ASCENDAS real estate investment trust (Reit) reported positive rental reversion of 3 per cent in first quarter lease renewals, but portfolio occupancy slid to 90.6 per cent from 91.7 per cent in last quarter and the year-ago period.

Occupancy in Singapore came down to 86.9 per cent for the three months ended March 31, 2021, from 88.6 per cent, the Reit manager said in a quarterly business update on Friday.

It attributed this decline to non-renewals at the TÜV SÜD PSB Building and 138 Depot Road, located within the Depot Lane industrial estate.

The TÜV SÜD PSB Building, which sits within the Singapore Science Park 1 and next to Kent Ridge MRT, is planned for redevelopment.

Occupancy in Australia also fell, to 94.9 per cent from 97.3 per cent in the year-ago period, mainly due to non-renewals at 1 Distribution Place in Sydney and 62 Stradbroke Road in Brisbane.

1 Distribution Place is a warehouse facility within the industrial precinct of Seven Hills, while 62 Stradbroke Road features two standalone warehouses within the Brisbane South Industrial Park.

Occupancy in the United States held steady at 92.5 per cent while that in Europe rose from 97.5 per cent to 98.6 per cent due to higher occupancy at Unit 5, Wellesbourne Distribution Park in the United Kingdom.

The Reit completed S$1.2 billion worth of acquisitions in the first quarter, with S$904.6 million invested in 11 data centres across five European cities.

The remaining S$284 million was invested in 1-5 Thomas Holt Drive in Sydney's Macquarie Park.

Another S$251.2 million worth of investments under development in Australia were secured and expected to complete within the next two years. These include two logistics developments in Brisbane and Sydney, as well as a suburban office in Sydney.

In Singapore, the Reit is proposing to sell a warehouse and office property at Changi North Way to building materials supplier Hafary for S$16 million, or S$1 million above the property's book value as at Dec 31, 2020.

The manager said it will ensure that new properties to be acquired or new developments undertaken will achieve green certifications. "If this is not achievable immediately, capital expenditure will be set aside to enhance the properties to attain green certifications in the future," it said.

As at March 31, 2021, the Reit's aggregate leverage stood at 38 per cent, interest coverage ratio was 4.6 times and weighted average all-in debt cost was 2.2 per cent.

In its outlook on individual markets, the Reit manager said demand in Singapore is expected to remain subdued as companies stay cautious amid lingering global uncertainties. "Excess supply in some industrial property segments is also expected to curb rental growth," it said.

It expects the recently acquired data centres in Europe to benefit from the acceleration of digitalisation and provide "steady long-term returns", while the US portfolio is expected to benefit from the growing technology and healthcare sectors.

The manager said its priority is to build a "stronger and profitable portfolio for the longer term".

"We will maintain our long-standing strategy of diversifying across multiple developed countries and asset classes. At the same time, we will exercise prudence, maintain a strong balance sheet and proactively manage the portfolio to deliver sustainable returns for unitholders," it said.

Units of Ascendas Reit ended Friday 0.32 per cent or one cent higher at S$3.11.