CapitaLand Ascendas REIT FY 2025 Results: Portfolio Rejuvenation and Stable Returns Amid Macroeconomic Uncertainties

CapitaLand Ascendas REIT (CLAR) has released its financial results for the fiscal year ended 31 December 2025. The report highlights a year of steady growth, active portfolio management, and ongoing sustainability initiatives, with a continued focus on resilient performance despite macroeconomic headwinds. Below, we analyze the key financial metrics, operational highlights, and strategic actions, and provide actionable recommendations for investors.

Key Financial Metrics and Performance Comparison

Dividend and Distribution Update

The Distribution Per Unit (DPU) for the full year was 15.005 cents, down 1.3% from last year, primarily due to an enlarged unit base following a S\$500 million equity fundraising and units issued for acquisition/divestment fees and management fees. For 2H 2025, the DPU was 7.528 cents, a marginal increase of 0.7% compared to 1H 2025, but a 2.0% decrease compared to 2H 2024.

Operational Highlights and Portfolio Developments

• Portfolio Occupancy: 90.9% as of 31 Dec 2025, down 1.9 percentage points year-on-year, but saw some quarter-on-quarter improvement in select geographies.
• Rental Reversion: Achieved a robust 12.0% average rental reversion for FY 2025, with a strong 19.6% in 4Q 2025. Rental reversion for FY 2026 is expected to be in the mid-single digits.
• Acquisitions: Acquired S\$1.47 billion in new assets across Singapore and the US at NPI yields ranging from 6.1% to 7.6%.
• Divestments: Divested S\$506.5 million worth of properties at a 9% premium to market valuation and 14% premium to original purchase price, further optimizing the portfolio.
• Ongoing Projects: Seven development and asset enhancement initiatives (AEI) are underway with an estimated cost of S\$730.3 million, including logistics developments in the UK and redevelopments in Singapore.

Balance Sheet and Capital Management

• Aggregate Leverage: 39.0%, providing healthy debt headroom below the MAS limit of 50%.
• Interest Coverage Ratio: 3.6x, well above regulatory requirements.
• Cost of Debt: Reduced to 3.5%, with 75.4% of debt on fixed rates; average debt maturity is 3.1 years.
• Green Financing: S\$3.3 billion (44% of borrowings) now classified as green debt, underscoring the sustainability push.
• Natural Hedge: Maintained high natural hedge (~76%) for overseas investments to mitigate FX exposure.

Historical Performance Trends

Over the past year, CLAR has consistently grown its gross revenue and NPI, supported by accretive acquisitions and successful asset recycling. However, DPU has faced slight pressure due to unit base enlargement from equity fundraising activities. Property valuations rose 8.6% YoY to S\$18.2 billion, with same-store valuations up 2.0% driven by cap rate compression.

Divestments, Fundraising, and Corporate Actions

• Divestments: CLAR completed the sale of 13 properties across Singapore, Australia, the US, and the UK over the last two years. Notably, Singapore divestments were at healthy premiums to book and purchase values.
• Fundraising: S\$500 million equity fundraise in June 2025, primarily to fund acquisitions and strengthen the balance sheet.
• Related-party Transactions: Units were issued as payment for acquisition and divestment fees to the manager, as well as for partial payment of management fees.

Asset Revaluation

CLAR’s independent property valuation exercise showed portfolio growth to S\$18.2 billion, mainly from new acquisitions and redevelopment completions. Cap rates have compressed across all segments, with valuation increases in Business Space & Life Sciences, Industrial & Data Centres, and Logistics assets.

Macroeconomic Environment and Outlook

• Singapore: GDP growth of 4.8% in 2025, projected to moderate to 1.0%-3.0% in 2026. Inflation remains contained, and monetary policy is steady.
• United States: Economy grew 2.1% in 2025 with solid consumer and government spending. The US portfolio has a long WALE (4.6 years) and is poised for growth with new logistics acquisitions.
• Australia/UK/Europe: CLAR’s portfolios in these markets remain resilient, with occupancy and WALE supporting stable returns. Development and AEI pipelines are expected to drive future growth.
• Risks: Management highlights uncertainties from tariffs, geopolitical tensions, and policy changes, but expects overall global growth to remain steady.

Sustainability Commitments and Recognition

• ESG Targets: Ambitious goals for green certifications (all properties by 2030), renewable energy (45% by 2030), and robust governance and vendor standards.
• Recognition: Maintained high scores in GRESB, MSCI ESG Ratings, SGTI, and FTSE4Good Indices, reflecting best-in-class sustainability management.

Conclusion: Performance Assessment and Investor Recommendations

Overall Financial Performance and Outlook:

CLAR delivered a year of steady financial growth, with higher gross revenue, NPI, and distributable income. The slight dip in DPU is primarily due to equity dilution, not operational weakness. The REIT’s proactive portfolio management—via accretive acquisitions, disciplined divestments, and ongoing asset enhancements—has strengthened its asset base and positioned it for sustainable growth. The balance sheet remains robust, with ample debt headroom and prudent capital management. Macroeconomic uncertainties persist, but CLAR’s diversified, resilient portfolio and sustainability leadership provide a solid foundation for future performance.

Investor Recommendations

• If you currently hold CLAR units: Maintain your position. The REIT’s fundamentals remain solid, with a well-diversified portfolio, healthy balance sheet, and visible growth pipeline. While DPU growth may be modest in the near term due to recent equity dilution, medium-term prospects look favorable as new assets contribute and sustainability initiatives bear fruit.
• If you do not currently hold CLAR units: Consider accumulating on price weakness. The current valuation offers exposure to a leading, regionally diversified S-REIT with strong ESG credentials and proactive capital recycling. Monitor for further DPU stabilization and updates on the ramp-up of newly acquired or developed assets.

Disclaimer: This article is for informational purposes only and does not constitute financial advice. Please perform your own due diligence and consult with a licensed financial advisor before making investment decisions. All analysis is strictly based on the contents of CLAR’s FY 2025 financial report.

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