Ascendas REIT - Annual Report 2021

Although capitalisation rates have also compressed in secondary locations, they still fall within Ascendas Reit’s investment thresholds. We will continue to leverage on our local teams’ network to seek off-market deals and use various investment strategies such as forward funding of development projects, undertaking greenfield or brownfield developments, or seeking smaller portfolios or single assets to achieve DPU accretive acquisitions. 3. Despite an improved operational and financial performance in 2021, Ascendas Reit’s unit price has traded sideways. Is there anything in particular we should be concerned with? Share price movements are affected by many factors such as market sentiment, government policies, industry performance, etc. Perhaps share price performance can be assessed over the longer term as it is a better reflection of a good strategic plan and a good execution of that plan. Our strategy of a multi-asset portfolio comprising business space, logistics, industrial and data centres in developed markets, has helped us to successfully navigate through the difficult COVID-19 period with limited impact. We did not withhold any dividends at any point in time. In 2021, we continued to plough a record S$2.1 billion worth of capital into such properties to ride the rapidly growing new economy sectors such as technology, life sciences, data centre and logistics. Five years ago, these properties made up approximately 68% of Ascendas Reit’s investment properties under management. Today, our exposure to these new economy assets has grown and accounts for 81% of investment properties as at 31 December 2021. We remain confident of delivering predictable distributions and achieving long-term capital stability for Unitholders. 4. Given the rising interest rate outlook, how will this impact Ascendas Reit? Our aggregate leverage is healthy at 35.9%. We took advantage of the low interest rates in 2021 to lower our weighted average all-in borrowing cost to 2.2% from 2.7% a year ago. One example is the issuance of a €300 million (~S$450 million) bond at an attractive rate of 0.75% for seven years. For 79.4% of our total borrowings, interest rates have been hedged for an average term of 3.5 years. For the unhedged portion of our interest exposure, Ascendas Reit’s distribution is expected to decrease by 2% for every 1% increase in interest rates. With our current strong standing in the market and Moody’s A3 credit rating, we are in a good position to tap a wide variety of funding sources and obtain competitive rates to fund future growth. 5. What are your green targets and how is your progress so far? In 2021, we set ourselves several ambitious green targets including meeting a minimum green building rating target for new acquisitions and developments as well as to achieve a green rating for all our existing owned and managed properties by 2030. To-date, about 46.6% or 30.0% of our respective managed and total properties by GFA is green certified. We also strive to decarbonise our Singapore operations and have started to power the common facilities’ electricity usage at Neuros & Immunos and Nexus @one- north with renewable energy. In fact, we surpassed our 2021 target by powering the common facilities’ electricity usage at two additional properties, Galaxis and LogisTech with renewable energy. We are on track to increase the number of properties to five in 2022. In March 2021, solar panels were installed on the rooftop of 37A Tampines Street 92, a light industrial property. We are doing the same at Changi Logistics Centre, a logistics property, and works are expected to complete by end- March 2022. We will have a total of eight buildings with solar panel installations that are expected to generate approximately 13.6 GWh of renewable energy annually, avoiding over 5,548 tonnes of carbon emissions. An additional 36 electric vehicle charging points were rolled out across 8 buildings in Singapore in 2021, bringing the total to 76 charging points across 16 buildings. This represents a 90% year-on-year increase from 40 in FY2020. Whilst we have achieved meaningful progress since setting these targets in 2021, we know there is an urgent need to do more. We are already working on expanding our solar generation capacity, increasing the number of green building certifications in our portfolio and stepping up our tenant engagement efforts to encourage green practices to collectively contribute to a greener portfolio. In Conversation with CEO Ascendas Reit 14