Ascendas REIT to focus on consolidation in FY13
Optimising portfolio performance has to follow the S$1bn in investments made in 2012.
According to DBS, with close to S$1bn in investments made in 2012, management feels that the focus in 2013 is to look for ways to optimise portfolio performance and look at opportunities to grow yields.
Here's more from DBS:
No major falloff in demand for space seen at this point. Expansionary demand is coming from tenants in precision engineering and IT (data centers) while there is no drop off in requirements for space. Continue to expect to see improving occupancies in the coming quarters.
Business park space looking strong. Believe positioning in the Jurong Lake District and Changi Business Park gives it an edge, as major MNCs are relocating there. That said, for Changi Business Park, the opening of Changi City Point has greatly improved the vibrancy of the business hub and expects that rentals in that location will remain strong. Asking rents remain in the S$3.80 - S$4.00psf range.
Frequently asked questions (and response by management)
1. Acquisitions in 2013. Nothing immediate though there are a few deals floating in the market.
2. China strategy and its relevance in the longer term? Not to be a big contributor in the near term, though they have signed to acquire 1 asset in Shanghai in early 2013 at S$117m, which is a small % of the whole portfolio. Expects China to contribute at most 20% of earnings/assets in the longer term (> 2015)
3. Which segments have the largest risk in a downturn (if one assumes that the economy goes into a recession as in 2009)? Based on historical performance, management highlighted that the hi-tech segment is most vulnerable - these are mostly MNC industrialists who were mandated to cut costs and reduce production back in 2009, though we are not seeing this at the moment. Highlighted that the experience of the crisis in 2009 had led to most companies being more conservative in their expansion plans in recent years.