |
37.8% |
38.9% |
37.7% |
38.9% |
37.4% |
-0.4ppt |
-1.5ppt |
| Average Cost of Debt |
3.7% |
3.7% |
3.7% |
3.6% |
3.7% |
0ppt |
0.1ppt |
| % Borrowing in Fixed Rates |
83.0% |
80.2% |
82.7% |
73.6% |
75.9% |
-7.1ppt |
2.3ppt |
| WALE by NLA (years) |
3.8 |
3.7 |
3.7 |
3.6 |
3.7 |
-0.1yrs |
0.1yrs |
| Rental Reversion |
13.4% |
14.4% |
11.6% |
11.0% |
9.5% |
-3.9ppt |
-1.5ppt |
Positive Rental Reversions by Region and Sector
| Region/Sector |
2Q24 |
3Q24 |
4Q24 |
1Q25 |
2Q25 |
| Singapore |
11.9% |
12.2% |
7.2% |
7.0% |
7.8% |
| – Business Space & Life Science |
8.3% |
0.7% |
3.2% |
5.8% |
5.9% |
| – Logistics |
24.9% |
31.7% |
17.8% |
2.5% |
6.0% |
| – Industrial & Data Centres |
13.9% |
9.6% |
9.6% |
9.0% |
9.5% |
| Australia |
7.7% |
14.9% |
6.6% |
59.0% |
3.5% |
| – Business Space |
n.a. |
9.5% |
6.6% |
n.a. |
2.4% |
| – Logistics |
7.7% |
52.3% |
n.a. |
59.0% |
18.6% |
| United States |
11.9% |
22.9% |
11.6% |
10.3% |
10.9% |
| – Business Space |
9.6% |
22.9% |
11.6% |
0.7% |
11.0% |
| – Logistics |
13.5% |
n.a. |
n.a. |
11.5% |
9.2% |
| United Kingdom/Europe |
10.1% |
n.a. |
10.9% |
n.a. |
n.a. |
| – Data Centres |
10.1% |
n.a. |
10.9% |
n.a. |
n.a. |
| Total Portfolio |
11.7% |
14.4% |
8.6% |
11.0% |
8.0% |
Valuation and Outlook
- Distribution Yield: Forecast at 6.1% for 2026.
- Valuation Basis: Target price of S\$4.02 based on DDM (cost of equity 6.5%, terminal growth 2.5%).
- Share Price Catalysts: Resilient growth across core segments—business parks, hi-tech buildings, life sciences, logistics, and data centres. Incremental contributions anticipated from ongoing and future development/redevelopment projects.
Conclusion: Diversified Growth and Strong Fundamentals Underpin Bullish View
CapitaLand Ascendas REIT stands out for its diversified, quality portfolio and disciplined capital management, supported by strong sectoral demand, positive rental reversions, and a pipeline of value-accretive developments and redevelopments. The REIT is well-positioned to capture upside from under-rented assets and new acquisitions, with stable income from long-WALE properties in Europe and sustained demand in logistics, data centres, and life sciences. Investors looking for resilient yield and growth potential will find CLAR a compelling choice, with UOB Kay Hian’s target price offering significant upside from current levels.
