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Ascendas REIT: Well Diversified Tenants And Leases Means Safety

Mar. 07, 2018 12:02 PM ETCapitaLand Ascendas REIT (ACDSF)


  • Ascendas REIT has more than 1350 tenants in its various properties with no single tenant accounting for more than 5% of gross monthly revenue.
  • The trust's tenants are from a variety of industries, with no single industry making up an outsized portion of the trust's revenues.
  • No single property in Ascendas REIT's portfolio accounts for more than 5.4% of the trust's total revenue.
  • The trust does not have an outsized portion of its leases expiring in any single year between now and 2032, which should protect its revenue base long-term.
  • The trust appears to be well-diversified across relevant metrics which should help ensure its safety going forward.

As many of my long-time readers are probably aware, Singapore's Ascendas REIT (OTC:ACDSF) has been one of my favorite foreign real estate income trusts for quite some time now. The trust bills itself as being a business space and industrial REIT, boasting a portfolio of industrial properties, business parks, warehouses, and even a few retail properties. As one might expect then, this lends itself to attracting a variety of prospective tenants from various industries.

One thing that is important for any business is having a variety of income sources. This is due to the fact that if a given customer that makes up a large portion of income runs into financial problems or switches to a competitor or does any of a variety of other things, then it would have a negative impact on the non-diversified business that is depending on that revenue. This is also the case with REITs, which should not become too dependent on any one tenant. Fortunately, Ascendas REIT has largely been successful at avoiding this problem. As of the end of December, the trust had approximately 1,350 tenants throughout its properties, which is certainly a good number to ensure adequate diversification of revenues. However, it is worth noting that the trust's ten largest tenants account for approximately 20.6% of its gross rental income:

Source: Ascendas REIT

While none of these tenants accounts for 5% or more of the trust's gross rental income, one company is quite close. That company is Singapore Telecommunications (OTCPK:SGAPY), which is the largest telecommunications company in Singapore. This may or may not be a problem. That company is one of the largest providers of both fixed line and mobile communications services in the world, and telecommunications companies, especially large ones, are usually quite stable financially. Thus, the trust probably does not have to worry about Singtel suddenly

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