AIMS APAC REIT - Maybank Kim Eng 2020-05-12: Redevelopment Play

AIMS APAC REIT (SGX:O5RU) | SGinvestors.io AIMS APAC REIT (SGX:O5RU)

AIMS APAC REIT - Redevelopment Play


AIMS APAC REIT's 4Q in-line, 8.5% div yield

  • AIMS APAC REIT (SGX:O5RU)'s 4Q20 DPU was down 27.3% y-o-y and 20.0% q-o-q with a SGD2.9m capital retention, despite the operationally in-line results, and stable portfolio occupancy. AIMS APAC REIT executed well on leasing and AEI, whilst delivering ahead on its 3 Tuas Ave 2 redevelopment project.
  • We expect negative reversions to persist in the near term – from earlier market oversupply and unwinding of CWT’s final master leases.
  • AIMS APAC REIT's DPUs are well-supported by its tenancies and concentrated logistics AUM. Redevelopment growth optionality from its underutilised GFA continues to offer 4-5% potential upside risk and remains backed by its low 34.8% leverage.
  • We have kept forecasts mostly unchanged, while revising our DDM-based Target Price to SGD1.55 (COE: 7.8%, LTG: 1.5%). AIMS APAC REIT's valuations are undemanding at 8.5% DPU yield and 0.8x FY20E P/B.





Revenue down on master lease conversions, expiries

  • AIMS APAC REIT's 4Q20 revenue dipped 5.7% y-o-y and 4.2% q-o-q with:
    1. a conversion of its master lease at 1A IBP to multi-tenancies (in Nov 2019),
    2. a full quarter impact on the final phase expiry of its master lease at 20 Gul Way in 3Q20, and
    3. expiry of the second phase of the master lease at 30 Tuas West Road (in Feb 2020).
  • New and renewal leases (22 in total) were executed in 4Q20, comprising 4.6% of its total NLA. Rental reversion was at -4.0% (vs -1.9% in 3Q20), even as exposure to CWT has fallen to 3.6% of its overall gross rental income (from 4.8% in 3Q20, and 7.9% in 2Q20) as leases expired at 20 Gul Way.


Maiden contribution from 3 Tuas Ave 2






Chua Su Tye Maybank Kim Eng Research | https://www.maybank-ke.com.sg/ 2020-05-12
SGX Stock Analyst Report BUY MAINTAIN BUY 1.55 DOWN 1.600



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