2H23: Continues To Generate Strong Positive Rental Reversions
CLAR continued to clock strong positive rental reversion of 15.2% in 4Q23 (Singapore: 16.9%, Australia: 21.8%, the US: 11.0%). Portfolio occupancy eased slightly by 0.3ppt qoq to 94.2% in 4Q23. CLAR has a resilient balance sheet with average debt maturity at 3.4 years. Management plans to scale up in new economy assets, including logistics properties. CLAR provides a resilient 2024 distribution yield of 5.3% (MINT: 5.6%). Maintain BUY with a target price of S$3.62.
RESULTS
• CapitaLand Ascendas REIT (CLAR) reported DPU of 7.441 S cents for 2H23 (-6.1% yoy), which is slightly below our expectations.
• Growth via acquisitions and higher occupancies. Gross revenue grew 11.0% yoy in 2H23 due to the acquisition of three Singapore properties, namely 622 Toa Payoh Lorong 1, 1 Buroh Lane and The Shugart in Jan 23, Feb 23 and May 23 respectively, acquisition of The Chess Building in Watford, UK during Aug 23 and higher occupancies in several existing properties. NPI increased 4.6% yoy despite higher utility expenses and property taxes in Singapore. Finance costs increased 26.5% yoy.
• Strong rental reversion from multiple drivers. CLAR achieved positive rental reversion of 15.2% in 4Q23, driven by Singapore (16.9%), Australia (21.8%) and the US (11.0%). Logistics properties in Singapore and Australia recorded strong positive reversions of 53.6% and 9.1% respectively. Business space properties in Singapore, Australia and the US recorded positive reversions of 13.1%, 22.3% and 11.0% respectively.
• Lower occupancy in the US. Portfolio occupancy eased 0.3ppt qoq to 94.2% in 4Q23. Occupancy for the US slipped 1.7ppt qoq to 90.4% due to downsizing by Nike in Portland.