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AIMS AMP Capital Industrial REIT Has A High Distribution Yield Of 8.2% Now: Here Are 3 Things Investors Should Know

AIMS AMP Capital Industrial REIT (SGX: O5RU), or AA REIT for short, is a real estate investment trust that focuses on industrial properties. Its current portfolio comprises 27 properties, of which one is in Australia. The rest of the 26 properties (one of which is a greenfield development) are located in Singapore.

At the moment, AA REIT has a distribution yield of 8.2%, which is over twice the market average. To the point, the SPDR STI ETF (SGX: ES3) has a yield of only 3%; the SPDR STI ETF is an exchange-traded fund that tracks Singapore’s stock market benchmark, the Straits Times Index (SGX: ^STI).

AA REIT’s high market-beating yield prompted me to take a deeper look at its business. Here are three things I found that could be of interest to investors:

1. Performance in the first nine months of current fiscal year

The table below shows how AA REIT’s gross revenue, net property income, distribution to unitholders, and distribution per unit have changed in the first nine months of its fiscal year ending 31 March 2017 (FY2017) compared to the same period a year ago:

AA REIT net income table
Source: AA REIT FY2017 third quarter earnings presentation

We can observe that all four metrics for the REIT have experienced year-on-year declines. It has been a tough environment for the industrial real estate sector in Singapore and this is reflected in AA REIT’s numbers.

2. The occupancy rate

The following chart shows the occupancy rates for AA REIT’s portfolio (the purple bars) as well as the average for Singapore’s industrial real estate sector (the yellow bars) for the fourth quarter of the calendar year 2016:

AA REIT occupancy chart
Source: AA REIT FY2017 third quarter earnings presentation

We can see that AA REIT is indeed operating in a challenging environment since the industrial average overall occupancy rate is only 89.5%. But, it’s also clear that AA REIT is outperforming the market, not just for its portfolio as a whole, but also in all the different kinds of industrial property classes it owns.

3. Historical growth in distribution per unit

Here’s a chart showing the historical changes to AA REIT’s distribution per unit:

AA REIT DPU chart
Source: AA REIT FY2017 third quarter earnings presentation

What’s worth noting here is the consistent, albeit marginal, growth in AA REIT’s distribution per unit from FY2011 to today.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Lawrence Nga doesn’t own shares in any companies mentioned.