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Monday, July 26, 2021

ARA LOGOS Logistics Trust Review @ 26 July 2021

Basic Profile & Key Statistics

ARA LOGOS Logistics Trust (ALOG) is a Logistics REIT that owns 29 properties (exclude fund investments) in Singapore and Australia. 

Performance Highlight

Gross revenue, NPI and distributable income increase due to contributions from newly acquired Australian properties, stronger performance across the portfolio and strong AUD. DPU increased YoY by 0.7% on a like-for-like basis.

Rental reversion is 2.4% for 1H 2021.

In 2Q, ALOG has divested Kidman Park & ALOG Changi Districenter 2. At the same time, there are AEI works across 5 properties in Singapore which are expected to be completed by December this year. The Heron Property is currently still under development and is expected to be completed by November.

Related Parties Shareholding

  • REIT sponsor's shareholding is low at 12.01%
  • REIT manager's shareholding is low at 0.52%
  • Directors of REIT manager's shareholding is moderate at 0.13%

Lease Profile

  • Occupancy is high at 98.2%
  • WALE is moderate at 4 years
  • Highest lease expiry within 5 years is low at 23.4% which falls in 2022
  • Weighted average land lease expiry is short at 44.26 years

Debt Profile

  • Gearing ratio is slightly high at 39.5%
  • Cost of debt is high at 2.92%
  • Fixed rate debt % is low at 65.8%
  • Unsecured debt % is moderate at 79.7%
  • WADM is long at 3.3 years
  • Highest debt maturity within 5 years is high at 37% which falls in 2023
  • Interest coverage ratio is moderate at 4 times
  • Preferred/perpetual securities over debt is slightly high at 12.7%

Diversification Profile

  • Top geographical contribution is high at 71.8%
  • Top property contribution is high at 27.9%
  • Top 5 properties contribution is slightly high at 62.8%
  • Top tenant contribution is high at 13.3% 
  • Top 10 tenants contribution is high at 50.2%

Key Financial Metrics

  • Property yield is high at 6.7% 
  • Management fees over distribution is slightly low at 12.7% in which unitholders receive S$ 7.87 for every dollar paid 
  • Distribution on capital is high at 4.9%
  • Distribution margin is moderate at 51%
  • 2.7% of TTM distribution is from income support

Trends


Let's look at the period after the synergy with LOGOS in April 2020.
  • Uptrend - NAV per Unit, Interest Coverage Ratio
  • Slight Downtrend - Property Yield, Distribution Margin
  • Downtrend - DPU, Distribution on Capital

Relative Valuation

  • P/NAV is higher than +2SD for 1y, 3y and 5y
  • Dividend yield is lower than -2SD for 1y, 3y and 5y 

Author's Opinion

 Favorable Less Favorable
High OccupancyLow REIT Sponsor's Shareholding
Well Spread Lease ExpiryLow REIT Manager's Shareholding
Long WADMShort Weighted Average Land Lease Expiry
High Property YieldHigh Cost of Debt
High Distribution on CapitalLow Fixed Rate Debt
NAV per Unit UptrendConcentrated Debt Maturity
Interest Coverage Ratio UptrendHigh Top Geographical Contribution
 High Top Property Contribution
 High Top Tenant & Top 10 Tenants Contributions
 DPU Downtrend
 Distribution on Capital Downtrend

Due to valuation uplift, NAV per Unit increased by 17.5% to S$0.67 as compared to 31 December 2020 at S$0.57. Overall, ALOG fundamental has improved after the latest acquisition; WALE improved to 4 years and having better diversification. 


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*Disclaimer: Materials in this blog are based on my research and opinion which I don't guarantee 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 and 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.

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