Ascendas REIT - Annual Report 2021

The Manager’s Review of FY2021 Customer Credit & Concentration Risk Management To minimise customer credit risk, a credit evaluation process has been established to assess the creditworthiness of Ascendas Reit’s customers. Based on standard industry practice, one month’s worth of gross rental is usually held as security deposit for each year’s lease. However, for long-term leases in single-tenant properties, a larger sum of security deposit may be held. This is dependent on the length of the lease, the credit risks of such customers and commercial negotiation. The weighted average security deposit for the portfolio is approximately 5.0 months of rental income. With a customer base of around 1,570 local and international companies, rigorous and conscientious effort has been put in to manage accounts receivables. About 93.9% of rental receipts are collected via interbank GIRO services. This enables the Manager to react efficiently and appropriately towards any delinquency in payment. Ascendas Reit’s customer base is diversified across more than 20 industries. In particular, the properties cater to the growing technology, logistics and life sciences industries. Approximately 64% of monthly gross rental income is contributed by tenants from such industries. Top ten customers accounted for not more than 18.4% of Ascendas Reit’s monthly gross revenue and the majority of these customers are either multinational or listed companies. Furthermore, no single property accounts for more than 4.3% of Ascendas Reit’s monthly gross revenue, offering income diversity within the portfolio. Customers’ Industry Diversification by Rental Income (As at 31 December 2021) Data Centres Engineering Information & Communications Technology (ICT) Logistics & Supply Chain Management Biomedical Sciences Financial Services Electronics Government Distributors & Trading Company Retail e-Commerce Food Media Professional Services Chemical Textile & Garments Energy/Utilities Education Real Estate Fast-Moving Consumer Goods (FMCG) Agriculture Hospitality & Leisure IO/NGOs/NPOs (1) Natural Resources 11.7% 10.9% 10.9% 10.8% 9.2% 7.2% 6.5% 5.6% 4.8% 4.0% 3.9% 3.4% 2.9% 2.7% 2.0% 1.0% 0.7% 0.5% 0.4% 0.4% 0.2% 0.1% 0.1% 0.1% Technology (ICT, Data Centres, Engineering, Electronics, e-Commerce) 43.9% Logistics & Supply Chain Management 10.8% Biomedical Sciences 9.2% Others 36.1% (1) International organisations/non-governmental organisations/non-profit organisations Annual Report 2021 53