CapitaLand Ascendas REIT (“CLAR”) will be issuing new subordinated NC5 perpetual bonds (non-call in the first 5 years) at an initial price guidance (“IPG”) of 3.50%. The new notes are expected to be issued on 12 August 2025. The first reset date for this issue will be on 15 August 2030, and every 5 years thereafter. 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 used to refinance, in whole or in part, the S$200M AREIT 3.000% Perpetual Corp (SGD) callable in September 2025.
CLAR is a global REIT with a primary focus on tech and logistics properties in developed markets. As of 30 Jun ‘25, the REIT owns 225 properties across three (reported) operating segments – 1) Business Space and Life Sciences, 2) Logistics and Industrial and 3) Data Centres. The majority of its portfolio is located within Singapore (65% of total asset value), followed by Australia (13%), US (12%), and the UK/Europe (10%).
As of 30 Jun ‘25 (“1H25”), CLAR reported net property income of S$ 523.4M, a 0.9% year-on-year (“YoY”) decline (1H24: S$ 770.1M). 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 decommissioning 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.
At 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 slight decline across other geographies. This was further weighed down by a 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$16.8B as at 30 June 2025, with Singapore assets still making the bulk of CLAR’s portfolio. Looking forward, we think CLAR’s earnings will remain anchored by Singapore assets, which have demonstrated relatively resilient portfolio occupancy and rental reversion. That said, we do not rule out softer revenue if macro headwinds persist. CLAR also has material exposure to the logistics sector (around 26% of asset value and 13% of tenants), which has reported strong demand in 1H25. Given the escalating global tariff narrative, we think tenants may be affected to a certain extent, which may weigh on gross revenue moving forward.
CLAR’s total debt remained largely unchanged as of 30 Jun ‘25, at S$ 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 were 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 remains 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 perpetual securities
Issuance | Issuer | Ask Price | Years to Call | Yield to Worst |
AREIT Perpetual Corp (SGD)* | CapitaLand Ascendas REIT | 100.00* | 5.00* | 3.50%* |
CapitaLand India Trust | 100.25 | 4.91 | 4.30% | |
Frasers Centrepoint Trust | 100.65 | 4.91 | 3.82% | |
Suntec REIT | 102.1 | 4.48 | 3.99% | |
AIMS APAC REIT | 101.0 | 4.62 | 4.45% | |
Source: Bondsupermart, iFAST Compilations. Data as of 6 August 2025. *Yet to be issued. | ||||
Overall, we believe CLAR’s credit profile remained stable despite slightly weaker net income in 1H25. The REIT maintains a manageable leverage profile with stable credit metrics. At an IPG of 3.50%, CLAR’s is less attractive compared to the yield to next call (“YTC”) of SGD REIT issuances with similar call dates (Table 1). We attribute this to CLAR’s stronger credit profile and asset portfolio.
Compared to CLAR’s fixed rate bonds, which have 4-5 years to maturity - AREIT 2.650% 26Aug2030 Corp (SGD) (YTM: 2.21%) and AREIT 3.468% 19Apr2029 Corp (SGD) (YTM: 2.17%) - we think the new issue provides a decent yield pickup. That said, this comes with call risk associated with perps and a relatively low reset rate. We expect the final price guidance (“FPG”) to adjust downwards from the IPG.
