AIMS APAC REIT - Maybank Kim Eng 2021-10-04: A Transformative Deal, Acquisition Of Woolworths’ HQ Strengthens Portfolio

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

AIMS APAC REIT - A Transformative Deal


Acquisition of Woolworths’ HQ strengthens portfolio

  • AIMS APAC REIT (SGX:O5RU) has proposed to acquire Woolworths’ Sydney HQ for AUD463.2m (S$454.0m). See AIMS APAC REIT's announcements. It would be its largest acquisition to date, as it boosts AUM by ~27% to S$2.2b and increases its Australian contribution from 21.8% to 38.4%.
  • Post-deal, Woolworths will rank as AIMS APAC REIT's largest tenant at 15.7% of gross rental income, while DPU visibility rises from a longer 4.92-year portfolio WALE (from 3.98 years).
  • Beyond a 4.7% DPU boost, longer-term upside could arise from potential development opportunities.
  • Our forecasts and DDM-based S$1.60 target price (COE: 7.6%, LTG: 1.5%) for AIMS APAC REIT are unchanged pending deal completion expected in four weeks.
  • AIMS APAC REIT’s liquidity has improved following its inclusion into the FTSE NAREIT Index. Valuations are undemanding at 6.9% FY22E DPU yield, and 1.0x P/B; BUY.


Quality tenancy, asset well-placed

  • The ~45k sqm NLA freehold property in Bella workforce growth of ~47% between 2020 and 2031, according to the local Hills Shire Council.


Valuation fair at 5.17% NPI yield

  • This is above the AUD336.5m (S$333.3m), 6.07% NPI yield that Inmark Asset Management paid for the property in 2016, which indicates cap rate compression and ~AUD50m in AEIs by Woolworths.
  • The tighter yield versus recent acquisitions in Macquarie Park by Ascendas REIT (SGX:A17U) (of MQX4 at 6.1% NPI yield) and Keppel REIT (SGX:K71U) (Pinnacle Office Park at 5.25%), reflects the asset’s longer 10-year WALE, which is subject to a built-in 2.75% pa rental escalation. Scope for redevelopment, with unutilised NLA (to 180k sqm) for expanding business park or data centre usage, suggests longer-term valuation upside.


Deal accretive, AIMS APAC REIT's gearing manageable for further deals






Chua Su Tye Maybank Kim Eng Research | https://www.maybank-ke.com.sg/ 2021-10-04
SGX Stock Analyst Report BUY MAINTAIN BUY 1.600 SAME 1.600



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