Download Full Report - Ascendas REIT
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S$’000 FY09/10 FY08/09 FY07/08 FY06/07 FY05/06 FY04/05 FY03/04 FY02/03<br />
Provision for doubtful debt - 102 324 58 60 121 124 -<br />
Doubtful debt provided/bad (72) (222) 266 21 45 37 133 351<br />
debt write-off/(write back)<br />
Trade receivables 3,066 2,137 1,977 1,589 2,134 4,033 1,123 627<br />
Total annual gross revenue 413,678 396,534 322,270 283,007 227,153 128,987 65,914 22,836<br />
Doubtful debt provision/bad<br />
debts write-off/(write back)<br />
as % of gross revenue<br />
(0.02)% (0.06)% 0.08% 0.01% 0.02% 0.03% 0.20% 1.54%<br />
Bad debt provisions and Write Offs<br />
Rigorous management of account<br />
receivables has resulted in low<br />
doubtful debt provisions as a<br />
percentage of total gross revenue.<br />
Despite the challenging business<br />
environment, A-<strong>REIT</strong> did not<br />
experience a significant increase<br />
in past due account receivables as<br />
the Manager has a well established<br />
internal credit control process in<br />
place. About 87% of rental receipts<br />
are deducted through Interbank<br />
GIRO services. In addition, specific<br />
operational actions, such as<br />
increased tenant visits and<br />
increased vigilance on tenant’s<br />
activities, stricter issuance of letter<br />
of demand are primed for early<br />
signs of trouble.<br />
As at 31 March 2010, outstanding<br />
accounts receivables that are<br />
more than two months past due<br />
amounted to about S$1.3m or<br />
about 0.3% of gross revenue. These<br />
are adequately secured by way of<br />
bankers’ guarantee or cash security<br />
deposit held by A-<strong>REIT</strong>.<br />
Security Deposit for Sale-and-<br />
Leaseback Properties<br />
The standard industry practice is<br />
to hold one month rent as security<br />
deposit for each year’s lease.<br />
However, for sale-and-leaseback<br />
transactions, depending on the<br />
credit-standing of the counterparty<br />
and commercial negotiation, a<br />
larger sum of security deposits may<br />
be held so as to balance between<br />
long term lease and the credit risk<br />
of such tenants. Security deposits<br />
for A-<strong>REIT</strong>’s sale & leaseback<br />
properties range from 7 to 14<br />
months rental income equivalent.<br />
The average security deposit for<br />
the portfolio is approximately 7<br />
months of rental income equivalent.<br />
In addition, the Manager has<br />
withheld some part of the purchase<br />
considerations on four properties<br />
which will be paid out in accordance<br />
with a pre-agreed schedule.<br />
The total amount withheld was<br />
S$14.5m which is about 0.3% of<br />
Total Assets as at 31 March 2010.<br />
This amount has to be included in<br />
the computation of aggregated<br />
leverage of A-<strong>REIT</strong> under the<br />
prevailing <strong>REIT</strong> guidelines.<br />
No. of Single<br />
Tenanted<br />
Properties<br />
Weighted<br />
Average No.<br />
of Months<br />
Rent as<br />
Security<br />
Deposit*<br />
Business 4 14<br />
& Science<br />
Parks<br />
Hi-Tech 7 7<br />
Industrial<br />
Light<br />
26 11<br />
Industrial<br />
Logistics & 13 8<br />
Distribution<br />
Centres<br />
Warehouse 2 11<br />
Retail<br />
Facilities<br />
Total 52 9<br />
Note:<br />
* Excluding cases where rental is paid upfront<br />
8th Annual <strong>Report</strong> FY09/10<br />
25
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