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Financial Comeback: Inside CapitaLand Ascendas 2024 REIT Performance · Investor Exchange

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  Music.
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  All right, let's dive in. We've got some interesting stuff to go over today.
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  Looks like we're looking at a real estate investment trust. These are the financial
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  statements and some supplementary information, all from 2024.
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  So I guess our mission today is to figure out, did this REIT do well?
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  And more importantly, why?
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  So I'm just going to throw this out there for anyone who needs a quick refresher on REITs.
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  Imagine a giant pot of money. Okay. All going towards owning property.
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  Like a landlord, but with way more people involved. Exactly. Yeah.
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  You and a bunch of other investors all own a slice of this massive property pie.
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  No dealing with tenants, but
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  you reap the rewards of rental income and any increases in property value.
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  Sweet deal, huh? Definitely. And REITs are super interesting because they can
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  give us a peek into how the whole economy is doing, what's hot,
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  what's not, in different parts of the world.
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  Right. Okay, so let's look at the numbers. First thing that pops out at me is
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  the total return for 2024 as $410,388,000.
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  It's a huge jump from 2023, where they actually posted a loss of $204,169,000.
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  Talking about a comeback story. So what drove this turnaround?
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  Well, a couple of things.
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  One big factor is the gain they made from selling off some investment properties.
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  Oh, like they sold some buildings. Exactly. That brought in about $44,733,000 in 2024.
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  And the report specifically mentions that they sold off some properties in Australia
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  and a logistics property in Singapore.
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  Interesting. So they were kind of shuffling things around. Do we know why they
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  got rid of those specific properties?
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  It doesn't really say in the documents, but I guess it was part of a strategy
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  to fine tune their portfolio. Maybe those markets weren't doing as well,
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  or maybe they saw better opportunities elsewhere. Makes sense.
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  OK, so what else is going on here? Their net finance costs also went down in 2024, right? Yep.
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  They dropped by 1.9% to S-133,740,000.
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  So they're saving money on financing. That's got to help. Exactly.
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  And that's mainly due to lower average interest rates.
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  That's good news for the REIT, but it's something they can't really control,
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  right? It's just the way the financial winds are blowing. True.
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  Now, this next one is a bit of a head-scratcher. Foreign exchange differences.
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  They went from a gain of $41,198,000 in 2023 to a loss of $25,862,000 in 2024.
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  What's up with that? Yeah, that's currency fluctuations for you.
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  When you're dealing with investments all over the globe, you're going to get
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  hit with those ups and downs.
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  The report says it was mostly due to a Japanese yen-denominated medium-term note that matured.
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  So, bit of bad luck there. Ah, so it's like gambling on exchange rates.
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  Risky business. Okay, let's move on to fair value changes. Those are always
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  interesting because they tell us how the market sees the REIT's assets,
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  right? Yeah, definitely.
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  So for financial derivatives, we see a gain of $43,699,000 in 2024.
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  Now that's a big swing from the loss they had in 2023, which was $52,096,000.
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  Wow, talk about a turnaround. But derivatives can be tricky,
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  right? They're all about managing risk, but it's not always clear how they'll play out.
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  Unfortunately, we don't have a lot of details here on the specific types of
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  derivatives they're using, so it's hard to say exactly what's going on.
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  Okay, we'll keep that in mind.
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  Now, this next one is really interesting. The fair value of their investment properties.
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  They had a massive loss in 2023, S, $495,234,000,000.
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  But in 2024, it flipped to a gain of $10,842,000.
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  That's a huge swing. What caused that? Well, if you remember back in 2023,
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  there was a big drop in the value of business-based properties,
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  especially in the U.S. and Australia.
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  That was mainly because capitalization rates went up. Basically,
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  investors were getting a bit spooked about those markets.
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  So this REIT was caught in the crossfire. You could say that.
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  But the good news is things seem to have stabilized in 2024.
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  So they rode out the storm and came out on top. That's impressive.
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  All right. Before we get into the nitty-gritty of their property management,
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  I'm curious, what's your overall impression of this REIT so far?
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  They seem to be doing pretty well, but there's always more to the story, right?
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  For sure. I think they've shown that they can make tough decisions and adapt
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  to changing market conditions and those strategic disposals. That was a smart move.
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  But we still need to look closer at their portfolio and how they're managing those properties.
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  That'll give us a better sense of their long-term prospects.
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  Sounds good. All right. So let's talk property management.
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  One thing I noticed is that their property operating expenses went up in 2024.
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  Is that a red flag? Not necessarily. Remember all those acquisitions and developments they did in 2023?
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  Well, those come with costs. It's like when you buy a new house,
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  got to spruce it up a bit, right? Yeah, makes sense.
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  So they're putting money back into their properties, which is good,
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  I guess. But we want to make sure those investments actually pay off, right? Absolutely.
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  We'll need to see if they can increase rental income and property values down
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  the line. That's the real test. Agreed.
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  Now, something else that caught my eye, management fees actually went down in 2024.
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  What's the deal with that? Well, remember how they sold off some properties.
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  That means fewer properties under management, so naturally lower fees.
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  Ah, so it all ties back to those strategic decisions. Okay, so they're managing
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  their portfolio, keeping expenses in check.
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  But what about the bigger picture? What's the outlook for this REIT going forward?
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  Well, they're definitely in a stronger financial position now than they were
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  a year ago. That much is clear.
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  The future, that's always a bit of a mystery, isn't it? True.
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  But we could look for clues, right?
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  Let's dig into that supplementary information document. I'm particularly interested
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  in the tenant mix. First up, industries.
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  Looks like globally, a big chunk of their revenue, 29.3%, to be exact,
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  comes from logistics and supply chain management.
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  Yeah, that's a key sector for them. But it's interesting how that breaks down
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  geographically. In Singapore, logistics is huge for them.
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  But in the U.S., they're all about data centers. Totally different story.
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  So they're not putting all their eggs in one basket. They're spreading the risk.
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  Smart move. Now, what about the countries those tenants are coming from?
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  Looks like a lot of their Singapore properties are rented by Singaporean companies,
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  which makes sense. And same thing in the U.S., mostly U.S. tenants.
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  But in Australia and the UK, more of a mixed bag. Yeah, definitely more diverse.
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  Now, this is where it gets really interesting. How will those different tenant
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  profiles affect the REIT's performance going forward?
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  Will those strong Singaporean companies keep driving growth?
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  What about the U.S. tech giants in those data centers? Are they going to keep booming?
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  Yeah, good questions. And on the flip side, what about those other regions?
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  What if there's an economic slowdown or some kind of political instability?
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  That could hurt, right? Oh, absolutely. It's a constant balancing act.
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  They've got to be ready for anything. It's like sailing a ship through a storm.
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  You need a steady hand and a keen eye on the horizon. Love that analogy.
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  So how do we weigh all these factors? How do we know if this REIT is a good bet?
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  Well, that's where the real analysis comes in. We've got to connect the dots.
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  We've got their financial performance, their strategic decisions,
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  and then those broader economic and industry trends. It's like piecing together a puzzle.
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  And those tenant details, those are crucial pieces.
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  All right, let's get those puzzle pieces out and see what kind of picture we
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  can put together. All right, let's talk tenants.
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  We were looking at how much revenue this REIT is getting from different industries.
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  Right. And remember that big
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  chunk coming from logistics and supply chain management, 29.3% globally.
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  That tells me they're riding the e-commerce wave.
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  All that online shopping, it needs warehouses and distribution centers. This REIT's got those.
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  So basically they're cashing in on our online shopping habits.
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  That's pretty clever. And I remember you saying that their logistics business
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  is especially strong in Singapore.
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  Yeah, and Singapore's economy is doing really well right now,
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  so that's good news for the REIT. It's all connected. Now, what about their U.S. portfolio?
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  Lots of data centers there, right? Yeah, data centers. They seem to be popping
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  up everywhere these days. What's the big deal with those?
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  Well, think about it. Everything's going digital, right?
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  Cloud computing, streaming services, all that stuff, it needs somewhere to live.
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  That's where data centers come in. They're the brains of the operation.
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  And as we use more and more tech, the demand for data centers just keeps growing.
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  So this REIT is basically betting on both e-commerce and the digital economy.
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  Sounds like a pretty solid strategy to me. It does, doesn't it?
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  But remember, there are always risks.
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  What if technology changes or people's shopping habits shift?
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  Those industries could take a hit. True. Things are always changing.
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  What else should we be watching out for? Well, interest rates are a big one.
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  They've had it pretty good lately with low rates. But what if those rates start claiming?
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  That could make it more expensive for them to borrow money and eat into their
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  profits. Right. So those macroeconomic factors we talked about earlier,
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  they can always come back and bite you. Exactly.
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  It's all a bit of a gamble, isn't it? Right. But that's investing for you.
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  Always got to weigh the risks and rewards. So bottom line, what's your take
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  on this REIT? Is it a good investment?
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  Well, I can't give you financial advice, but they've definitely got some things going for them.
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  They've made some smart moves, weathered some storms, and they're positioned
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  in some really promising sectors.
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  But like any investment, you got to do your homework, understand your own risk
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  tolerance, and decide if it's right for you. Great advice.
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  Well, folks, that wraps up our deep dive into this REIT.
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  We've covered a lot of ground from their financial performance to those global
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  trends that are shaping their future.
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  And hopefully you've learned a thing or two along the way. And hey,
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  if you've got any other financial documents you want us to dissect,
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  just send them over. We're always up for a challenge. Absolutely.
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  We love getting our hands dirty with those numbers and uncovering those hidden stories.
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  Thanks for joining us on this deep dive. Until next time, happy investing.
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  Music.