Singapore, Australia to remain A-REIT’s key focus, say analysts

Main growth areas will be science, business park assets.

Ascendas REIT (A-REIT) is likely keep its focus geographically on Singapore and Australia in the near-term, according to a report by OCBC.

For Singapore, the main area of growth would be from business as well as science park assets.

Moreover, OCBC believes that A-REIT would be able to tap on its sponsor’s robust pipeline of assets within this segment.

Further, upcoming supply of business parks in Singapore from the second to the last quarter of 2016 is also relatively limited at 139,000 sqm. This represents only 5.7% of total upcoming factory and warehouse supply.

Meanwhile, A-REIT’s capital recycling strategy remains in place. Net proceeds from its recent proposal to divest its Beijing business park is expected to come in at $135m.

“The proposed divestment consideration comes in favourably as compared to the asset’s valuation of RMB690 (~S$144.7m), as at 31 Mar 2016, and is also significantly above its acquisition price of RMB300m,” OCBC notes.

This could be channeled towards financing future acquisitions, repay existing debt, and/or fund A-REIT’s general corporate and working capital needs.

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