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Source: Aims Apac REIT's website

Aims Apac REIT (SGX: O5RU) has recently announced its second-quarter 2021 financial results. It is trading at 6.6% dividend yield based on its last traded of $1.2 on 27 Oct.


Key Highlights:


  • Distribution per unit (DPU) and Dividend Yield (6.6%)

  • Price to book ratio (0.89)

  • Gearing (33.6%)

  • Portfolio Occupancy (94.5%)

  • Interest coverage ratio (3.7x)

  • Growth catalyst


Background of Aims Apac REIT


AIMS APAC REIT is an industrial REIT, which manages 27 business parks, logistics and warehouse buildings.  


Out of its 27 assets, 25 properties are located in Singapore, and two are in Australia. The REIT is managed by AIMS APAC REIT Management Limited, which is wholly owned by AIMS APAC REIT’s sponsor, AIMS Financial Group.


1. Distribution per unit and dividend yield


Net property income tumbled 5.2% to $21.3m. This was mainly due to the expiry of master lease at 541 Yishun Industrial Park A and lower contributions from 1A International Business Park, which was converted from master to multi-tenancy leases.


Based on its latest price, the REIT is currently trading at about 6.6% dividend yield. Historically, the REIT's DPU has been declining in the past 4 years.


2. Price to book ratio


Over the past 8 years, Aims Apac REIT has been trading at an average price to book ratio of 0.93. The recent price correction has brought down the ratio to 0.89. The current level also indicates a 5% discount based on its historical valuation.


3. Gearing


Portfolio leverage remains conservative at 33.6%, with a weighted debt maturity of 2.6 years. The REIT has less than S$64M (11%) debt due for refinancing in 2021.

Aims Apac REIT's Debt Maturity Profile

4. Portfolio Occupancy


Portfolio leverage remains high at 94.5%, with a weighted lease to expiry of 4.23 years. The REIT is maintaining a high occupancy rate as compared to its industry average.

Source: Aims Apac REIT's Occupancy Rate

5. Interest coverage ratio


Aims Apac REIT has a low interest coverage ratio of 3.7 times, which is slightly below our preference of 4 times. The REIT maintains an interest cost of 3.2%, 80.1% of its debt are under fixed rate.


6. Growth Catalyst


Aims Apac REIT has recently completed the acquisition of 7 Bulim Street, a strategically located, modern ramp-up logistics warehouse for $129.6m. The property is fully master-leased to KWE-Kintetsu World Express, a Japanese freight forwarding and logistics group.


Despite the impact from the Covid-19 pandemic, the REIT manager expects healthy demand for logistics facilities supported by the growth in e-commerce.


Summary


Aims Apac REIT remains as an industrial REIT in our watchlist. However, its declining DPU trend is a bit worrying and the yield is not attractive based on the current pricing.


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https://www.reitscompass.com/post/aims-apac-reit-sgx-o5ru-analysis-1

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