CapitaLand Ascendas REIT 3Q 2025: Strategic Acquisitions, Portfolio Rejuvenation, and Sustainability Drive Growth Potential

Key Highlights from the 3Q 2025 Business Update

• Major Accretive Acquisitions: S\$1.3 billion invested in five high-quality Singapore properties at yields of 6–7%.
• Portfolio Rejuvenation: S\$107.4 million redevelopment of 5 Toh Guan Road East, increasing GFA by 71%.
• Significant Divestments: S\$381.5 million in asset sales at an average 7% premium to market value and 17% premium to original purchase price.
• Robust Capital Management: Aggregate leverage up to 39.8% with S\$1.0 billion raised in new debt and perpetual securities, including S\$700 million green notes at 2.343%.
• Strong Sustainability Credentials: 61% of portfolio green-certified (up from 49%), 4-star GRESB rating, MSCI ESG ‘AA’ (third year), and 2nd place in Singapore Governance & Transparency Index for REITs/Trusts.
• Portfolio Resilience: Overall occupancy at 91.3% despite new supply, with positive rental reversions of 7.6% in 3Q 2025.
• Ongoing Developments and AEIs: Over S\$750 million committed to new developments and enhancements in Singapore, US, UK, and Australia.

Strategic Moves and Their Potential Impact on Shareholders

1. Aggressive Acquisition and Capital Recycling Strategy

CapitaLand Ascendas REIT (CLAR) is actively reshaping its portfolio with an S\$1.3 billion investment in five Singapore properties, targeting high-yield segments such as business space, logistics, and data centres. Completed acquisitions in 3Q include a premium business space at 5 Science Park Drive (S\$261m) and a Tier III colocation data centre at 9 Tai Seng Drive (S\$463.6m), both fully occupied and offering NPI yields of 6.1% and 7.2% respectively.

In parallel, S\$381.5 million in divestments are being executed at substantial premiums, freeing up capital for newer, higher-yielding assets. This disciplined capital recycling is expected to drive DPU accretion (0.8% for the three proposed new acquisitions) and enhance portfolio quality.

2. Portfolio Rejuvenation and Expansion

The completion of the S\$107.4 million redevelopment of 5 Toh Guan Road East has increased its GFA by 71% to 50,920 sqm, introducing a state-of-the-art ramp-up logistics facility. Seven development and enhancement projects valued at S\$751 million are underway, including large logistics centres in the US and UK, as well as business space and data centre upgrades in Singapore and the US. This ongoing investment pipeline supports long-term growth and value creation.

3. Capital Management and Financial Resilience

CLAR has fortified its balance sheet, raising S\$1.0 billion in new funding, including S\$700 million in 7-year green notes at a low coupon of 2.343% and S\$300 million perpetual securities at 3.18%. The REIT maintains a healthy aggregate leverage of 39.8%, interest coverage at 3.6x, and a high proportion (77.6%) of fixed-rate debt, effectively managing interest rate risk.

Additionally, approximately 77% of overseas investments are naturally hedged to mitigate FX risks. The A3 Moody’s rating ensures continued access to competitive funding.

4. Occupancy, Rental Reversions, and Lease Expiry Profile

Portfolio occupancy remains robust at 91.3%, with Singapore at 90.4% (stable at 91.1% excluding the newly redeveloped Toh Guan asset). The US portfolio dipped to 85.3% due to Raleigh, while Australia and UK/Europe performed strongly at 94.8% and 98.8% respectively.

Rental reversions remain positive across geographies, averaging 7.6% in 3Q 2025, with Singapore logistics achieving a remarkable 24.5%. The weighted average lease expiry (WALE) is steady at 3.6 years, with only 4.5% of gross rental income up for renewal in FY2025, reducing near-term income risk.

5. Sustainability and ESG Leadership

Sustainability is a core value for CLAR, with 61% of the portfolio now green-certified and a target to reach 100% by 2030. The REIT has installed solar panels on 29 Singapore properties, generating 28GWh annually (enough to power over 6,100 households). Green financing now constitutes 44% of total borrowings, aligning funding with ESG goals. CLAR has retained its GRESB 4-star rating and MSCI ESG ‘AA’ for the third consecutive year—key factors for ESG-focused investors.

6. Market Outlook and Management Commentary

Despite a challenging macroeconomic backdrop, CLAR remains confident, with Singapore (67% of asset value) acting as the portfolio anchor. The Manager aims to further strengthen the portfolio through selective acquisitions, redevelopments, and AEIs, while continuing to divest non-core or mature assets at attractive prices. The REIT’s diversified tenant base, focus on growth sectors (technology, logistics, life sciences), and proactive lease management underpin portfolio resilience.

Potential Price Sensitive Factors for Investors

• Accretive Acquisitions: The scale and yield of recent and proposed acquisitions are likely to support DPU growth, a key driver of share price performance.
• Significant Divestments at Premiums: The ability to sell mature assets above valuation demonstrates strong asset management and could boost NAV and future distributions.
• Leverage and Interest Rate Management: While leverage has increased, prudent fixed-rate coverage and robust liquidity mitigate refinancing and interest rate risks.
• ESG Progress: Enhanced green credentials and access to green financing could attract more institutional/ESG-focused investors, potentially supporting share price valuations.
• Development Pipeline Execution: Successful completion and leasing of ongoing projects in Singapore, US, and UK will be critical to realising projected returns and maintaining DPU momentum.
• Global Economic Backdrop: Management notes ongoing macro uncertainty, but expects the diversified, resilient portfolio to weather market volatility.

Conclusion

CapitaLand Ascendas REIT’s 3Q 2025 update reveals a focused and disciplined growth strategy, with large-scale acquisitions, active recycling of capital, robust financial management, and a deepening commitment to sustainability. These initiatives are likely to be viewed positively by investors, with the potential to drive share price appreciation, especially if execution remains strong and market conditions remain supportive.

Disclaimer: This article is for informational purposes only and does not constitute investment advice. Investors should consult their own advisors and review official disclosures before making any investment decisions. Past performance is not an indication of future results. The article is based on the company’s 3Q 2025 business update and public information as of the date of publication.

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