Ascendas REIT (AREIT SP)

Global Markets Comment

Amid an environment of low interest rates, we think defensive stocks with resilient earnings and sustainable dividends, such as A-REIT, should perform well. We like A-REIT for its well-diversified portfolio as well as its tenant base. A-REIT has performed well versus its industrial S-REIT peers, with rental reversions and occupancy remaining healthy despite industry headwinds. Potential catalysts could come from inorganic growth, as A-REIT continues to possess substantive acquisition opportunities, given its access to Ascendas-Singbridge Group's pipeline of more than S$1bn worth of business and science park properties.

Performance since inception*

Company Profile

Listed in 2002, Ascendas REIT (AREIT) is an externally managed Industrial REIT that operates in business and scenic parks, suburban office properties, high-specification industrial properties, light industrial properties, logistics and distribution centres, and integrated development properties. It owns 99 properties in Singapore, 35 properties in Australia, 38 properties in the UK and 28 properties in the US. The manager, Ascendas Funds Management, is a wholly owned subsidiary of CapitaLand. The AREIT portfolio is valued at S$12.8bn as of December 2019.

Price History 1 year

Investment Case

We favor AREIT’s portfolio consisting of business parks and logistic properties which remains relatively resilient during the pandemic. Business parks have delivered strong reversion in 1H20 and remains supported while new demand in Logistics are driven by stockpiling and e-commerce activities. We believe there is potential in accretive acquisition in the business park segment from CapitaLand’s portfolio and further portfolio expansion in continental Europe which can be funded through debt given low interest rates and available headroom.

Price History 5 years

Risk in Investment Case

We believe that a prolonged COVID-19 outbreak is a key risk for AREIT. Leasing demand could be negatively affected as the economy and external trade deteriorate. Should market liquidity worsen, the ability to raise rents would be at risk and valuations may revisit GFC levels.

Hong Kong & Singapore Private Clients

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