CapitaLand Ascendas REIT announces SGD 7Y senior bonds at an IPG of 2.60%

CapitaLand Ascendas REIT (“CLAR”) will be issuing new senior unsecured fixed rate green notes at an initial price guidance (“IPG”) of 2.60%. The new notes are expected to be issued on 27 August 2025 and mature on 27 August 2030. The issuer is rated A3 (stable) by Moody’s Rating with the new issue expected to be rated Baa2. CLAR indicated that the proceeds will be use will be used towards refinancing the existing borrowings of the Group relating to the eligible projects under the Group’s green finance framework.

As of 30 Jun ‘25 (“1H25”), CLAR reported net property income of S$ 523.4M, a 0.9% year-on-year (“YoY”) decline (1H24: S$ 528.4M). This was driven by a slight 2.0% YoY decline in gross revenue due to the divestment of five properties (3 Australia, 1 Singapore, and 1 US) and decommission of one UK property. Despite the slight moderation in net property income, the REIT reported a net income gain of 14.4% YoY to S$ 338.6M (1H24: 296.0M) as non-property expenses declined by a significant 20.5% YoY as foreign exchange losses narrowed.

On the portfolio level, as of 30 June 2025 (“2Q25”), total portfolio occupancy was -1.4pps lower at 91.8% (2Q24: 93.1%), driven by a bigger decline in Australia (-3.7pps to 93.1% in 2Q25) and slightly decline across other geographies. This was further weighed down by lower average portfolio rent reversion of 8.0% in 2Q25 (2Q24: 11.7%) which negatively impacted CLAR’s gross revenue.  We think the portfolio’s lease expiry is well spread out, extending beyond FY29, with roughly 9% - 22% of gross rental income up for renewal each year. 

The REIT reported a total asset value of S$16.8B as at 30 June 2025, with Singapore assets still making the bulk of CLAR’s portfolio. Looking forward, we think CLAR’s earnings will remain anchored by Singapore assets which has demonstrated resilient portfolio occupancy and rental reversion. That said, we do not rule out softer revenue if macro headwinds persist. CLAR also has material exposure to the logistics sector (around 26% of asset value and 13% of tenants), which has reported strong demand in 1H25. Given the escalating global tariff narrative, we think tenants may be affected to a certain extent, which may weigh on gross revenue moving forward.

CLAR’s total debt remained largely unchanged as of 30 Jun ‘25, at S$ 6.7B (31 Dec ’24: S$6.7B). The REIT’s debt maturity is also well spread out, especially over the next five years, with its debt having a weighted average tenure of 3.2 years. We think the near-term financing risk remains manageable, with CLAR’s access to various modes of financing as seen from the past. This includes easy access to the SGD bond market, room for more secured borrowings (around 93% of investment properties are unencumbered), and equity financing from private placement.

The REIT’s debt metrics was largely stable in the year. Adjusted for perpetual securities, CLAR reported flat debt/EBITDA at 7.7x as of 30 Jun ’25 (31 Dec ’24: 7.6x) while EBITDA interest coverage was 3.7x (31 Dec ’24: 3.6x), above MAS’ limit of 1.5x. The weighted average all-in debt cost also maintained at 3.7% (31 Dec ’24: 3.7%). As of 30 Jun ’25, CLAR reported an improved aggregate leverage ratio of 37.4% (31 Dec ’24: 37.7%), translating to a comfortable S$4.5B debt headroom before breaching MAS’s aggregate leverage limit of 50.0%.

Recommendations

Table 1: Comparable SGD REIT issuances

Issuance	Issuer	Ask Price	Years to Call	Yield to Worst
AREIT 27August2032 Corp (SGD)*	CapitaLand Ascendas REIT	100.00*	7.00*	2.60%*
AREIT 2.650% 26Aug2030 Corp (SGD)	CapitaLand Ascendas REIT	102.4	5.02	2.16%
AREIT 3.730% 29May2034 Corp (SGD)	CapitaLand Ascendas REIT	110.1	8.78	2.44%
OUECT 3.900% 26Sep2031 Corp (SGD)	OUE REIT	105.85	6.10	2.84%
ARTSP 3.690% 15Mar2029 Corp (SGD)	Ascott REIT	105.25	3.569	2.15%
Source: Bondsupermart, iFAST Compilations. Data as of 20 August 2025. *Yet to be issued.

Overall, we believe CLAR’s credit profile remained stable despite a softer net income. The REIT maintains a manageable leverage profile, with stable credit metrics. At an IPG of 2.60%, CLAR’s new issue will be more attractively priced as compared to its 2030 and 2034 notes (Table 1). While we expect the final price guidance (“FPG”) to adjust downwards from the IPG, we think the FPG could still end up slightly more attractive, considering the tenor. 

Compared to SGD notes from other rated REITs - OUECT 3.900% 26Sep2031 Corp (SGD) and ARTSP 3.690% 15Mar2029 Corp (SGD) - which have similar years to maturity, we think the new issue is fairly priced. We find OUECT 3.900% 26Sep2031 Corp (SGD) to be a more attractive option with a stable issuer credit profile.

Declaration: For specific disclosure, at the time of publication of this report, IFPL (via its connected and associated entities) and the analyst who produced this report holds an NIL position in the abovementioned securities.