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Monday, February 08, 2021

AIMS APAC REIT Analysis @ 8 February 2021

Basic Profile & Key Statistics

AIMS APAC REIT (AAREIT) is a diversified REIT that invests in Business Park, Industrial, Logistic properties. AAREIT owns 28 properties in Singapore and Australia.  


Performance Review

Gross revenue and NPI increased YoY by 9.1% and 2% respectively mainly due to the contribution of 7 Bulim Street which was acquired in October 2010. The smaller increase in NPI is due to a property tax refund of S$2.3 million in 3Q FY2020; without considering this, the NPI would increase by 13.3% YoY.  Distributions to Unitholders and DPU decreased YoY by 17.6% and 18% respectively mainly due to management takes fees in cash.
Rental reversion is 1.1%.
There is another proposed acquisition of Sime Darby Business Centre. The pro forma DPU would be 9.98 cents (if management takes partial fees in unit) which is increased by 5.1%. This is base on as if this property contributed from 1 Apr 2019 to 31 Mar 2020. Gearing ratio is expected to increase to 39%.

Lease Profile

  • Occupancy is slightly high at 95.7%
  • WALE is moderate at 3.94 years
  • Highest lease expiry within 5 years is moderate at 28.5% which falls in FY2026 & beyond, without breakdown.
  • Weighted average land lease expiry is short at 41.42 years


Debt Profile

  • Gearing ratio is slightly low at 34.1%
  • Cost of debt is high at 3.1%
  • Fixed rate debt % is moderate at 78.9%
  • Unsecured debt % is low at 25.2%
  • WADE is slightly short at 2.6 years
  • Highest debt maturity within 5 years is high at 37.9% which falls in FY2025
  • Interest coverage ratio is moderate at 3.8 times


Diversification Profile

  • Top geographical contribution is high at 88.5%
  • Top property contribution is low at 14.4%
  • Top tenant contribution is high at 13.3% 
  • Top 10 tenants contribution is high at 47.4% 

Key Financial Metrics

  • Property yield is high at 5.9%
  • Management fees over distribution is moderate at 14.5% in which unitholders receive S$ 6.90 for every dollar paid
  • Distribution on capital is high at 3.6% 
  • Distribution margin is low at 42.6%

Trends

  • Slight Downtrend - NAV per Unit, Property Yield
  • Downtrend - DPU, Interest Coverage Ratio, Distribution on Capital, Distribution Margin


Relative Valuation

  • Dividend Yield - Past 4 quarters DPU @ 8.05 cents / average yield @ 7.55% = S$ 1.07 (include retention, past 4 quarters DPU is 8.2 cents, translate into S$ 1.09)
  • Price/NAV - NAV @ S$ 1.336 x average P/NAV @ 0.98 = S$ 1.31


Author's Opinion

 Favorable Less Favorable
Diversified SectorShort Weighted Average Land Lease Expiry
Low Top Property ContributionHigh Cost of Debt
High Property YieldLow Unsecured Debt %
High Distribution on CapitalConcentrated Debt Maturity
 High Top Geographical Contribution
 High Top Tenant & Top 10 Tenants Contribution
 DPU Downtrend
 Interest Coverage Ratio Downtrend
 Distribution on Capital Downtrend
 Distribution Margin Downtrend

On QoQ basis, AAREIT distribution has increased mainly due to contribution from 7 Bulim Street. The acquisition of Sime Darby Business Centre would also further improve AAREIT fundamental and performance. However, in order for AAREIT to meet the pro forma DPU of 9.98 cents, management would need to take partial fees in units.


For more information, you could refer to:

SREITs Dashboard - Detailed information on individual Singapore REIT

SREITs Data - Overview of Singapore REIT

REIT Analysis - List of previous REIT analysis posts

REIT-TIREMENT Patreon - Support this blog as a Patron and get SREITs Dashboard PDF

REIT Investing Community - Facebook Group where members share and discuss REIT topic


*Disclaimer: Materials in this blog are based on my research and opinion which I don't guarantee the accuracy, completeness, and reliability. It should not be taken as financial advice or a statement of fact. I shall not be held liable for errors, omissions as well as loss or damage as a result of the use of the material in this blog. Under no circumstances does the information presented on this blog represent a buy, sell, or hold recommendation on any security, please always do your own due diligence before any decision is made.

2 comments:

  1. Hi Vince. I've been following your website and I really like the way you present all the data, easy to read and not so confusing unlike other websites. Just a suggestion. It will be great if EPS can be added to the Basic Profile & Key statistics right at the top. EPS vs DPU will give meaningful comparison at a glance and we can know the payout ratio by the REIT.

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    Replies
    1. Hi Kok,

      Thanks for your compliment. EPS would affected by non cash items like valuation gain/loss, the same also apply to share of joint ventures/associate in Income Statement. Therefore, even if EPS is negative due to valuation loss, REIT is still able to pay out distribution. There is the main reason why EPS is less use for REIT analysis.

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