On 7 May 2025, AIMS APAC REIT (“AA REIT”) announced their full year result for FY2025. The fundamental metrics remain relatively unchanged this quarter, with DPU and net property income seeing an increase despite the ongoing AEI and transitory movement by tenants and decrease in committed occupancy rates. Investors can continue to monitor if there are any changes over the next few quarters.
For investors who monitor the perpetual securities of AA REIT, do note that as of 31 March 2025, AA REIT has perpetual securities of SGD497 million. This is an increase from the SGD373 million as of 30 September 2024. Based on interpretation of management disclosures, it can be seen that AA REIT is switching from debt to perpetual securities, which resulted in a lower gearing ratio. This is something to take note for investors who are monitoring if AA REIT is over reliant on perpetual securities as they rank higher than unit holders.
Disclaimer: Not financial advice. All data and information provided on this site is for informational purposes only.
Website: Financial Statements And Related Announcement::Full Yearly Results
Photo source: https://www.aimsapacreit.com/
Financial Highlights
Distribution Per Unit (“DPU”)
| Metrics | Current | Previous |
|---|---|---|
| Distribution Per Unit | +5.4% | Unchanged |
| Rating | Favorable | Neutral |
For AA REIT, DPU disclosed are as follows:
- Fourth Quarter of FY2025: SGD0.0253 per unit
- Third Quarter of FY2025: SGD0.0240 per unit
- Second Quarter of FY2025: SGD0.0240 per unit
- First Quarter of FY2025: SGD0.0227 per unit
DPU for the fourth quarter of FY2025 has increased by 5.4% to SGD0.0253 per unit from SGD0.0240 per unit in the previous quarter. This is contributed by an increase in net property income, as the quarter saw an amount of SGD34 million which is higher than the previous quarters. This metric is Favorable.
Occupancy
| Metrics | Current | Previous |
|---|---|---|
| Occupancy | 93.6% | 94.5% |
| Rating | Neutral | Neutral |
Occupancy rate as of 31 March 2025 has decreased to 93.6%. The decrease is contributed by the logistics and warehouse sector in Singapore. Management have disclosed that the portfolio occupancy rate based on committed leases will be 95.8% if excluding the impact of AEIs and transitory movement by tenants. Do note that the disclosure has remained consistent with previous quarter. The metric remains Neutral as it is below my expected healthy occupancy rate of 95%.
Gearing ratio
| Metrics | Current | Previous |
|---|---|---|
| Gearing Ratio | 28.9% | 33.7% |
| Rating | Favorable | Favorable |
Gearing ratio as of 31 March 2025 has decreased to 28.9%. This metric remains unchanged at Favorable as there is more than sufficient headroom from the limit of 50% to fund new acquisitions through debt.
Do note that perpetual securities amounted to SGD497 million as of 31 March 2025. This is not included in the gearing ratio and is not a concern from the regulatory perspective as perpetual securities will not cause a breach in regulation and force AA REIT to take unfavorable measures. However, perpetual securities rank higher than unit holders should liquidation occur and has priority payment over distributions, something investors will need to keep in mind.
Interest coverage
| Metrics | Current | Previous |
|---|---|---|
| Interest Coverage | 2.4x | 2.4x |
| Rating | Unfavorable | Unfavorable |
The adjusted interest coverage as of 31 March 2025, which includes the amount reserved for distribution to Perpetual Securities holders, remain unchanged at 2.4 times. The metric remains Unfavorable as it is significantly lower than my preference of 3.0 times.
Debt maturity profile
| Metrics | Current | Previous |
|---|---|---|
| Debt Maturity Profile | 3.0 years | 3.2 years |
| Rating | Favorable | Favorable |
Weighted average term to maturity of their debt as of 31 March 2025 have shortened to 3.0 years. The metric remains Favorable as it allows them sufficient time to refinance their debts. Do note that approximately 35.2% of their debt will mature by the end of FY2027.
Price to Book Ratio
| Metrics | Current | Previous |
|---|---|---|
| Price to Book Ratio | 1.03 | 1.00 |
| Rating | Neutral | Favorable |
The Price to Book (“P/B”) ratio became more expensive at 1.03. This is computed using the closing share price of SGD1.27 on 23 May 2025 and the net asset value per unit of SGD1.23 as of 31 March 2025. The P/B ratio is Neutral as you are paying a slight premium to its book-value.
As of 23 May 2025, the Market Capitalization is approximately SGD1,034 million.
Website: Yahoo Finance: AIMS APAC REIT (O5RU.SI)
Dividend
| Year | Yield | Total |
|---|---|---|
| 2025 | 3.88% | SGD 0.049 |
| 2024 | 7.39% | SGD 0.094 |
| 2023 | 7.79% | SGD 0.099 |
| 2022 | 7.41% | SGD 0.094 |
| 2021 | 7.64% | SGD 0.097 |
| 2020 | 6.69% | SGD 0.085 |
The dividend payout for the first half of the calendar year 2025 is higher than the previous calendar year when annualized. As a conservative estimate, we will use the total dividend payout of SGD0.094 per unit for the calendar year 2024 for computation.
With a closing share price of SGD1.27 as of 23 May 2025, this translates to a dividend yield of 7.39%. For my benchmark, a general reasonable yield would be around 5.25% and AA REIT have been consistently above throughout the years. The dividend yield is Favorable.
Website: Reasonable Dividend Yield 2025Q2 – 5.25%
Interest Rate Sensitivity
The Federal Reserve on 8 May 2025 have kept interest rates unchanged at a range of 4.25% to 4.50%, despite pressure from Trump to lower borrowing costs. The US central bank has warned that President Donald Trump’s tariffs have created “so much uncertainty” that it is unsure what to do about interest rates. The chairman Jerome Powell said the economic fallout from Trump’s tariffs meant it was “not at all clear” what the bank should do next.
Website: Fed holds rates because of tariff ‘uncertainty’
AA REIT have provided the interest rate sensitivity analysis as below. Should the interest rate change by another 1.0%, using FY2025 DPU of 9.60 cents as a base, DPU is expected to change by 1.3%.
| Change in Interest Rates | Change in DPU (cents) | Change as % of FY2025 DPU |
|---|---|---|
| 50 bps | 0.06 | 0.6% |
| 100 bps | 0.12 | 1.3% |
| 150 bps | 0.18 | 1.9% |
| 200 bps | 0.24 | 2.5% |
Key Things to Note
Tenant Concentration
Throughout the years, AA REIT is continuously increasing the customer base and reducing reliance on the top 10 tenants. As of quarter end, AA REIT currently has the top 10 tenants contributing to 50.3% of the total revenue, with Woolworths which contributes to 13.0%. Based on the latest financial results the Woolworths Group is generating profits and cash flows and are unlikely to default on rent, AA REIT is now heavily reliant on a few customers for income. The tenant concentration is something investors should take note of.
Website: https://www.woolworthsgroup.com.au/
Summary
| Metrics | Financials | Rating |
|---|---|---|
| Distribution Per Unit | +5.4% | Favorable |
| Occupancy | 93.6% | Neutral |
| Gearing Ratio | 28.9% | Favorable |
| Interest Coverage | 2.4x | Unfavorable |
| Debt Maturity Profile | 3.0 years | Favorable |
| Price to Book Ratio | 1.03 | Neutral |
| Overall | Neutral |
Overall, the metrics indicate that it has remained Neutral to invest in AA REIT. The overall position of AA REIT remains relatively stable, and despite the decrease in occupancy due to AEI and transitory movement by tenants, DPU has seen an increase this quarter. Investors can continue to monitor their financial performance over the next few reporting cycles.
Background
AA REIT is a real estate investment trust listed on the Mainboard of the Singapore Exchange Securities Trading Limited. Their investment mandate is to invest in high quality income-producing industrial real estate throughout Asia Pacific, including warehousing and distribution activities, business park activities and manufacturing activities. The Trust’s portfolio consists of business parks and industrial properties.
The Trust is managed by AIMS AMP Capital Industrial REIT Management Limited.
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Website: AIMS APAC REIT (SGX: O5RU): 2025 Third Quarter Business Update
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