Analyst Note| Xavier Lee |
CapitaLand Ascendas REIT (formerly known as Ascendas REIT), or CLAR, delivered a resilient third-quarter 2022 performance, with portfolio occupancy rates inching up 0.5 percentage points quarter on quarter to 94.5% for the month ended September 2022. The strongest improvement in occupancies can be found in CLAR’s Australian and European portfolio, which hit near full occupancy rates of 99.1% and 99.4%, respectively, in the third quarter. The trust registered a lower positive rental reversion of 5.4%, 7.8 percentage points lower than the previous quarter that enjoyed a one-off, exceptional leasing quarter. The most impressive performance came from its U.S. and Singapore logistics portfolios, where rental reversions were up 60% and 14.6%, respectively, reflecting the tailwind in this asset class. As the results were largely in line with our expectations, we maintain our fair value estimate at SGD 2.92. Although the trust is now trading at an attractive 6.1% of its 2023 distribution following the market selloff, we see greater upside and better risk-adjusted returns in Singapore-focused ESR-Logos REIT, which is currently trading at a generous 9% 2023 distribution yield.