Is AIMS APAC REIT Worth Looking At Right Now?

AIMS APAC REIT (AAREIT) is a SGX-REIT which invests primarily in a portfolio of industrial real estate located in Singapore. In addition, it owns a 49% interest in Macquarie Park Trust, which holds the Optus Centre Property. It is a business park located in Australia. In this article, I’ll be covering on its latest financial results, future plans, and valuation figures.

Thus, here are 11 things to know about AAREIT before you invest.

  1. Portfolio Valuation
    As of 31 March 2019, AAREIT has a portfolio of 26 industrial real estate with an appraised value of S$ 1.46 billion. Its valuation has remained at S$ 1.40 – S$ 1.50 billion levels since 2015 as AAREIT has maintained the number of properties at 26 in its portfolio for the last 5 years.

Source: AAREIT’s Annual Reports

  1. Financial Results
    AAREIT has reported a fall in revenues to S$ 116.9 million in 2018, from S$ 124.4 million in 2016. It is caused by lower rental reversions and the expiry of master lease at 3 Tuas Avenue 2. Distributable income dipped to S$ 72.1 million in 2018, from S$ 72.1 million in 2016. This has caused distribution per unit (DPU) to drop to 10.30 cents in 2018 after hitting a high of 11.35 cents in 2016.

Source: AAREIT’s Annual Reports

  1. Latest 12-Month Results
    For the last 12 months, AAREIT generated S$ 118.1 million in revenues, S$ 70.5 million in distributable income or 10.3 cents in distribution per unit (DPU). Thus, it maintained its financial results reported for 2018.

    Figures in S$ ‘000 unless stated otherwise


Distributable IncomeDistribution per unit (Cents)
Q1 201928,92517,1392.50
Q2 201929,41617,1392.50
Q3 201929,81917,2182.50
Q4 201929,91819,0002.75

Source: AAREIT’s Quarterly Results

  1. Balance Sheet Strength
    As of 31 March 2019, AAREIT has reported to have as much as S$ 497.4 million in total borrowings and S$ 1.48 billion in total assets. As such, it has a gearing ratio of 33.5%. Its overall funding costs is 3.6% a year and has weighted average debt maturity of 2.4 years. Presently, 85.8% of its interest rate is fixed via interest rate swaps and fixed rate notes. AAREIT has been granted credit rating of BBB- by Standard & Poor (S&P).

  2. Income Visibility
    As of 31 March 2019, AAREIT has achieved 94.0% in occupancy rate. Its top 10 tenants are contributing 53.2% in gross rental income (GRI). The following is a list of these tenants:

No.Key TenantsGross Rental Income (%)
1Optus Administration Pty Ltd13.0%
2Illumina Singapore Pte Ltd8.9%
3CWT Pte Ltd8.8%
4Eurochem Corporation Pte Ltd7.3%
5Schenker Singapore (Pte) Ltd3.8%
6Beyonics International Pte Ltd3.7%
7Focus Network Agencies (Singapore) Pte Ltd2.9%
8CIT Cosmeceutical Pte Ltd1.8%
9King Plastic Pte Ltd1.5%
10DHL Supply Chain Singapore Pte Ltd1.5%
AAREIT’s Total Tenants53.2%

Source: Q4 2019 Financial Results Ended 31 March 2019

  1. Lease Expiry Profile
    72.5% of its leases would expire in 3 years. It includes CWT leases. They will be reduced on a progressively until its final lease agreement expire in July 2021. AAREIT’s lease expiry profile based on gross rental income is as follows:

Financial Year202020212022> 2022
% of GRI20.5%24.5%27.5%27.5%

Source: Q4 2019 Financial Results Ended 31 March 2019

  1. Land Lease Expiry
    The Optus Centre is a freehold property. As for its other 25 properties, they are all leasehold properties and have weighted average unexpired land lease of 36.4 years.

Source: Q4 2019 Financial Results Ended 31 March 2019

  1. Boardriders APAC HQ
    As of 15 May 2019, AAREIT has proposed to acquire Boardriders APAC HQ, a light industrial facility which comprises of warehousing facility, a retail showroom and an office in Gold Coast, Australia for a price of A$ 38.46 million. It would be leased to GSM (Operations) Pty Ltd at a rate of A$ 3.0 million in Net Property Income (NPI) with rental escalation of 3% per annum, with rental review of minimum 3% commencing year 7. It would be leased for 12 years. Upon completion, it would increase its total assets of S$ 1.52 billion, extend its weighted average lease expiry (WALE) from 2.59 years to 2.76 years and increased its occupancy rate to 94.1% from 94.0%.

Source: AAREIT’s Proposed Acquisition of Boardriders APAC HQ.

  1. Other Growth Opportunities
    AAREIT has identified as much as 502,707 sq. ft. in potential untapped gross floor area (GFA) which are underutilised based on plot ratios. As such, they offer AAREIT with a handful of asset enhancement initiative (AEI) works for organic growth. These properties include:

No.Properties with AEI Growth Opportunities
12 Ang Mo Kio Street 65
28 Senoko South Road
311 Changi South Street 3
410 Changi South Lane
53 Toh Tuck Link
67 Clementi Loop
7541 Yishun Industrial Park A

Source: Q4 2019 Financial Results Ended 31 March 2019

  1. P/B Ratio
    As of 28 May 2019, AAREIT is trading at S$ 1.39 per unit. In Q4 2019, its net asset a share is S$ 1.34. Thus, its current P/B Ratio is 1.04, above its 10-year average of 0.95 presently.

  • Dividend Yields
    For the last 12 months, AAREIT has paid out 10.25 cents in DPU. Based on its current stock price, AAREIT’s dividend yield is 7.37% a year, which is marginally lower than its 10-year average of 8.05% per annum.

VIA’s Verdict

AAREIT has delivered a relatively flat financial results for the past 5 years. Thus, its stock price movements had been relatively flat during the 5-year period.

Source: Google Finance

So, would you invest in AAREIT at S$ 1.39 per unit?

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