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What Investors Need to Know About AIMS AMP Capital Industrial REIT’s Latest Earnings

This morning, AIMS AMP Capital Industrial REIT (SGX: O5RU) announced its financial results for the third quarter ended 31 December 2017. Here are 10 things investors should know from the earnings announcement:

1. Gross revenue slumped from S$30.4 million last year to S$28.9 million in the latest quarter, a fall of 4.9% year-on-year. The decline was mainly due to lower rental and recoveries from 20 Gul Way as five phases of the property reverted to multi-tenancy leases, and the expiry of the master lease at 3 Tuas Avenue 2. This was partially offset by rental contributions from 30 Tuas West Road and 8 Tuas Avenue 20.

2. Net property income declined 2.8% to S$19.2 million while distribution to unitholders tumbled 3.5% to S$17.1 million.

3. Distribution per unit came down 5.4% year-on-year to 2.62 Singapore cents but improved 2.7% quarter-on-quarter.

4. As at 31 December 2017, the net asset value per unit stood at S$1.35, a slight fall from S$1.36 achieved at the end of September 2017.

5. The aggregate leverage was 33.8% for the quarter, an improvement from 37.3% seen three months ago. The improvement was mainly due to paring down of debt using the gross proceeds from a private placement.

6. As at 31 December 2017, the REIT’s weighted average debt maturity was at 2.1 years with no debt due for refinancing until November this year. Meanwhile, the overall blended funding cost was 3.6% per annum.

7. The portfolio occupancy stood at 88.4%, as at the end of last year, with the weighted average lease expiry at 2.46 years.

8. In August 2017, the REIT’s redevelopment at 8 Tuas Avenue 20 achieved its Temporary Occupation Permit and is now 83.7% occupied. Meanwhile, rental income will commence from the first quarter of the financial year 2019 for the development at 51 Marsiling Road.

9. In the middle of last month, the REIT’s manager announced the divestment of its smallest property at 10 Soon Lee Road for S$8.17 million, around 28% above the property’s latest valuation, as part of its capital recycling strategy.

10. AIMS AMP Capital Industrial REIT said: “In Singapore, the industrial oversupply situation will continue into 2018 that may continue to put downward pressure on rentals and occupancy”. The oversupply situation could cause further challenges for the REIT going forward.

AIMS AMP Capital Industrial REIT is changing hands at S$1.38 per unit now. This gives a price-to-book ratio of 1.02 and a trailing distribution yield of 7.6%.

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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 Sudhan P owns units of AIMS AMP Capital Industrial REIT.