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SINGAPORE: Ascendas Real Estate Investment Trust (A-REIT) is distributing 3.48 cents per unit, down 13.2 per cent on-year, for the second quarter ended September.
However, total distributable income is up 15.4 per cent at S$61.6 million, compared to the same period last year.
The drop in distribution per unit is largely attributed to share dilution after the private placement of new units in August this year.
A-REIT said its portfolio occupancy rate declined marginally to 96.8 per cent, from 97.1 per cent a quarter ago, due to the global recession. But it has managed to achieve positive rental reversion for the first six months of the financial year.
The company managed to turn in an 11.7 per cent on-year rise in net property income to S$81.1 million.
Market watchers said that the outlook for industrial rentals remains challenging. According to industry players, a turnaround may only begin in three to six months.
They said the industrial rental sector typically lags behind the economy by about 18 months, as companies need to raise their output significantly before they expand into new spaces.
Tan Ser Ping, CEO & executive director, Ascendas Real Estate Investment Trust, said: "Occupancy rate may not go up given the current sort of market conditions. In fact, it may moderate marginally in the next six months.
"But the net property income for the portfolio, we would expect it to be able to sustain, because the marginal decline expected in the occupancy rate is compensated or mitigated by the higher rental rate upon renewal."
"We continue to be able to let out some of the vacated space and also more importantly, we have two new properties coming onstream - contributing to the portfolio income - and another big one coming onstream in the fourth quarter of the financial year."
This year, A-REIT completed two development projects for S$123 million at about 7.3 per cent below budgeted development cost.
These include a logistics facility at the Airport Logistics Park of Singapore, and Phase 2 of Plaza 8 Changi Business Park. The two properties are expected to contribute to 2009's third quarter revenue.
The company's other development in progress, which is expected to be ready by next year, is a building at Kim Chuan Road that will be leased to SingTel for at least 20 years.
- CNA/sc
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