AIMS APAC REIT - DBS Research 2023-05-08: Portfolio Occupancy At Record-High; +36.8% Rental Reversions

• AIMS APAC REIT (SGX:O5RU)'s FY23 revenues grew 17.6% y-o-y to S$167.4m and NPI grew 18.7% y-o-y to S$122.5m, largely due to full year contribution from Woolworths HQ (acquired on 15 Nov 2021), and also due to higher rents and recoveries from properties.
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• AIMS APAC REIT's FY23 DPU of S$0.09944 was 5.1% higher y-o-y, outperformed our projections by ~15%. The outperformance was mainly due to better-than-expected revenues and NPI margins. Higher revenues were partially offset by higher borrowing costs and trust expenses.
• Portfolio occupancy also improved 0.4 ppt y-o-y to 98.0%; record-high occupancy for AIMS APAC REIT.

Solid positive rental reversions of +36.8% in 4Q23

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• Should expect further positive rental reversions going forward as passing rents for most segments are still below market rents. Only the Business Park and Light Industrial segments have passing rents in line with current market rents.
• ~21.5% of portfolio leases will be due to expire in FY24. Majority of these expiries (~19.4%) are from the Logistics & Warehouse segment which should continue to see strong positive rental reversions.
• WALE of 1.4 years for the Logistics & Warehouse segment is the shortest in AIMS APAC REIT’s portfolio. It will be a positive for AIMS APAC REIT in this part of the cycle as rents for logistics facilities continue to grow strongly. AIMS APAC REIT’s passing rents for this segment is ~S$1.22 psf, compared to current market rents of between S$1.40-S$1.80. Rental reversions for logistics facilities expected to be in the positive double-digit range.

Cap rates mostly stable despite a slight decline in portfolio valuations

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Dale LAI DBS Group Research | Derek TAN DBS Research | https://www.dbs.com/insightsdirect/ 2023-05-08 SGinvestors.io

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