AIMS APAC REIT - Maybank Research 2022-04-29: Resiliency And Growth

AIMS APAC REIT (SGX:O5RU)

AIMS APAC REIT - Resiliency And Growth

AIMS APAC REIT (SGX:O5RU)’s FY22 DPU rose 5.7% y-o-y, underpinned by resilient portfolio occupancy, recovering rents and the Woolworths acquisition in Nov’21. The results were in line with consensus, and ahead of our estimate.
We see strong fundamentals ahead, given the higher Australian business park contributions and improving rental growth outlook for its Singapore industrial assets.

AIMS APAC REIT's portfolio occupancy was maintained at 97.6% in 4Q22, driven by strong leasing momentum at 5.9m sf (vs 6.1m sf in 3Q22). AIMS APAC REIT achieved a strong +14.7% rental reversion (vs +0.2% in 3Q22). llumina renewed its lease (at 29 Woodlands Industrial Park E1) for 10 years at a +16% reversion. This and others at 8 & 10 Pandan Crescent (at 4%-12%), helped to offset weaker reversion at 1A IBP (of -8%).
Management expects NPI to be cushioned from higher utility costs, as they are mostly passed through to tenants for its triple-net leases.

Contributions from its Australian assets rose to ~13% of FY22 revenue (from ~3% in FY21), and made up 39.6% of AUM (from 21.8%) following the Woolworths acquisition, while the portfolio WALE increased to 5.05 years (from 4.85 years at end-Dec 2021).
We see sound growth fundamentals in Australia, with the assets anchored by its business parks (94% of Australian AUM). The properties are backed by resilient occupancies and built-in 2.75%-3.25% pa rental escalations for its two largest (blue-chip) tenants, which together contributed ~28% of gross rental income.

Chua Su Tye Maybank Research | Li Jialin Maybank Research | https://www.maybank-ke.com.sg/ 2022-04-29

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