Q2 2025 CapitaLand Ascendas REIT Earnings Call
Welcome to the house.
Station.
Yes.
Street.
Of $331.1 million and DPU of 7.477 cents. Uh, are stable.
Investment properties increased to $16.83 billion.
Our portfolio occupancy remains high at 91.8%, and we achieved a high rental reversion of 9.5% for Lisa's renewal in the first half.
Jerry is healthy at 37.4% and the cost of that is stable at 3.7%.
Diving into the financials.
Gross revenue in the first half decreased by about 2% to $755 million.
And some of the reasons, uh, were due to the demand of some properties in Singapore, Australia, and the U.S.
However, the contribution from the newly acquired DHL Logistics property in the U.S. helped to mitigate the decline.
NPI decreased slightly by 0.9% to $1 billion due to lower operating expenses.
And distribution income was stable at $331.1 million.
DPU declines slightly to 7.477 cents due to an increase in the units.
When we compare the first half of 2025 versus
2024.
Gross revenue increased slightly to $755 million, mainly due to the acquisition of DHL Logistics property in the US and partially offset by the divestment of 21 Jalan Buroh in Singapore and the top side of business space property in the US.
So, NPI increases in tandem with the increase in revenue.
And the DPU increased by 2.1% in tandem with the distribution income.
To 7.681 cents.
Okay.
Distribution.
On June 30th, we paid an advanced distribution of 6.479 frames per unit for the period from January 1st to June 5th.
So, for the remaining period from June 6 to June 30, a distribution of $0.998 will be made, and you'll be receiving the dividends on September 4.
Moving on to Investments.
Of DHL, uh, logistics center in Indiana, police in the U.S.
In the first half, we also completed the redevelopment of 1 Sizable Spark Drive.
Uh, you guys are here today and, uh, we completed a total development cost of about $600.884 million.
Dollars.
Uh, very soon, the plan is set to add another $725 million of income-producing properties in Singapore, specifically at 9 Tai Seng Drive, a data center, and 5 Science Park Drive, a business space property next door.
okay, so the total acquisition
For the four properties, thumbs up to almost $1.2 billion.
If you recall, all these properties were acquired at attractive NPI yields of over 6 percent, and as high as 7.6 percent for the DHL property. They are all equipped and will, you know,
Contribute to our income stream in the long term.
So, um, this slide you have seen before. So
Moving on to divestment.
Uh, so this is real.
We have divested Parkside, uh, Business Park, uh, business based property in the US Portland for about 26.5, uh, million dollars.
The property.
It was sold at a 45% premium to market valuation. It was sold to an end user.
On capital management during Women's Health, at 37.4%, after the equity fund raise in May,
uh,
You will also note that if the numbers have improved. And if you look at, uh, some of the numbers here,
Uh, ICR is still very healthy.
At 3.7 times, and the cost of that remains stable at 3.7 percent.
Okay.
And on the
That expiry profile we have about $6.7 billion worth of total debt. And you can see here, they are very well spread out.
So, in the next 2 to 3 years, we have about $900 million or so due for refinancing per annum.
Okay.
Metro hatch. We continue to have this high level of natural hatch for our overseas investments.
So, um, on the portfolio basis, it's about 76%.
Okay, occupancy.
The occupancy rate for the portfolio was stable at 91.8%. So this is on the right-hand side of the slide.
Um, the occupancy rate for Singapore.
Was 91.2%.
Us 87.3%.
Australia, increased to 93.1%.
And UK Euro, uh, stable at 98.9%.
So, let's take a look at the details.
91.2%. This is mainly due to a non-renewal at an industrial property.
Um, when we look at, you know, within Singapore, portfolio occupancy rates for the business space properties and the logistics properties were stable.
in the US.
The occupancy declined by 0.7% to 87.3%. This is mainly due to the expiry of a lease in a logistics property in Kansas City, but offset by higher occupancy.
For our business property in Portland.
Australia.
Um, Australia improved by 3.9% to 93.1%.
Driven by higher occupancy rates in Sydney.
So we backfilled two logistics properties.
And the tenants have signed long leases of 7 years, 7 years, 5 years, and 7 years at 94 Lenard Drive and 16 Kangaroo Avenue.
As 4197 coward Street.
Uh, a business-based property in Sydney, it also attracted a few new tenants. The occupancy rate improved from 85% to 94%.
Overall occupancy rates for both the logistics and business parts of our properties have improved.
In the UK and Europe, as usual, the occupancy remains high at 98.9%.
No demand in the FAQ for Singapore. The largest sources of new demand by Ross, rental income, were the logistics and supply chain management industry. Many of these tenants are moving into our logistics properties.
The next, uh, large source of demand in the first half is the IT and data center sector. Many are moving into our high-spec, industrial properties.
And education and media is the next, uh, group. Many of them are also moving into our business space properties.
As for our overseas portfolio, the largest source of new demand was the logistics sector.
Okay, rental reversion.
for this renewals in 2q,
Uh, the column, the first column, Q2. Uh, at the bottom, last row, you will see, uh, 8%. So the total portfolio achieved.
A positive rental revision of 8%. Okay? And if you were to look at the variance geographies for Singapore, 7.8%.
Us.
10.9%.
Australia 3.5%.
For UK Europe, you see a dash there, and that's because there weren't any lease renewals during the period.
Okay.
Well.
Stable at 3.7 years.
Okay.
On expiries, for the whole portfolio or for geographies put together, we have a balance of 8.9% of rental income that will be due for renewal for the rest of the year.
Okay.
Currently, we are working on Q2.
Projects uh, including 1 developmental.
AI. So this projects are scheduled for completion between 3 Q to 025 and 1 Q uh 2028.
We will continue to add to this list, right?
Um, so the last slide, uh, in this uncertain economic situation.
Um, I think we will continue to be with us in the near future. However, we are confident to write through this period, right given our well-diversified portfolio and good tenant base.
Good operational management and prudent financial management. So, we will continue to adapt to the changing market conditions.
Thank you very much.
And the first race hand will be, uh, from GP Market.
Thank you, thank you for the opportunity. I'm Terrence from JP Morgan, congrats on a good set of results. Um uh, since we are here at this beautiful building, uh, perhaps I could ask a little bit more about Gino. Um, is there anything further you could share in terms of, uh, what are the major tenants, uh, coming into Gino, um, what's what's some of the signing ones are and and perhaps uh, when the cash flow contributions could start.
That's the first question for me.
Thanks, Darren.
GP Morgan. Always the first question. Okay. We have not, uh, any further updates. We have mentioned we are about 95% pre-committed and in advanced negotiation.
Uh, about 75-76% are already committed.
Uh, just now we're talking about whether antennas have moved in. The retail tenants are already in.
Uh, I just got, after your hours, I just got updates. First, Tenor is going to move in in mid-August.
And in August, September, October, right? All the way to July next year, we will progressively update the directory.
When the tenants move in, you can catch who the tenants are that are moving in.
Uh, and, uh, the signing R.S., uh,
As you have heard me mention about the Shopee building next door. Shopee is building with, I believe, that 15% under rented.
Uh, and we are not even talking about the rents that the GO has achieved.
Uh, so Junior actually has achieved much higher rents. Uh, they are, if you use.
A gauge against uh, 1 North Region uh and Science Park. Typical signing is about 5 6 dollars. Uh, Gino is above 7. Uh, we believe that this is this sets, The Benchmark, uh, because of the quality of the building as well as the offering in terms of uh uh uh retail and the catchment and it's directly connected to MRT stations, you can walk around, it's all covered. Uh so this is actually uh quite a quite a good.
Rent for us.
Uh, we believe these were actually set where asking rent is, uh, for other renewals, whether it is in Shopee across the road in Ascendas? And, uh, this will be the, the, uh, this will set the expectation of rent.
Thank you. And I I just do have a question from a client. Um, basically, the client is asking, um, is there risk that uh, like for, if when tenants move into junior? Is there risk that they, they could be leaving, um, some of the existing assets, uh, particularly for, uh, ascenders uh for class properties.
Moving from a Sender's Well class properties to Gmail, um, existing tenants. Um, I think there's only one tenant that's moving from a Sender's property. The rest are all expansion and relocation.
Uh, outside of Clare properties. Okay. That's very, very good to hear. And, um, maybe on my second question. If I could ask for an update on the data centers from Tell.
And the companies we develop opportunities, uh, we see you better than our plans. Uh, we are likely to look at that.
Commercial development, as I mentioned. Uh, that's probably why we were getting to us.
And maybe any changes to the cost of that.
For this year.
Uh, the cost of that is to be to hover around high levels.
William Tay: That building is typical. Once a tenant leaves, either you can back to back have a new tenant. If not, the current environment requires us to at least three months, six months. James mentioned Kangaroo took us for a year, but at least we do see demand in the market. In Singapore, other than Singtel Building in Tampines, this is the other one. It is a B2 site. Actually, it is very attractive given where the current demand is for B2 locations. Even before the tenant leaves, some brokers really got wind that they are moving, and we actually had some unsolicited offers to see whether we are interested to divest. We are still evaluating options, but because it is a B2 site, I think it is quite a good location as well as suitable for manufacturing, much better than a B1 site.
Buildings are typical. Once again, lease is either you can back-to-back. We have a new tenant, if not, the current environment requires us to have at least 3 months, 6 months.
Uh, while James mentioned kangaroo, he told us about a year.
Uh, but at least we do see demand in the market, uh, in Singapore. Other than...
Uh, single building in T. This is the other one. Uh, it's a B2 site, actually. It's very attractive, given where the current demand is for B2 locations.
Uh, even before the tenant leaves, I mean, some brokers already got wind that they are moving, and we actually have some sort of unsolicited offers to see whether we're interested in divesting.
William Tay: So we will evaluate options and see where we can close this as soon as possible.
Yeow Kit Peng: So for the 16 Kangaroo, do you have to give additional incentives to get the new tenant in?
Uh, we have the evaluating options, uh, but because of the B2 site, I think is quite a good location, as well as, uh, suitable for manufacturing, uh, much better than the B1 site. So we will evaluate options and see where we can, uh, close this, uh, as soon as possible.
For the 16 Kettleman.
Uh, do you have to give additional incentives to get the new tenant in?
William Tay: Hello, hello. Generally, incentives in Australia have gone up, but it has helped that the headline rents have also gone up aggressively. You are still seeing a positive and effective rent level improvement over the previous rent. Escalation also has gone up. We have signed about 3.5% to 4%.
Hello, hello. Um, generally, incentives in Australia have gone up, but it has helped that the headline rents have also gone up aggressively. So, you are still seeing a positive effect at the effective rent level improvement over the previous rent.
Escalation has also gone up. We have signed about 3.5% to 4%.
Yeow Kit Peng: Okay. For the U.S. and the Melbourne properties, the expiring rents, how is it compared to the market rents?
And, uh, how does it compare to the market rent?
William Tay: I think that question, generally, if you look at U.S., we are still under-rented. Although that gap is narrowing, you see even in our latest reversion, we are reporting close to double-digit. So we are somewhere between mid-single to like a low double-digit kind of under-renting below market right now.
Yeow Kit Peng: Okay. Thank you. Just one second question from me. I think in terms of your tenant part, you spoke about converting to commercial, looking at commercial. Are you likely to do it yourself, or are you likely to look for another party to do it for you? I mean, divestment. Do you have any interest?
I think that question, uh, generally, if you look at us, um, we are still underrated. Although, that gap is narrowing, but you see even in our latest reversion, we're reporting close to, uh, double digits. So we are somewhere between mid single to like a low double digit kind of, uh, under renting below market right now.
Okay, thank you. And, uh, just one second question from me. I think, uh, in terms of your Teddy Park, I think you spoke about, uh, converting to commercial, looking at commercial. Are you likely to do it yourself, or are you likely to look for another party to do it for you?
William Tay: All options are being considered.
Yeow Kit Peng: So, you have started to market the property?
Do you have any interest? All options are being considered.
William Tay: We are still looking at our plans in terms of the development options. Whether we divest, bring in a partner, or what, I think these are all options that are still open.
So yes, subject to market the property. Uh, no, no.
We are still looking at our plans in terms of the development options.
Yeow Kit Peng: Okay. All right. I will give others a chance to ask. Next, we will have Dale from DBS.
So whether we divest, bring in a partner, or what, I think these are all options that are still open.
Okay. All right. I'll give others a chance to ask me.
Dale Lai: Yep. Thank you. Hi, William and team. Thanks for the presentation. Just a few quick questions from me. I think with regards to the acquisition, I mean, with regards to your recent acquisitions, and this is the One Science Park Drive, right? I mean, in these first few months, there will be a little bit of drag to earnings because of the placement and things like that. How soon should we expect these additional contributions to start, you know, driving DP, driving earnings back up?
Uh, next we have Dale from DBS.
Yeah, thank you. Uh, hi. Hi, William and team. Thanks, thanks for the presentation. Uh, just just a few quick questions from me, I think, uh, with regards to the acquisition, I mean with regards to your recent acquisitions and and these are 1 Science Park Drive, right? I mean in in in this first few months, there will be a little bit of drag to earnings because of the placement and things like that, but how soon should we expect this additional contributions to to start? You know, driving driving driving DP, driving earnings, uh, back back up.
William Tay: We expect to close within the next one, two weeks. This week or next week.
Uh, we expect to close within.
Next 1 2 weeks.
Dale Lai: Okay. Okay. Oh, sounds good. Sounds good. Okay. The next question is on Shopee. I know it is still some time to November, but how are negotiations looking or what are our expectations? Has it changed? Are we still expecting that 15% upside in negotiations?
This week or next week.
Okay, okay. Oh, sounds good. Sounds good. Okay, and the next question is, um, on Shopee. I know there’s still some time to November, but, um, how are negotiations looking? Or what are expectations? Has it changed? Are we still expecting that 15% upside and Nico negotiation?
William Tay: Still early, but that sets the expectation. As I mentioned, I think with 15%, it sets the expectation of what we think is the floor. To Terrence's question earlier, the signing rents that we have achieved and asking rents is much higher. Given it is a full single building, I do not think it is possible to be honest. It is possible to find the max rent that JTC can achieve. JTC is multi-tenanted. We bring in different tenants of different sizes, and this is a single-lab building. I think there will be a negotiation. We have not started, but given where we understand from our existing negotiation on Galaxies and their movement with regards to the business unit that has been moved to Rochester Commons, we got a good sense of where are their business plans.
Uh, it's still early, but that sets the expectation. As I mentioned, I think with 15%, it sets the expectation of what we think is the floor.
Uh, and uh, to Terence's question earlier, the signing RS that we have achieved and asking rest is much higher.
Uh, given that it's a full single building, I don't think it's possible to be honest. It's possible to find at the max rent that GO can achieve. I mean, GO,
Is multi-tenanted. Uh, we bring in different tenants of different sizes, uh, and this is a single lab building. Uh, so I think there will be a negotiation, uh, we have not started, uh, but given where we understand from our existing, uh, negotiation or galaxies.
And their movement with regard to the business unit that has been moved to Rochester. Commons.
William Tay: Once all this is settled, I think this is the next stage of negotiation. It is still November next year, one and a half years later.
Dale Lai: Okay. Okay, sure. Sure. Thank you. Sorry, last question. If I can squeeze in one. I think in terms of the borrowing cost, I think, Kit Yeow, you are saying that you expect it to remain around this 3.7%. This is including the refinancing that is due for the next half of the year.
Yeow Kit Peng: We are left with an Aussie dollar loan that we need to refi. Taking that into account, we should be able to achieve around 2.7% for the full year.
This is, uh, settled. I think this is the next stage of, uh, negotiation and it's still November next year, one and a half years later. Okay? Okay, sure, sure. Okay. Sorry, last question. If I can squeeze in one, I think, in terms of the borrowing cost, I think keeping you saying that you expect it to remain around this 3.7. Uh, this is including the refinancing that is still for the next half of the year.
Yeah, so, um, we are left with, uh, the Aussie dollar loan.
Dale Lai: Okay. Okay. Got it. Yeah. That's all from me. Thank you.
Yeow Kit Peng: Thank you, Dale. We will move to Vijay Natarajan from RHB, the gentleman over there.
Yeah, that we need to refund. So taking that into account, we should be able to, uh, achieve around, uh, 2.7 for the percent, for the full year. Okay, okay, okay, got it. Yeah, that's all from me. Thank you. Thank you, Dale. We'll move to Vijay from rhb.
The gentleman over there.
Vijay Natarajan: Yeah. Hi. Good evening. Thanks for the opportunity. I have a couple of questions. Firstly, in terms of the U.S. divestment, it was a good premium, a surprise, a 45% premium. Considering the challenges in the market, how did you manage to get such a good premium for this asset? Are there any such opportunities available in the U.S. portfolio for future? Maybe you can also guide on divestment target for this year. Divestment has been a bit slow so far.
Yeah, hi. Good evening. Thanks for the opportunity. I have a couple of questions. Firstly, uh, in terms of the US divers, uh, it was a good premium surprise of 45% premium considering the challenges in the market. Why do how did you manage to get such a good premium for this asset and are there any such opportunities available in the US portfolio for future and maybe also, I can guide on diverse and target for this year. Diverse man has been a bit slow so far.
William Tay: Thanks, Vijay. Thank you for asking this question because I think our team did really well. Kudos to my U.S. asset management team. To be honest, all options are always on the table, particularly for challenging markets like the U.S. So we look at various ways, including whether we can enhance the value of the property by doing selected AEIs, which we have done and we continue to do. If we could then selectively also divest assets and try to extract maximum value of our portfolio. In this case, the end user is pretty unique. It is a local government entity that runs parks around that Portland area. They were looking for a flagship HQ to move into. Just to give a bit of context, this property used to be occupied by Nike.
Uh, thanks Vijay. It's and and thank you for asking this question because I I think our team did really well, uh, kudos to my us as a management team.
Uh, to be honest, all options are always on the table, particularly for challenging markets like us. So we look at various ways, including whether we can enhance the value of the property by doing selected AIS, which we have done and continue to do, and if we could then selectively also divest assets and try to extract maximum value for a portfolio. In this case, um, the end user is pretty unique; it's a local government entity that runs parts.
William Tay: When they left, the occupancy went down to about in the 20s in a percent and has remained that way for a while. So it was active combing of the market that we managed to find this potential user. While at first the discussion was about leasing, it very quickly pivoted to a sale process. We are very happy that through this entire process, we were able to get very good value for this asset and to return that value back to our unitholders by selling that property.
Around that Portland area and they were looking for a flagship HQ to move into. Now, just to give a bit of context, this property used to be occupied by Nike and when when they left, um, the occupancy went down to about in the 20s and a percent um and has remained that way for a while. Um and so it was active, kind of like um combing of the market that we managed to find this potential user. Um and while at first the discussion was about leasing, but it very quickly pivoted to a sale process uh and we're very happy that the through this entire process, we were able to get very good value for this asset and
Return that value back to our unitholders by selling that property.
Vijay Natarajan: Are there any such opportunities and maybe divestment target for this year?
Are there any such opportunities, and maybe diverse and targeted for this year?
William Tay: Divestment target, I think since Q4 last year, I did mention that this year we probably look at about $300 million to $400 million of divestments in Singapore, in Europe, and U.S., as well as Australia. Just like what James Goh mentioned, I think all options are open for us, especially such non-core assets like the one that we just divested in Portland. Given that it is actually a government-related company or other entity, it took some time for us to close that. There is a value to them because it is near where their operations are, which is why I think it helps us to get a premium. The other one is Australia. I think you have also seen us demonstrate it in the past. Last year, we divested three assets that we can get about 3% to 4% of exit yield.
Um, the investment cycle, I think since Q4 last year, I did mention that this year we will probably look at about $300 million to $400 million of divestments.
Uh,
In Singapore, in, uh, Europe and the US.
Uh, as well as Australia. So just like what James mentioned, I think all options are open for us, especially.
Such long call assets, like the, the 1 that we just invested in Portland, uh, given that it's actually a government related company, uh, or rather entity. Uh, it took some time for us to close that, uh, but there is a value to them because it's near where their operations are
William Tay: I think Australia, even when we will have, for example, some of the vacancies, we do entertain customers who are prepared to acquire the assets if they do not want to lease. We will work on that. In Singapore as well, Singapore, given there are some assets that we believe that there are assets that we want to keep, actually, are those that we have redeveloped opportunities. I think since Q4, I also mentioned of a redevelopment target of about $1.5 billion. This includes not just the data centers in overseas, but Singapore as well, especially near MRT stations. I also mentioned about IBP. Those assets that are potentially not able to achieve either higher crop ratio or redevelopment opportunities. In Singapore's case, if there is still existing good lease on the asset, I think it is where we can find buyers for Singapore assets.
so, which is why I think it helps us to get a premium. Uh, the other 1 is Australia. I think you also seen us the demonstrated in the past. Uh, last year, we divested 3 assets that we can get about 3 4% of, uh, exit. You
Uh, so I think Australia, uh, even when we have, for example, some of the vacancies, uh, we do entertain customers who are prepared to acquire their assets. If they say they do not want to lease.
Uh, so we will work on that.
Uh, in Singapore as well. Uh, Singapore, given the, uh, there are some assets that we believe that there.
Uh, I assess that we want to keep, actually, those that we have developed or redeveloped opportunities. I think since 4 were so mentioned, uh, Redeemer Target about $1.5 billion. This includes not just the, uh, data centers overseas but also Singapore, as well as especially near MRT stations. Uh, I also mentioned about IBP, uh, so those assets that potentially are not able to achieve either a higher pro ratio.
Uh, and in Singapore's case,
William Tay: These are the few things that we will do. Hopefully, we can close them in the second half of this year.
If there's still a good lease on the asset, I think it's where we can find buyers for Singapore assets.
So these are a few things that we will do. Uh, so
Vijay Natarajan: Thank you. My last question. In terms of occupancies, can you give us more color in terms of the vacancy of the U.S. logistics assets, considering that this has been acquired recently? Also, in Singapore, what is the reason for the tenant exiting the Serangoon asset? Broadly, is there any tariff impact so far you have seen in any of your tenants or your portfolio?
Hopefully, we can close them in the second half of this year.
Thank you. My
Last question. In terms of occupancies, can you give us a more color in terms of the we can see at the US Logistics assets, considering that has been this has been a quite recently and also in Singapore. The reason for the tenant exiting, the sin asset broadly, is there any tariff impacts so far? I have seen in any of your tenants, or your portfolio.
William Tay: James answering. First, I will address the U.S. question. I think U.S. logistics, there was a very strong tailwind right after we did the acquisition because it was post-COVID, and there was the entire supply chain disruption. That led to a lot of 3PLs taking on more space than they required because they were holding buffer stock. Now that things have normalized, it is reverting back to the means where there will be some downtime. I do not expect the U.S. logistics occupancy to vary too much. It would not be like at your high 99%, 98% kind of range. It was probably moderate a bit, but it should not move too much. I would just like to add that the U.S. office continues to be challenging, and we do see in the second half some potential downside there. Your last question was on Singapore?
For our address, the U.S. question, I think U.S. logistics, um, there was a very strong tailwind right after we did the acquisition because it was post-COVID and that was the entire supply chain disruption. So that led to a lot of, um, 3PLs taking on more space than they required because they were holding buffer stock. But now that things have normalized, um, it's going, it's reverting back to the mean where there will be some downtime. So I don't expect the U.S. logistics occupancy to vary too much. Uh, you wouldn't be like at your high 99.988% kind of range. It will probably moderate a bit, but it shouldn't move too much.
I would just like to add that, uh, the U.S. office continues to be challenging, and we do see in the second half some potential downside there. Um, and your last question was on Singapore.
Dale Lai: Tariff.
William Tay: On the tariff impact, generally, we have done a refresh of the survey. When the first announcement was made, we actually polled internally 10 of our largest tenants in each location to ask them what the impact was. At that point in time, the response that came back was, "Oh, it was too early. It is still BAU for them." We did another sense check very recently to find out has anything changed now that things seem to be settling down. Again, the response is the same. There is a lot of uncertainty still. At the same time, we do not see them holding back in terms of either renewing their leases or continuing to expand. I think in gist, we have not really seen any material impact. This is not just in Singapore. This cuts across all of our operations into U.S., U.K., and Australia as well.
Um, there is a terrific. Sorry. So, on the Tariff impact, generally, we've done a refresh of the survey. So, when the first, uh, announcement was made, we actually pulled internally our 10 of our largest, uh, tendency in each location. To ask them what the impact was at that point in time. The response that came back was, oh, it was too early, it still be a you for them. So we, we did another sense. Check very recently to find out has anything changed. Now that things seems to be settling down, um, and again, the response is the same. Uh, there's a lot of uncertainty still. So, but at the same time, we do not see them holding back in terms of either renewing their leases or continuing to expand. So, I think, uh, in G, we haven't really seen any material impact. And this is not just in Singapore, this cuts across all of our operations into us. Uh, UK and Australia as well.
Yeow Kit Peng: Thank you, Vijay, and thank you, James. We will move on to Tan Shen from Goldman Sachs.
Joy Wang: Hi. Good evening. Can I ask how you are thinking about redevelopment versus acquisition at this point? Also, what are some of the opportunities that you are reviewing?
Um, thank you, Vijay, and thank you, James. We'll move on to Dashin from Goldman Sachs.
Hi. Uh, we think, um, can I ask how you are thinking about redevelopment versus acquisition at this point? You know, what are some of the opportunities that you are reviewing?
William Tay: Both are exciting for us. I think redevelopment is quite clear given the fact that we are sitting on assets that we know very well. Tested location. We know what we can achieve out of testing whether there is additional crop ratio, additional capacity. Even for overseas, where there is opportunity, we also looked at whether there is redevelopment to reposition assets. If you know, a lot of our overseas assets are actually of certain vintage. We want to be able to refresh them. As well as, if it is data center, the first thing we will do is if there is opportunity, we look at whether we can increase power. With our assets, we can have more control and more, if you like, examine more options for us in terms of redevelopment. Especially when you are holding on to assets for a while, we know whether it is leasable.
Uh, both are exciting for us.
I think we development is quite clear. Given the fact that we are sitting on assets that we know very well, tested locations. Uh, we know what we can achieve out of.
Testing. Um, whether there's additional clock ratio, additional capacity, uh, even for overseas, uh, where there's opportunity? We also looked at whether there is redevelopment to.
Reposition the asset. If you know, a lot of our overseas assets are actually of certain vintage, so we want to be able to refresh them.
Uh, as well as for his data center. The first thing we will do is, if there's an opportunity, we looked at whether we can increase power.
Uh, so with our assets, we can have more control and, um, if you like, examine more options for us in terms of defect redevelopment.
William Tay: If it is a redevelopment on spec or even it is your customer, we know what we are entering into. That is one key strategy which we mentioned that we will go into because as the REIT gets large enough, in the past, we typically have about $300 million to $500 million, right? As we develop, take for example, this, we invest about $300 million. We also have a few others that are coming on the way. Once it becomes income-producing, it gives us the capacity to bring in development. It is a cycle where we redevelop, and then in time to come, when there is new income from the redeveloped sites, we can continue with redevelopment. This will be a continuous cycle, if you like.
Uh, and especially when you're holding on to assets for a while, we know whether it's liable. Uh, if it's a redevelopment on spec or even if your customer, we know what we are entering into.
So that is one key strategy, which we mentioned that we will go into because as the RE gets large enough. In the past, we typically have about $300 million to $500 million.
Right? And as we develop the sector, for example, this, we invest about $300 million.
William Tay: It allows us to reposition our asset either for green purposes or to increase our ability to lease out higher specs as well as reposition the assets. On acquisitions, we have done now to date $700 million with what we approved at the EGM and the DHL acquisition. I think on the acquisition side, we are still active. We continue to explore opportunities here in Singapore and mostly in Singapore and Europe. U.S., we have took a slight pause of where it is today to see where the dust will settle, and we will see whether we can reactivate our acquisition opportunities in the U.S. As I mentioned, Australia has always been a difficult market for us given where cap rates are against debt. The acquisitions, I would say, include both sites for development, just like what we have done in the U.S., logistics development, as well as core products.
Continue with Redevelopment. So, this will be a continuous cycle, if you like.
Uh, and allow us to reposition assets either for green purposes or to increase our ability to lease out higher specs, as well as, uh, uh, reposition their assets.
Uh, on acquisitions, we have done now, to date, $700 million with what we approved at the EGM and the DHL acquisition.
I think, on the acquisition side, we are still active.
Uh, we continue to explore opportunities here in Singapore, uh, and mostly in Singapore and Europe.
Uh, as we have discussed, let's take a slight pause to consider where we are today. Uh,
To see where the dust will settle. And we will see whether we can reactivate our acquisition opportunities in the U.S. As I mentioned, Australia has always been a difficult market for us, given where cap rates are against that.
Uh, and the acquisitions, I would say, include both.
Joy Wang: Thanks. If I can follow up on occupancy, I think earlier, James, you mentioned U.S. could see some weakness. What about the other geographies that CapitaLand Ascendas REIT is in?
Sites for development, just like what we've done in the U.S., include logistics development as well as call products.
Thanks. Um, if I can follow up on occupancy, I think. Earlier, James you mentioned we could see some weakness? What about the other geographies that Claris?
William Tay: I will take that question. First, we start with Singapore. Generally, we expect it to be pretty stable. I do not expect to see any material movements. As a side note, I would just like to highlight that CBP, we have actually quite quietly pushed up occupancy there to about 84%. That is the highest in the last nine quarters. While it is no longer in the news, we continue to work hard to squeeze the most and to try and reinvigorate some of these assets. In UK, Europe, again, we do not expect any large movements because a lot of those are single-lab buildings with long leases. Australia, now that it has improved to 93%, we expect it to hold above the 90% mark. U.S., as I mentioned earlier, the logistics will remain close to where they are currently, and there might be some downside to the office.
I think the question is, so I think first we start with Singapore. Generally, we expect it to be pretty stable. I don't expect to see any material movements. As a side note, I just like to highlight that CBP has actually quite quietly pushed up occupancy there to about 84%. That's the highest in the last 9 quarters. So while it's no longer in the news, we continue to work hard to squeeze the most out and to try to reinvigorate some of these assets.
Joy Wang: Thanks. Just one last question.
Uh, in the UK and Europe, again, we don't expect any large movements because, uh, a lot of those are single-LED buildings with long leases. In Australia, now that it has improved to 93%, we expect it to hold, uh, above the 90% mark. Um, in the US, as I mentioned earlier, we anticipate that logistics will remain close to where they are currently, and there might be some downside to the office.
William Tay: Let me just touch on CBP. A year ago, it was 74%. We pushed up to last year's 81%. Now it's 84%. At 84%, it's similar to where Science Park is, Science Park 2. If you look at Science Park 2, it's about 85%. Science Park 1 is about 90%. One North is the best, 98%. I think CBP, what we have done is we have injected, we have actually injected new target markets that are likely to be approved by the authorities. They have been quite supportive in relation to where are the adjacent industries, so not the typical traditional BP players. Obviously, you have heard mention about an aviation company entering into OCC. That's engineering. Subsequently, we also started looking at institutions, which we have brought into CBP. This allows us to be able to fill our buildings.
Thanks, uh, just one last point. Let me just, uh, touch on CBP. A year ago, it was 74%. We pushed up to last year's 81%. Uh, now it's 84%. At 84% is...
Similar to where Science Park is Science Park 2. So if you look at Science Park 2, it's about 85 science part. 1 is about 90 1. North is the best 98
So, I think CBP, what we've done is, uh, we have injected.
Uh, we have actually injected new target markets.
within uh,
That is likely to be approved by the authorities.
Uh, and they have been quite supportive in relation to where the adjacent industries are, so not the typical traditional BP players.
Uh, obviously you have heard mentioned about an aviation company entering into OCC. That's engineering. Then, subsequently, we also started looking at institutions.
Uh, which we have brought into CBP, and this allows us to be able to fill out our buildings.
Joy Wang: Quick one. What is the yield on cost on Jin Yeow?
Uh, quick one. What's the yield on cost on G new?
William Tay: Publicly, we say 6.3, but now it is actually higher than 6.3.
Yeow Kit Peng: Thank you. Next, I will move to Joy from HSBC.
Joy Wang: Sure. Thank you, everyone. First, on maybe just updates on the upcoming redevelopment. Can we get a sense of leasing and income contribution once completed? The 5 Toguan?
Thank you, next, to Joy from HSBC. Um, thank you, everyone. Uh, first on maybe just updates on the upcoming Redevelopment. Can we get a sense of leasing and income contribution once completed?
William Tay: Yes.
Joy Wang: The upcoming one, five Toguan and the 27 eyes.
William Tay: Are you on a cost of 7% and above?
Joy Wang: No, leasing.
William Tay: Leasing. Okay. Leasing, we will again announce when we hit TOP. I hope you understand, bear with me because that is how we want to strategize. We do not want to disclose pre-commitment and any leasing activities because then we got a better hold of how we negotiate and where we want to land the tenants.
No, no. So the upcoming 1.5 to 1 and, uh, 27, I well you on course about 7 and above, know, do you think? Do you think? Okay, listen, we will again.
Announced when we hit the OP. Yeah.
I hope you understand where, yeah, bear with me.
Joy Wang: Okay.
William Tay: There are pipelines.
Because that's how we want to strategize. We do not want to disclose pre-commitment and any leasing activities, because then we have a better hold on how we negotiate and where we want to land the tenants.
Okay. Um,
But there are Pipelines.
Joy Wang: I guess, you know, maybe just in terms of income contribution, how should we think about income contribution for these buildings? When would income start?
And I guess, you know, maybe just in terms of income contribution, how should we think about income contribution for these buildings? Like, when would income start?
um,
William Tay: For your model, just assume maybe a year. A year of void.
Joy Wang: Okay. Okay. Second question. Updates on the U.K. data center?
William Tay: Okay. U.K. data center, not much progress. We are still talking to our tenants. I think there was a question asked about what does our tenant include? Hyperscaler. Most recently, we started entertaining inquiries from Hyperscaler. As we all know, as you get closer to the date of confirmation of when the supply will come, this actually triggers some interest. We originally intended to build a 60-megawatt data center, but given the fact that we have not got a confirmation of when with the additional 35 will come in, now we are working with a prospect to relook at the construction. We may then now phase out 25 first, then subsequently take 35 when the power comes in. This works well with the tenant or the prospect, given the fact that even if there is 60 megawatts on day one, they will not be utilizing 60 megawatts.
You avoid. Yeah, okay, okay. Um, second question: updates on the UK Data Center.
Okay. UK, Dr. Sensor, um,
Not much progress. Uh, we are still talking to our tenants. I think there was a question asked about whether our tenant mix includes hyperscalers?
Uh, most recently, we started entertaining inquiries from hyperscalers.
Uh, as we all know, as you get closer to the date of confirmation, or when the supply will come, I think that actually triggers some interest.
Uh, we originally intended to build a 60 megawatt data center. Uh, given the fact that we haven't got confirmation of where the additional 35 will come in.
Uh, now we are working with a project to look at the...
William Tay: We need to go through the specs and relook at our planning and construction.
The construction. So we may then now phase out 25 first, then subsequently take 35 when the power comes in. And this works well with the tenant for the prospect, given the fact that even if the 60 megawatts on day one, they won't be utilizing 60 megawatts.
Joy Wang: Okay. Thank you. Just a last question on rental reversions. Your guidance is maintained at Missingo. First half is actually high to double digits. So how should we think about it?
So we need to go through the, uh, the specs and relook at our planning and construction.
Okay, thank you. And just, uh, last question on rental reversions. Your guidance is maintained at this single. First half is actually high to double digits. So how should we think about it?
William Tay: We are still keeping at mid. As James mentioned, we still continue to see some uncertainties. To Vijay Natarajan's questions, whether tariff has any impact, we have not seen directly hit from our tenants, or rather, at least from our tenants. On the question that Vijay Natarajan asked about whether our this quarter's non-renewal was affected by tariff, I do not think so because their business was slowing down, as we see from their business. We think that given where now tariff is landing, we may start to see signs, whether it is in Q3 or Q4, to see whether there is impact down the line to our tenants. At this point in time, we got no clear indication that tariff is probably holding their expansion.
We are still keeping at Mid uh, I think as uh, James mentioned, we still continue to see some uncertainties, uh, the vgs questions whether Terry has any impact. Uh, we haven't seen directly hit uh from our tenants or rather as at least from our tenants.
Uh, so on the question that Vijay asked about whether our this quarter's non-renewal was affected by Terry? I don't think so because their business was...
Uh, slowing down as we see from their business. Uh, but we think that given where now Terry is landing, we may start to see signs, whether it is in Q3 or Q4, to see whether there's impact.
down the uh, down the line to our tenants but at this point in time, we got no clear indication uh, that Terry is uh
William Tay: If it is renewal, most of the time, since it is uncertain, they renew short-term, two years, three years, instead of five years or seven years. I think with all this clarity, we would like to see our tenants being able to make better decisions, and we will then evaluate whether there will be any impact.
Joy Wang: Thank you.
Is probably holding their expansion. Uh, if it's renewal most of the time is, since it's uncertain. The renew, short term, 2 years, 3 years, instead of 5 years or 7 years. So, I think with all these uh Clarity I think we would like to see our tenants being able to make better decisions. And uh, we will then evaluate whether there will be any impact.
Yeow Kit Peng: Thank you, Joy. Next, we will move to Jonathan from UOB.
Thank you.
Thank you, Joy. Uh, next we will move to Jonathan from UOB.
Jonathan: Sorry to repeat the topic. I am looking at tariff, but maybe from a positive angle. Tariff in Singapore is 10%, a lot lower than 20% in neighboring countries. Some are even higher. Does that mean that there will be positive impact on demand to expand in Singapore for multinational companies? Would that lead to higher occupancy for business park and high-tech buildings in the second half and beyond?
So what I will repeat the topic.
William Tay: Business park is not affected. I do not think our tenants in that area are affected by the tariff. If you are weighing the point about tariff relatively lower than, say, our ASEAN partners, I hope what you have expected will come true. There are other costs. Occupation cost includes labor, electricity, many others. I would say I do not think there is any immediate. If there is, it is good, but I do not think it is going to be immediate. Given the fact that you were to move an operation from a location into Singapore, it is not an overnight decision. We hope that there will be because when it first started, I think you also heard me mention there was an increase in inquiries.
So I'm looking at tariffs, but maybe from a positive angle. The tariff in Singapore is 10%, which is a lot lower than 20% in neighboring countries; some are even higher. Does that mean there will be a positive impact on demand for multinational companies to expand in Singapore? Would that lead to higher occupancy for business parks and high-tech buildings in the second half and beyond?
Yeah. Um,
Business spark is not affected.
I don't think our tenants in the area are affected by the tariff. If you are weighing the point about the tariff, it is relatively lower than...
Say our asean partners.
Uh, I hope what you have expected will come through. Uh, but there are other costs. Occupation costs include labor, electricity, and many others.
Uh, I would say, I don't think there's any immediate, if there is, it's good, but I don't think it's going to be immediate, given the fact that you were to move an operation.
From a location into Singapore. It's not an overnight decision.
William Tay: Almost everybody, not just in Singapore, but overseas brokers were telling us there was an increase in inquiries, but it has since died down. Now, if you are asking whether with all this certainty, we hope there will be more activities. I think operational cost is not just about the tariff.
Uh, and we hope that there will be, because when you first started, I think you also heard me mention, uh, there was an increase in inquiries. Almost everybody.
Jonathan: For U.S. business park, they are the one imposing the tariff. Is it a positive or a negative impact for business park in the U.S.?
Not just in Singapore, but overseas, brokers were telling us there was an increase in inquiries, but it has since died down. So now, if you're asking whether we have all this certainty, we hope there'll be more activities. However, I think operational costs are not just about the tariff.
William Tay: No direct impact from business park.
Jonathan: Okay. Just a short follow-up. Weakness for logistics in the second half. What is the reason for weakness in the second half?
No direct impact from the business part. Yeah.
William Tay: Not logistics. Office.
Jonathan: Not weakness per se, but continuing challenges with the U.S. office market. Thank you.
William Tay: I think U.S. office, we do need to see a catalyst. I think we have started to see a bit. For example, when we see Portland, there is an increase in occupancy. A small amount that came from AI-related, but these are still small. If you look at the entire U.S. market today, the big tech and the life sciences are not expanding where they were previously. It will still be likely in this state for a while. It is not logistics. It is more business park. We have been saying this actually from quarter to quarter. Logistics, we are still confident that we can find the tenants to replace any vacancies.
Okay. And just a short follow-up on the weakness for logistics in the second half. What's the reason for the weakness in the second half? Not logistics office? Yeah, so not weakness per se, but continuing challenges with the U.S. office market.
Okay, thank you. Thank you. I think us office we.
Do we need to see a catalyst, right? I think we'll start to see a bit, uh, for example, where we see Portland. There's an increase in occupancy, a small amount that came from AI-related, but these are still small if you look at the entire U.S. market today.
Jonathan: Thank you. Thank you very much.
The big tech and the life sciences are not expanding where they were previously. So it will still be likely in this state for a while. Uh, so it's not logistics; it's more the business part. And we've been saying this actually from quarter to quarter. So logistics, we are still confident that we can find the tenants to replace any vacancies.
Yeow Kit Peng: Okay. Thank you. Can we have the next question from Dale Lai, DBS?
Thank you. Thank you very much.
Dale Lai: Thanks, William. It is me again. I just wanted to follow up on the divestment targets for this year. How should we look at your divestment gains? Is it you are going to use it to stabilize DPU, or is it entirely just used to repay debt?
Okay, thank you. Uh, can we have the next question from Dale, DPS?
Yeah, thanks William. It's me again, just just wanted to follow up on the, uh, divestment, um, uh, targets for this year. So how, how should we look at your divestment gains? Um, you know, is it you're going to use it to to, to stabilize dpu or this entirely, just used to, to repay that.
William Tay: We prefer to repay debt. That opens our headroom, and we can acquire. If we do divest at better exit yield, of course, acquisition, we've been looking at 6%, 7%. It would be helpful for us to recycle, and that's probably a better use of funds. If you look at even our this half year, operationally, if you look at the numbers, whether it's the MPI or gross revenue, it's been quite stable. The key reason for the slight decline in DPU is because of the new new new units that's issued. The relevant question is when income will come in, likely to be these two weeks, that will actually be able to support the new units that was issued. But we prefer to make all the divestment proceeds to work.
Uh, we prefer to repay that. Uh, that opens up our headroom and we can acquire. So if we do diversify at...
Better exit. You, of course, have an acquisition. We've been looking at 6-7%; it would be helpful for us to recycle, and that's probably a better use of funds, right? If you look at even this half-year,
Operationally, if you look at the numbers, whether it's the MPI or gross revenue, it has been quite stable. The key reason for the slight decline in DPU is because of the new units. That's issued.
Uh, so the relevant question is when income will come in, likely to be two weeks. That will actually be able to support the newness that was issued. Uh, but we prefer to make.
Dale Lai: Okay. Okay. Got it. Just a quick follow-up on that is I am presuming any of the divestments, it would be somewhat dilutive to DPU in that sense unless you get really low exit yields of, I don't know, below 4%.
Uh, all the investment proceeds to work. Okay? Okay. Got it. And just a quick follow-up on that is, um, I'm presuming, uh, you know, any of these investments, it would be somewhat, uh, dilutive to DPU. And in that sense, unless you get really low, really low exit deals or, I don't know, below 4%.
William Tay: Depending on market, yes. If we say in Singapore, where you've seen all the existing divestment that was done, about 5%, 6%. Obviously, you hope to do better, and we can acquire better. In terms of increment between a divestment and acquisition, there is some positive carry. Take for example, when we acquired Knight-Heising, it was over 7%, right? It is huge given the fact it is over $400 million. We hope to be able to do that. While we look at divestment, yes, including overseas where there is still rank growth, like for example, Australia, we do expect sharper exit yield, which will be helpful for us to redeploy.
um,
Depending on the market? Yes, I think if you say in Singapore, you've seen all the existing investments that were done around 5% to 6%. So, obviously, you hope to do better, and we cannot acquire better. In terms of the increment between the divestment and acquisition, I think there's some positive carry. Take, for example, where we acquired 9 Tai Sing; it was over 7%, right? And that's huge given the fact it was over $400 million.
Uh, so we hope to be able to do that. And then, while we look at the investment years, including overseas, where there's still ranked growth, like for example, Australia, we do expect.
uh,
Dale Lai: Okay. Got it. That is clear. Thank you.
Sharper exit for you, which will be helpful for us to redeploy.
Yeow Kit Peng: Thank you, Dale. Are there any more questions from the audience? If not, then I think we can end this session. There are no more questions online that were not answered, mostly covered as well. We will just do a final check.
Okay. Okay. Got it. Thank you. Thank you, Dale. Are there any more questions from the audience?
Okay, um, if not, then I think we can end this session. There's no more questions online that I will not answer; mostly covered as well.
Yeah, I would just do a final check.
Okay.
Joy Wang: I think, okay. There is one more question.
Oh, okay, that's one more question. Okay.
Yeow Kit Peng: Okay.
Joy Wang: Thank you. For the U.S. portfolio, I think occupancy now is at 85%. Logistics is stable from challenging investor space. Do you think the portfolio will drift down to close to 80% occupancy?
Thank you. Um, so for us portfolio. The occupancy now is at 85%. Logistics is stable, some challenging business space. You think portfolio will drift down to close to 80% occupancy?
William Tay: I cannot give precise guidance right now, but it should be on the downward trend.
Um, I cannot give precise guidance right now, but it should be on the downward trend.
Joy Wang: Okay. Thanks.
William Tay: Actually, it took us a while to drift to 85% as well. So there is always, if you like, we do see non-renewal. After a few months, we are able to back a few. So while there are still activities, I think what I mentioned about if you want to see the occupancy start to pick up, I think we need to see catalysts.
Okay, thanks.
Thank you to us a while to drip to.
85% as well.
So there's always, um, if you like, we do see non-renewal.
Uh, after a few months, we do be able to back few. So what does the activities, right? I think what I meant. What I mentioned about if you want to see.
The occupancy starts to pick up. I think we need to see a catalyst.
Joy Wang: Are the vacancies mainly downsizing or just vacating, moving to somewhere else?
And the vacancies are mainly due to downsizing or just vacating and moving to somewhere else. So.
William Tay: A mixed bag, non-renewals as well as downsizing.
Uh, a mix of bank non-renewals as well as downsizing.
Joy Wang: All right. Thanks.
Yeow Kit Peng: Okay. Thank you, Rachel. Any final questions from the floor? If not, then thank you, everyone, for joining us physically today as well as online. We wish you a good evening ahead. If you have any further questions, you can follow up with the IR team. Thank you.
Rachel any
Questions from the floor.
Okay, if not, then thank you everyone for joining us, both physically today as well as online. We wish you a good evening ahead, and if you have any further questions, you can follow up with us. Thank you.