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AIMS APAC REIT 2Q DPU drops 20% to 2 cents on lower NPI

Felicia Tan
Felicia Tan10/27/2020 08:39 AM GMT+08  • 3 min read
AIMS APAC REIT 2Q DPU drops 20% to 2 cents on lower NPI
Unitholders can expect to receive their DPU on Dec 18.
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The manager of AIMS APAC REIT (AA REIT) has announced distribution per unit (DPU) of 2.00 cents for the 2QFY2021 ended September, down 20% from the 2.50 cents reported a year ago.

This brings DPU for 1HFY2021 to 4.00 cents, down 20% from the 5.00 cents in 1HFY2019.

2QFY2021 gross revenue dipped 0.3% y-o-y to $30.5 million mainly due to lower contributions from 1A International Business Park arising from the conversion from a master lease to multi-tenancy leases. The marginal decrease in gross revenue also came about from the expiry of the master lease at 541 Yishun Industrial Park A.

The lower gross revenue was slightly offset by rental contribution from 3 Tuas Avenue 2 as well as Boardriders Asia Pacific HQ in Australia.

Property operating expenses increased 13.1% y-o-y to $9.2 million mainly due to an additional property tax of $0.3 million recognised this quarter for 3 Tuas Avenue 2. The additional tax came from the change in annual value of the property assessed by the Inland Revenue of Singapore (IRAS).

Consequently, net property income (NPI) fell 5.2% y-o-y to $21.3 million.

Distributions to unitholders fell 18.9% to $14.1 million during the quarter, compared to the $17.4 million the year before, primarily due to lower NPI. The lower distributions were also attributable to management fees being fully paid in cash, and an amount reserved for distribution to perpetual securities holders.

The REIT’s share of profits of joint venture fell 28.6% y-o-y to $4.3 million. The decrease was mainly due to the lower share of revaluation surplus recognised from the valuation of Optus Centre of $0.9 million.

As at Sept 30, the valuation of the property stood at A$597.5 million ($578.7 million) based on the independent valuation carried out by Knight Frank NSW Valuations & Advisory.

For 2QFY2021, AA REIT’s share of profits of joint venture comprises the contribution from the group’s 49.0% interest in Optus Centre and the revaluation surplus from the valuation.

As at Sept 30, AA REIT’s portfolio occupancy stood at 94.5% with a weighted average lease expiry (WALE) of 4.23 years.

Cash and cash equivalents as at Sept 30 stood at $142.0 million.

Looking ahead, the manager says the overall outlook for the industrial sector in both Singapore and Australia remains supported by structural growth drivers such as growth in e-commerce driving warehouse demand and office decentralisation to drive business park demand, as well as acquisition growth potential.

“AA REIT has experienced a healthy demand for logistics facilities. This arose from the pandemic conditions, which led to a shift in global supply chains and the resulting additional warehousing needs. We remain optimistic over the warehouse and logistics sector,” says Koh Wee Lih, CEO of the manager.

“We are focused on the continued execution and evaluation of yield accretive investment opportunities in Singapore and Australia. The latest acquisition of 7 Bulim Street, strategically located within the Jurong Innovation District, further strengthens AA REIT’s portfolio of industrial and logistics assets in Singapore.”

“With a strong lease covenant and master tenant, this will provide the REIT with greater stability, and is in line with our strategy to build a high-quality, diversified portfolio of assets that create long-term value for our unitholders,” he adds.

See also: ESR scoops up more AA REIT units; AEM director sells shares as stock runs up

Unitholders can expect to receive their DPU on Dec 18.

Units in AA REIT closed flat at $1.21 on Oct 26.

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