CapitaLand Ascendas Reit scores higher rental reversion in Q3; occupancy also up

[SINGAPORE] CapitaLand Ascendas Real Estate Investment Trust (Clar) recorded higher rental reversion in the third quarter of 2026 amid its drive to reshape its industrial portfolio.

Its rental reversion for Q3 came in at 9.9 per cent, up from 5.2 per cent in Q2, and 7.6 per cent the year before. For the first nine months of 2026, rental reversion was 9 per cent.

Portfolio occupancy improved slightly, rising  to 90.1 per cent as at Sep 30, up from 89.1 per cent in the preceding quarter. But occupancy was still lower than the 91.3 per cent recorded the year before.

The Reit has assets under management (AUM) worth S$20.7 billion, with Singapore accounting for 66 per cent of that, followed by Australia and the US at about 11 per cent each.

Clar is steering its portfolio towards segments that cater to changing market and tenant requirements arising from structural trends and shifts in consumption patterns, including digitalisation and e-commerce.

Business space and life sciences accounted for S$8.8 billion of portfolio AUM; logistics accounted for S$5.5 billion, and industrial and data centres, S$6.4 billion as at Sep 30.

The manager expects full-year rental reversion to remain positive in the “high single-digit range”. The portfolio’s weighted average lease expiry (WALE) stood at 4.1 years, with 6.6 per cent of gross rental income due for renewal in the remainder of the year.

In Singapore, overall occupancy rose to 90.9 per cent from 90.1 per cent in Q2. The manager attributed the increase mainly to newly acquired properties being fully occupied and to the higher occupancy in the logistics portfolio.

Occupancy in its US portfolio rose to 82.3 per cent from 80.9 per cent in the preceding quarter, although it remained below the 85.3 per cent of the year before.

The improvement was mainly driven by logistics properties, with occupancy hitting 100 per cent in properties in Chicago and Kansas City as at Sep 30. In June, occupancy for the assets in the two cities were at 78.8 per cent and 77.5 per cent, respectively. Occupancy at a logistics centre in Charleston in South Carolina rose to 9 per cent from zero.

In Australia, occupancy was unchanged quarter on quarter at 91.1 per cent, down slightly from 94.8 per cent the year before. Occupancy in the UK and Europe rose to 96.3 per cent from 93.1 per cent in Q2, while Japan remained fully occupied.

Portfolio transactions 

The Reit completed two Singapore acquisitions during the quarter for a combined S$638.1 million.

The properties are at 5 Tuas Avenue 5, acquired for S$133.9 million on Aug 17, and 25 Loyang Crescent, for S$504.2 million on Aug 27. 

Both are fully occupied and have leases with built-in annual rental escalations.

The manager expects initial net property income yields of 6.6 per cent for 5 Tuas Avenue 5 and 6.9 per cent for 25 Loyang Crescent, before transaction costs.

Their WALEs are five years and about 13 years respectively; annual rental escalations are 2 per cent for Tuas Avenue 5 and 2.5 per cent for Loyang Crescent for the first 12 years.

The Reit’s total acquisition value for the first nine months of 2026 was about S$1.8 billion, including a US logistics property and a stake in a Japanese data centre.

Clar plans to divest three Singapore properties – Kim Chuan Telecommunications Complex, 17 Changi Business Park Central 1 and 9 Serangoon North Avenue 5, for S$281.7 million. The sum is about 25 per cent above their combined independent market valuation, and 86 per cent above their total purchase price. The sales are expected to be completed in Q4 2026.

The manager estimates net proceeds of S$255 million, which, if fully used to repay borrowings, would reduce the Reit’s aggregate leverage to about 41 per cent from 41.8 per cent as at Sep 30.

The Reit’s Singapore portfolio occupancy would also rise to 91.5 per cent from 90.9 per cent on a pro forma basis.

Aggregate leverage rose from 39.7 per cent at end-June to 41.8 per cent as at Sep 30, mainly due to higher borrowings to fund acquisitions.

Its weighted average all-in debt cost for the first nine months of 2026 was 3.4 per cent, compared with 3.5 per cent in the first half.

Separately, Clar has seven ongoing projects with an estimated total cost of S$847.7 million, including two new redevelopment projects in the UK and Singapore for S$340.5 million.

The manager expects stabilised yields on cost of 6 to 8 per cent for development and redevelopment projects.

Units of CapitaLand Ascendas Reit closed unchanged at S$2.18, before the business update.