Ascendas REIT - Annual Report 2021

The Manager’s Review of FY2021 Positive Rental Reversion Average rental reversions in Singapore ranged from 0% to +4.4% across the various property segments. Overall, the Singapore portfolio maintained a healthy +2.9% rental reversion for renewed leases in multi-tenant buildings during FY2021. In USA, the overall achievement of +22.6% in rental reversion was mainly attributable to the renewals in the Business Park segment. It is an improvement from FY2020 at +16.6%. In the UK/Europe, the newly acquired data centre portfolio achieved a +6.2% rent reversion. The weighted average rental reversion for Ascendas Reit’s total portfolio was +4.5% for all the renewed leases in multi-tenant buildings signed during the year. Achieved Positive Rental Reversion in FY2021 Multi-tenant Buildings Percentage Change in Renewal Rates (1) FY2021 FY2020 Singapore 2.9% 3.1% Business & Science Park 2.9% 7.2% Integrated Development, Amenities & Retail Properties 0.0% 13.5% High-Specifications Industrial Properties 2.8% -2.6% Light Industrial Properties and Flatted Factories 1.7% 1.3% Logistics & Distribution Centres 4.4% -7.9% Australia – (2) 14.0% Suburban Offices – (2) 15.7% Logistics & Distribution Centres – (2) 13.6% USA 22.6% 16.6% Business Park 24.2% 16.6% Logistics and Distribution Centres 0.0% N.A. UK/Europe 6.2% – (2) Data Centres 6.2% N.A. Logistics and Distribution Centres – (2) – (2) Total Portfolio: 4.5% 3.8% (1) Percentage change of the average gross rent over the lease period of the renewed leases against the preceding average gross rent from lease start date. Takes into account renewed leases that were signed in their respective periods and average gross rents are weighted by area renewed. (2) There were no renewals signed in the period. Lease Structure and Profile About 32.0% of Ascendas Reit’s portfolio comprises long-term leases in single-tenant properties. These leases provide stability in earnings growth. The remaining 68.0% of Ascendas Reit’s portfolio comprises multi-tenant buildings. The rental rates for such leases are marked-to-market upon renewal and provide an opportunity for increase in earnings in an upmarket. Typically for Singapore, leases have three-year tenures without any rental escalations during their tenure. For the USA, majority of the leases have annual escalations of between 2.5% to 4% per annum and for Australia, average rental escalation is around 3% per annum. For leases of logistics customers in the UK, rents are adjusted up to market rates, pegged to index inflation or increased by a pre-determined rate every five years. Most of the data centre leases in UK/Europe enjoy annual escalations of between 1% to 3%. The weighted average lease expiry (WALE) for the portfolio was 3.8 years as at 31 December 2021. Specifically, the WALE in Singapore was 3.4 years, Australia was 3.5 years, USA was 4.4 years, and the UK/Europe was 5.7 years. Weighted average lease term of new leases signed in the 12 months ending 31 December 2021 was 4.0 years and they accounted for 7.9% of total gross rental income for FY2021. About 18.7% of Ascendas Reit’s gross rental income is due for renewal in FY2022 of which 3.4% are leases of single-tenant buildings and 15.3% are leases of multi-tenant buildings. The Manager is proactively working on the renewal of these leases. Annual Report 2021 49