The manager of AIMS APAC REIT (AA REIT) has posted a distribution per unit (DPU) of 2.28 cents for the 1QFY2023 ended June, 1.3% higher than the DPU of 2.25 cents in the corresponding period the year before.
Total distributions to unitholders increased by 2.7% y-o-y to $16.3 million, thanks to the higher gross revenue for the quarter, which grew by 29.8% y-o-y to $41.3 million.
Net property income (NPI) also grew 34.3% y-o-y to $31.0 million.
The higher figures were due to contributions from Woolworths Headquarters. The acquisition of the building was completed on Nov 15, 2021. Higher rental income from the REIT’s existing properties including 20 Gul Way, NorthTech, 15 Tai Seng, 27 Penjuru Lane and 8 & 10 Pandan Crescent also contributed to the higher gross revenue and NPI.
The higher revenue was offset by higher operating expenses, distributions to perpetual securities holders, higher interest expense and management fees following the acquisition of Woolworths Headquarters.
As at June 30, AA REIT reported an overall portfolio occupancy of 97.9%, 2.2 percentage points higher y-o-y.
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Its weighted average lease expiry (WALE) stood at 4.93 years.
During the quarter, the manager executed 10 new and 14 renewal leases totalling 30,525 sqm or 3.9% of the REIT’s total net lettable area (NLA) with a positive rental reversion of 9.5%.
According to the REIT manager, the REIT’s healthy committed occupancy rate is expected to be sustained as demand for industrial space continues to be underpinned by the “resilient” e-commerce and logistics sectors as well as Singapore’s reopening of its borders.
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AA REIT’s aggregate leverage as at June 30 stood at 37.0%, below the regulatory limit of 50%.
Approximately 88% of the REIT’s borrowings are on fixed rates (including forward interest rate swaps) with an average debt to maturity term of 3.8 years.
Looking ahead, the REIT manager expects expansionary demand from occupiers in the various industry clusters to continue to support the industrial and business park sectors despite the current macroeconomic uncertainties such as inflation, rising interest rates and higher commodity prices.
Russell Ng, CEO of the manager says the REIT will remain “firmly focused” on maintaining its stable operations while “prudently driving” asset enhancement initiatives (AEIs) and portfolio rejuvenation strategy to reposition selected properties, and “add value to AA REIT’s resilient portfolio”.
“We have seen a positive rental reversion of 9.5% for this quarter backed by strong leasing activities from our existing tenants. Our financial performance continues to be supported by healthy demand from new tenants in the logistics sector and contribution from our three master tenanted Australian properties that make up 39.5% of our portfolio,” he says.
George Wang, chairman of the manager adds: “We aim to further deepen our regional presence in Australia, with a priority on high quality assets that provide good investment returns for the long term to build greater resilience for AA REIT’s portfolio.”
Unitholders will receive their DPUs on Sept 23.
Units in AA REIT closed at $1.39 on July 25.
