A-REIT – BT

A-Reit’s $97m plan to enhance 3 properties

ASCENDAS Real Estate Investment Trust (A-Reit) will be investing an estimated $97 million to enhance three properties in its portfolio.

The business space and industrial Reit said this yesterday as it released results for the second quarter ended Sept 30.

A-Reit’s net property income in Q2 was $83.9 million, up 3.5 per cent from a year ago. Acquisitions and the completion of development projects contributed to the improvement.

Distributable income rose 0.4 per cent to $61.8 million. Distribution per unit (DPU) was 3.3 cents – 5.2 per cent lower than the 3.48 cents a year ago.

Adjusting for units issued for a placement exercise and for the payment of a base management fee and an acquisition fee, the proforma DPU last year would have been 3.29 cents – leading to a 0.3 per cent growth this year.

Tan Ser Ping, CEO and executive director of A-Reit’s manager, said that the manager has identified three asset enhancement opportunities ‘to capitalise on under-utilised plot ratio or to enhance the attractiveness of the properties’.

One of the largest projects involves the redevelopment of 1 Senoko Avenue for $59 million. A-Reit is raising the site’s plot ratio to 2.5 from 0.6, creating an additional 34,519 sq metres of gross floor area. The property will be positioned as a ‘food hub’ for the food and beverage industry when works are completed in Q4 FY2011/12.

A-Reit is also seeking regulatory approval for a $33.7 million enhancement of 10 Toh Guan Road. Plans include the creation of more parking facilities and the improvement of the building’s exterior facade.

In addition, A-Reit will be spending $4.3 million to create a courtyard on the upper floors of Techview at Kaki Bukit.

A-Reit expects these projects to deliver a weighted average yield exceeding 8.5 per cent.

Portfolio occupancy slipped in Q2 to 95.3 per cent from 96.8 per cent a year ago. But on the bright side, A-Reit managed to secure a larger lease commitment from Citibank for a facility in Changi Business Park – the bank will be leasing the entire building, up from 50 per cent of it.

For the half year, A-Reit’s net property income rose 5.8 per cent year on year to $171.3 million. Distributable income inched up 1.9 per cent to $124.9 million.

A-Reit closed one cent up yesterday at $2.11.