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Tuesday, August 10, 2021

AIMS APAC REIT Review @ 10 August 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 Highlight

Gross revenue and NPI increased YoY mainly due to contribution from 7 Bulim Street (acquired in October 2020), higher rental from 20 Gul Way and 8 & 10 Pandan Crescent. Distribution and DPU increased due to the above and also partial management fees received in units. 

Rental reversion is at negative 0.4%.

Related Parties Shareholding

  • REIT sponsor's shareholding is low at 5.31%
  • REIT manager's shareholding is low at 0.61%
  • Directors of REIT manager's shareholding is high at 8.01%

Lease Profile

  • Occupancy is slightly high at 95.7%
  • WALE is moderate at 3.98 years
  • Highest lease expiry within 5 years is slightly low at 24.2% which falls in FY2024
  • Weighted average land lease expiry is short at 41.14 years

Debt Profile

  • Gearing ratio is slightly low at 34.3%
  • Cost of debt is high at 2.8%
  • Fixed rate debt % is moderate at 77.2%
  • Unsecured debt % is low at 24.8%
  • WADM is short at 2 years (Post refinancing, WADM is long at 3.3 years)
  • Highest debt maturity within 5 years is high at 37% which falls in FY2025
  • Interest coverage ratio is slightly high at 4.3 times
  • Preferred/Perpetual Securities over Debts is high at 17.5%

Diversification Profile

  • Top geographical contribution is high at 87.6% 
  • Top property contribution is low at 13.1% 
  • Top 5 properties contribution is low at 43.3% 
  • Top tenant contribution is high at 12.8% 
  • Top 10 tenants contribution is high at 46.7%

Key Financial Metrics

  • Property yield is high at 6.1% 
  • Management fees over distribution is moderate at 13.3% in which unitholders receive S$ 7.52 for every dollar paid 
  • Distribution on capital is slightly high at 3.9%
  • Distribution margin is slightly low at 45.3%

Trends

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

Relative Valuation

  • P/NAV - Above +2SD for 1y and 5y; Above +1SD for 3y
  • Dividend Yield - Below -2SD for 1y, 3y and 5y

Author's Opinion

FavorableLess Favorable
Diversified SectorLow REIT Sponsor's Shareholding
High Directors of REIT Manager's Shareholding Low REIT Manager's Shareholding
Long WADM (Post Refinancing)Short Weighted Average Land Lease Expiry
Low Top Property & Top Properties ContributionsHigh Cost of Debt
High Property YieldLow Unsecured Debt %
 Concentrated Debt Maturity
 High Top Geographical Contribution
 High Top Tenant & Top 10 Tenants Contributions
 DPU Downtrend
 Interest Coverage Ratio Downtrend
 Distribution on Capital Downtrend
 Distribution Margin Downtrend
 High Perpetual Securities %

AAREIT performant has dropped slightly as compared to the previous quarter. There is still no update for the proposed acquisition of 315 Alexandra Road which was announced in January. Together with the result announcement, AAREIT announced that it would adopt half-yearly reporting, but maintain quarter distribution.


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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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