Ascendas REIT’s portfolio occupancy slipped 2.5% in Q2

Net property income slipped 1.4%.

Ascendas REIT’s portfolio occupancy slipped 2.5% quarter-on-quarter in the second quarter of FY15. Physical portfolio occupancy came in at 85.6%, down from 88.1% in the last quarter.

According to OCBC, the decline in occupancy was due mainly to the acquisition of Aperia, which has a net lettable area of 68,735sqm with 27.7% occupancy. The decline can also be attributed to conversion of C&P Logistics Hub, which has an NLA of 129,763sqm, from a single-tenanted to multi-tenanted building in July 2014.

A-REIT’s net property income slipped 1.4% quarter-on-quarter to $114.7m from $116.3m. On a year-on-year basis, NPI climbed 7% to $114.7m.

Here’s more from OCBC:

2QFY15 results were in line with our estimates and Bloomberg consensus. Rent reversions were still positive at 6.3%, but weaker occupancy and higher operating and financing costs moderated DPU growth to 2% y/y.

The acquisition of Aperia on 22 September, which came with committed occupancy of c50%, will likely start slowly, but should be accretive in the longer term.

The rent reversion of 6.3% was significantly below the 11.8% in 1QFY15 and 14.8% in FY14 due to a large tenant renewal. The manager expects to achieve high-single-digit rental reversion for full year FY15.

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