CapitaLand Ascendas REIT Reports 3Q 2025 Business Update: Portfolio Expansion, Capital Management, and Sustainability Drive

Overview

CapitaLand Ascendas REIT (“CLAR”) has released its 3Q 2025 business update, revealing significant developments that could have a material impact on the REIT’s future performance and share value. The report demonstrates CLAR’s commitment to portfolio growth, portfolio rejuvenation, capital recycling, prudent capital management, and sustainability leadership.

Key Points and Potential Price-Sensitive Developments

• Accretive Acquisitions and Developments:
  • CLAR completed S\$1.32 billion of acquisitions in Singapore, adding five properties at attractive yields of approximately 6% to 7%. These include premium business space and a Tier III colocation data centre, as well as high-quality industrial and logistics assets. The newly acquired properties are fully occupied by reputable tenants from technology, logistics, and life sciences sectors, with a long WALE of 5.5 years and built-in rental escalations.
  • Ongoing development projects totaling S\$751 million are underway, including new logistics assets in the UK and the US, and asset enhancement initiatives (AEIs) in Singapore and the US. Notable projects are the redevelopment of 5 Toh Guan Road East (GFA up 71%), Summerville Logistics Center in the US, and green-certified logistics developments in the UK.
• Recycling Capital and Divestments:
  • Completed divestments amounted to S\$480 million, achieving approximately 7% premium to market valuation and 17% premium to original purchase price. The capital recycling strategy involves divesting older or non-core assets and reinvesting proceeds into higher-quality, growth-oriented properties. Major divestments include Astmoor Road in the UK, 95 Gilmore Road in Australia, and several Singapore assets.
• Portfolio Performance and Resilience:
  • As at 30 September 2025, CLAR’s portfolio comprises 228 properties with an asset value of S\$17.7 billion, geographically diversified across Singapore (67%), United States (11%), Australia (12%), and United Kingdom/Europe (10%).
  • Occupancy remained robust at 91.3% (slightly down from 91.8% in June), with the UK/Europe portfolio at 98.8%, Australia at 94.8% (notable 1.7% QoQ improvement), Singapore at 90.4% (dragged by new asset addition), and US at 85.3% (down 2% QoQ).
  • Rental reversions across the portfolio remained positive at 7.6% for the quarter, with logistics rental reversions in Singapore reaching 24.5%. The WALE is stable at 3.6 years, and lease expiry is well spread with only 4.5% of gross rental income due for renewal in FY2025.
• Capital Management and Financial Strength:
  • CLAR raised S\$1.0 billion in capital, including S\$300 million in 5-year perpetual securities (3.18% coupon) and S\$700 million in 7-year green notes (2.343% coupon). Aggregate leverage increased to 39.8% from 37.4% in June, still within regulatory and internal limits. Weighted average cost of debt remains low at 3.6%.
  • 77.6% of borrowings are on fixed rates, and CLAR maintains a high natural hedge (~77%) for overseas investments to mitigate FX risks. Green financing now accounts for about 44% of total borrowings (S\$3.3 billion).
  • Interest rate and refinancing risk are prudently managed, with sensitivity analyses showing manageable DPU impact for each 50bps rate hike.
• Sustainability Leadership:
  • CLAR continues to lead in sustainability, with green-certified properties (by GFA) rising to 61%, up from 49% at end-June. 29 Singapore properties now have rooftop solar panels, projected to generate 28GWh annually, enough to power over 6,100 HDB flats.
  • The REIT retained a 4-star GRESB rating, ‘A’ for public disclosure (6th consecutive year), and AA MSCI ESG rating. Green lease coverage reached 62% by NLA.
  • CLAR targets all properties to be green-certified by 2030 and aims for 45% electricity consumption from renewables by then.
• Market and Macro Outlook:
  • Management remains cautious about ongoing global macroeconomic volatility, with IMF projecting slowing global growth (3.2% in 2025 to 3.1% in 2026) and persistent inflation risks. Singapore’s GDP growth forecast has been upgraded to 1.5–2.5% for 2025, while the US, Australia, and Europe face mixed economic signals.
  • The Manager will continue to pursue accretive investments, selective acquisitions, and proactive asset and capital management to drive sustainable returns.

What Shareholders Must Know – Potentially Price-Sensitive Information

• Significant Portfolio Expansion: The aggressive acquisition and development pipeline, especially in growth sectors like logistics and data centres, is poised to drive future DPU and NAV growth. The scale and quality of new assets, as well as successful AEIs, position CLAR to capture structural demand from digitalisation, e-commerce, and supply chain transformation.
• Portfolio Rejuvenation and Recycling: The divestment of mature assets at premiums to book and redeployment into higher-yielding, future-ready properties may enhance capital values and earnings visibility, supporting share price performance.
• Leverage and Interest Rate Sensitivity: While aggregate leverage remains within safe bounds, the increase (to 39.8%) and ongoing debt refinancing at higher rates may put some pressure on DPU. However, the high proportion of fixed-rate debt and strong liquidity buffer reduce risk.
• Resilient and Diversified Portfolio: High occupancy and long WALE, especially in overseas markets, underpin stable income streams. The UK/Europe and Australia portfolios are performing strongly, with rising occupancies and robust rental growth in logistics.
• Sustainability Credentials: CLAR’s leadership in green financing and certified properties enhances investor appeal, supports access to cheaper capital, and aligns with growing ESG investor mandates, potentially supporting valuation premiums.
• Macro Risks: Shareholders should be aware of volatility in global economic conditions and interest rates, which could affect rental reversions, asset values, and funding costs.

Conclusion

CLAR’s 3Q 2025 update signals a continued strategy of active portfolio management, capital recycling, and sustainability leadership. The latest acquisitions, developments, and strategic divestments are material events that could positively impact future distributions and underlying asset values. The REIT’s prudent financial management and robust ESG framework further reinforce its attractiveness to investors. However, rising leverage, global economic headwinds, and interest rate risks are factors to monitor closely.

Disclaimer: This article is for informational purposes only and does not constitute investment advice, an offer, or solicitation to buy or sell any securities mentioned. Past performance is not indicative of future results. Investors are advised to conduct their own due diligence and consult with professional advisers before making investment decisions. Neither the author nor the publisher accepts any liability for any loss arising from reliance on the information provided.

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