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AIMS AMP Capital Industrial REIT’s 2018 Distribution Per Unit Falls By 6.8%

This morning, AIMS AMP Capital Industrial REIT (SGX: O5RU) announced its financial results for the financial year ended 31 March 2018 (FY2018). Here are 10 things investors should know from the earnings announcement:

1. Gross revenue for FY2018 declined 2.7% year-on-year to S$116.9 million while net property income fell 3.8% to S$76.4 million. The poor showing were mainly due to lower rental reversions and the expiry of the master lease at 3 Tuas Avenue 2.

2. However, the share of results of joint ventures (net of tax), which comprises of the contribution from the REIT’s 49% interest in Australia’s Optus Centre, grew 18% to S$17.4 million.

3. Distributions to unitholders came down from S$70.5 million a year ago to S$67.4 million in FY2018, a decline of 4.4%. Meanwhile, distribution per unit tumbled 6.8% to 10.30 Singapore cents.

4. As at 31 March 2018, the net asset value (NAV) per unit stood at S$1.37, a slight improvement from S$1.35 achieved at the end of December 2017. However, as compared to 31 March 2017’s figure of S$1.39, the latest NAV per unit marked a fall of 1.5%.

5. The aggregate leverage was 33.5%, with the weighted average debt maturity at 1.8 years, at the end of FY2018. This is an improvement from 33.8% seen at the end of last year. In April 2018, the REIT received commitments from a syndicate of financial institutions to refinance its existing secured loans due in November 2018 and February 2019. Post refinancing, the weighted average debt maturity will improve to 3.3 years with no debt due for refinancing until May next year.

6. The REIT’s first third-party greenfield build-to-suit development at 51 Marsiling Road is currently 100% leased to Beyonics International Pte Ltd for a period of 10 years. AIMS AMP Capital Industrial REIT will receive rental income from this property from the first quarter of FY2019. The newly developed property at 8 Tuas Avenue 20, which was completed in August 2017, has an occupancy rate of 83.2%.

7. The portfolio occupancy stood at 90.5%, as at the end of March 2018, with the weighted average lease expiry at 2.56 years. In comparison, at the end of December 2017, the figures stood at 88.4% and 2.46 years respectively.

8. During the year, the REIT’s manager also executed 94 new and renewal leases representing around 33% of the total net lettable area.

9. In the fourth quarter, the REIT’s manager announced the divestment of AIMS AMP Capital Industrial REIT’s 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. The manager also made public its plans to redevelop the property at 3 Tuas Avenue 2 into a contemporary ramp-up industrial facility suitable for general industrial usage. Once completed, the gross floor area will increase by 52% and the plot ratio will go up from the current 0.92 to 1.40.

10. Looking ahead, AIMS AMP Capital Industrial REIT said:

“In Singapore, the industrial oversupply situation will continue into 2018 and that may continue to put downward pressure on rentals and occupancy. AA REIT [AIMS AMP Capital Industrial REIT] remains focused on active asset and lease management, and unlocking organic value within the portfolio through asset enhancement initiatives and redevelopments.”

AIMS AMP Capital Industrial REIT ended Wednesday at S$1.39 per unit. This gives a price-to-book ratio of 1.01 and a trailing distribution yield of 7.4%.

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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.