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Notes to the financial statements
27. Financial ratios
2010 2009
% %
Ratio of expenses to weighted average net asset value (1) 0.90 1.08
Ratio of expenses to weighted average net asset value (2) 0.90 1.44
Portfolio turnover rate (3) - -
(1) The annualised ratio is computed in accordance with guidelines of Investment Management Association
of Singapore. The expenses used in the computation relate to expenses at the Trust level, excluding
property related expenses, borrowing costs and performance component of management fees.
(2) The annualised ratio is computed in accordance with guidelines of Investment Management Association
of Singapore. The expenses used in the computation are the same as in (1) above except that performance
fees have been included.
(3) The annualised ratio is computed based on the lesser of purchases or sales of underlying investment
properties of A-REIT expressed as a percentage of weighted average net asset value.
28. Financial risk management
Capital management
A-REIT’s objective when managing capital is to optimise Unitholders’ value through the mix of available capital
sources which include debt and equity instruments, whilst complying with statutory and constitutional capital
and distribution requirements, maintaining gearing, interest service coverage and other ratios within approved
limits.
The Board of Directors of the Manager (the “Board”) reviews A-REIT’s debt and capital management cum
financing policy regularly so as to optimise A-REIT’s funding structure. The Board also monitors A-REIT’s
exposure to various risk elements and externally imposed requirements by closely adhering to clearly established
management policies and procedures.
A-REIT is subject to the aggregate leverage limit as defined in the Property Fund Appendix of the CIS Code. The
CIS Code stipulates that the total borrowings and deferred payments (together the “Aggregate Leverage”) of a
property fund should not exceed 35.0% of the Deposited Property. The Aggregate Leverage of a property fund
may exceed 35.0% of the Deposited Property (up to a maximum of 60.0%) only if a credit rating of the property
fund from Fitch Inc., Moody’s or Standard and Poor’s is obtained and disclosed to the public. The property fund
should continue to maintain and disclose a credit rating so long as its Aggregate Leverage exceeds 35.0% of
the Deposited Property. A-REIT currently has a corporate family rating of Baa1 by Moody’s. A-REIT has complied
with the Aggregate Leverage limit of 60.0% during the financial year.
As at the balance sheet date, the gross amounts of loans and borrowings (including collateral loan) and deferred
payments as a percentage of net assets is 52.13% (2009: 59.74%).
There was no change in A-REIT’S approach to capital management during the financial year.
150 Ascendas real estate investment trust