Ascendas REIT

Ascendas REIT: 2QFY15 DPU was in line, increasing 1.7% y/y to 3.66¢, while distributable income rose 1.1% to $86.0m. Revenue rose 8.6% to $164.8m while NPI rose 7.0% to $114.7m, from recognition of income from Nexus@one-north, A-REIT City@Jinqiao, HIC, Aperia, as well as positive rental reversions of 6.3%. (-5.5ppt q/q). Portfolio occupancy of 87.2% (-0.9ppt q/q) with WALE of 4 years. In the quarter, A-REIT acquired Aperia for $458m, while AEI works Corporation Place, LogisTech and Techquest for $25.4m were completed. Aggregate leverage of 32.6% (1QFY15: 31.6%) with average debt maturity of 4 years (1QFY15: 3.7 years). Underlying trends such as rental reversions and occupancy are weakening. Deutsche notes risks of going into negative rental reversions on rising supply and stagnant spot rent. BVPS of $2.07 translates to 1.1x P/B. A-REIT is trading at annualized 2QFY15 yield of 6.3% Latest broker ratings: CIMB maintains Hold with TP of $2.36 Deutsche maintains Hold with TP of $2.25