AIMS APAC REIT: Strong rent reversions in Singapore

9MFY25 DPU up 1.1% YoY

AIMS APAC REIT (AAREIT) reported 9MFY25 Distributions Per Unit (DPU) of 7.07 cents, up 1.1% YoY. While distributions to unitholders rose 4.3% YoY in 9MFY25, an enlarged unit base meant DPU only rose by 1.1% YoY. 

Revenues and Net Property Income (NPI) were up by 5.7% YoY and 1.9% YoY respectively, on the back of sustained positive rental reversions achieved.

Strong rent reversions of 28.2% in Singapore

AAREIT continued on its track record of delivering strong rent reversions at its Singapore assets, having executed 19 new and 41 renewal leases in 9MFY25, totalling 127,299 sqm, which represented 16.4% of the portfolio’s net lettable area (NLA). 

This contributed to a strong 9M FY2025 rental reversion rate of 21.2%, with rental reversions of 28.2% achieved in 3QFY25 alone.

Divestment of 3 Toh Tuck Link at 32.5% premium to valuation

On 10 December 2024, AAREIT announced it has signed a Sales and Purchase Agreement with Crown Worldwide Pte Ltd to sell 3 Toh Tuck Link for S$24.388 million, a 32.5% premium over its S$18.4 million property valuation as of 31 March 2024. 

The divestment is targeted to be completed by the first half of 2025, subject to JTC Corporation’s approval, and is part of the REIT’s continuous proactive asset management strategy.

Value creation via identified AEIs

Asset Enhancement Initiatives (AEI) at 7 Clementi Loop and 15 Tai Seng Drive, both of which are located in Singapore, have been progressing well, and are 50% and 20% completed respectively. 

Both AEIs are expected to complete in 1QFY26, with projected NPI yield post-AEI works at more than 7.0%.

Aggregate leverage stable at 33.7%

Since the S$100 mn Equity Fund Raising (EFR) in 1HFY2024, AAREIT has been a stable leverage position, with aggregate leverage of 33.7%. 

This would put AAREIT in good stead to capitalise on any market opportunities, without the overhang of leverage and capital management concerns.  

Weighted average debt maturity is at 3.2 years with blended debt funding cost of 4.4% and an interest coverage ratio of 3.9 times. 

70% of debt is on fixed rates with an average fixed debt tenure of approximately 1.5 years.

We maintain a BUY rating and target price of S$1.43

We like AAREIT as it stands out in the sector in active asset rejuvenation, which helps to raise the value of its Singapore assets. 

We expect demand for logistics and warehouses to stay strong, on the back of sustained demand for e-commerce and stockpiling to avert supply chain disruptions, and more manufacturing bases outside China to overcome US trade restrictions. 

Annualising AAREIT’s 9MFY25 DPU, AAREIT trades at 7.4% DPU yield, close to its historical average of 7.3%.

Related links:

• AIMS APAC REIT share price and share price target
• AIMS APAC REIT dividend history and forecast

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