Should You Invest In AIMS APAC REIT [Fundamental Analysis]

In this article, we'll be conducting a fundamental analysis of AIMS APAC REIT and its suitability to achieve the following investment objective: To deliver a stable dividend yield of 5% to 6% per year while having a high degree of capital preservation ability.

Information Is Accurate Up To Nov 2023

Business Description

AIMS APAC REIT is an industrial REIT that was listed in 2007 and owns 29 office properties (26 are in Singapore and 3 are in Australia).

What I Like About AIMS APAC REIT:

• Resilient occupancy rate & decent WALE
  

• Tenants are well diversified and are in defensive and resilient industries

What I Do Not Like About AIMS APAC REIT:

• Decreasing DPU and the increasing use of financial engineering to mask the impact of a diluting and stagnating distributable income from operation.
  

• 16% of their properties have a remaining lease of less than 20 years which will require investors to ask for higher dividend yield to counter the impact of lease decay.
  

• Management does not have a track record in capital preservation which eventually erodes the total return of the counter
  

Updates From Recent Performance (1H 2024)

General Comments:

• Cost of borrowing would probably not feel the full brunt of a higher interest rate environment as the majority of their debt is due for renewal in 2027.
  

• 70% Of AUD Income exposure is hedged
  

• Gearing ratio had decreased to 32.1% as a result of equity fundraising that was completed in July 2023

Positive Headwinds:

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Negative Headwinds:

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- Work In Progress -

Daniel is a Licensed Independent Financial Consultant with MAS and a Certified Financial Planner (CFP®).

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Disclaimer:

This article is meant to be the opinion of the author

This article is for information purposes only

This article should not be seen as financial advice

This advertisement has not been reviewed by the Monetary Authority of Singapore