KGI Securities has issued an unrated report on AIMS Apac REIT (AAREIT) following its 1Q21 results on July 23, came “in line with expectations of a weaker quarter” considering circuit breaker measures that were enforced two out of three months during the period.

According to KGI analyst Amirah Yusoff, AAREIT held steady 1Q21 results in spite of the measures that took a toll on other REITs.

In the same period, AAREIT secured two new additional leases and nine lease renewals even with the circuit breaker in full effect for most of 1Q21 due to logistics and warehouse demand. Having these leases secured along with improved the company’s portfolio occupancy from 89.4% in 4Q20 to 93.6%. 

On that, Yusoff says, “We maintain a relatively positive outlook" on the industrial real estate sector in the near and medium term, especially as demand for logistics and warehouse space is expected to be sustained even post Covid-19, as businesses shift towards not only online e-commerce, but also relying less on just-in-time inventory.”

1Q21 proved yet again to not be a bad quarter for AAREIT as the company was included in the MSCI Singapore Small Cap Index as of 30th May 2020. 

However, some risks that Yusoff highlights are the “slowing in leasing demand for general industrial property 541 Yishun Industrial Park A as focus shifts towards logistics/warehouse leases”, and the “significant downward pressure on rental reversions as real impact of circuit breaker emerges over the coming quarters.”

As at 2.18pm, units in AAREIT were changing hands 1 cent higher, or 0.8% up, at $1.21.