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Two Things That Investors Should Know About AIMS AMP Capital Industrial REIT – Latest Results And Valuations

AIMS AMP Capital Industrial REIT (SGX: O5RU) or AACIR is a Real Estate Investment Trust that focusses primarily on industrial properties.

The company has 26 properties in Singapore and 1 in Australia. Examples of properties held by the REIT include ramp-up warehouses in areas such as 20 Gul Way and 27 Penjuru Lane, cargo-lift warehouses at 8&10 Pandan Crescent and 10 Changi South Lane and more.

In this article, we will look at two things about the REIT, namely its latest financial performance and valuation.

Latest financial result

Source: AACIR FY18 Quarter 1 Result Release

Gross revenue was 4.3% higher year-on-year due to rental contribution from 30 Tuas West Road. This was partially offset by the expiry of the master lease at 3 Tuas Avenue 2 and lower rental and recoveries from 20 Gul Way.

Net property income (NPI) was lower year-on-year, despite an increase in gross revenue due to the increase in expenses.

Distribution to unitholders was down 8.7% year-on-year mainly due to the partial retention of the current quarter’s distribution to fund the working capital and/or capital expenditure requirements of the Trust.

Uncertainties in global economy and industrial oversupply situation in Singapore could exert continued pressure on the REIT’s performance.

Valuation

Valuation is important to help investors determine the price to pay for an investment. Ideally, we want to pay a cheaper price.

Here, two simple calculations can be used to evaluate the value of a REIT, namely the price-to-book ratio and distribution yield.

What we will do here is to compare AACIR’s ratios to the average ratios of 39 REITs listed on Singapore Exchange.

Source: SGX.com stockfact

From the above, what we can see is that AACIR is trading at a discount to the market average in term of distribution yield, whilst its price-to-book ratio comparable to the market average.

Conclusion:

Overall, AACIR delivered a slightly weaker performance in the first quarter of FY18. In term of valuation, it is trading at a discount indicated by the high distribution yield.

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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.