The outlook is stable. There are no leases expiring in Australia for the remainder of the year. 13.3% of Singapore leases by gross revenue expiring in the remainder of the year. Some negative reversions are to be expected from the Singapore portfolio, but offset by the portfolio rebalancing strategy. We expect recent acquisitions to drive gross rental growth in FY18e. There will not be any further unit dilution from the Exchangeable Collateralised Securities (ECS) as it has been fully converted in FY17. Ascendas REIT (A-REIT) has a healthy aggregate leverage of 33.9%, allowing it to embark on further acquisitions.
Maintain Accumulate with unchanged target price of $2.86
We expect a stable 5.8% yield and our target price gives an implied FY18e P/NAV multiple of 1.35x, which compares against the FTSE REIT Index forward 12-months P/NAV multiple of 1.06x.
A-REIT is trading above the peer average P/NAV multiple and at a lower 12M-trailing yield than the peer average.
50 Kallang was decommissioned to facilitate the asset enhancement initiative (AEI) for a single-tenant. The AEI was completed during the quarter and handed over to the tenant.
52 Fox Drive was acquired during the quarter and contributed to the growth in gross revenue.
Source: Company 1Q FY18 Financial Results Presentation, 27 July 2017