AIMS APAC REIT operating metrics growing in strength: analyst

The reit suffered minimal impact from rising interest rates and utility costs.

AIMS APAC REIT remains an attractive proxy to the favourable Singapore industrial sector outlook with a majority of its income derived from the attractive logistics sector and long leased Australian business parks, an analyst from RHB Singapore said.

The reit’s operating metrics has been growing stronger, with portfolio occupancy in the first quarter (Q1) standing a high of 97.9% driven by strong demand for its Singapore logistics assets. 

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Rent reversion in the same quarter was at 9.5% for the 10 new and 14 renewal leases secured during Q1. RHB said that [ositive rent reversions are expected to continue, with c.70-80% of upcoming leases, until FY 2024, in the favourable logistics segment. In addition, its Australian portfolio, which is currently on long leases, has an annual rent escalation of c.3% per annum (pa).

AIMS APAC REIT also suffered minimal impact from rising interest rates and utility costs. Overall borrowing costs remains unchanged at 2.7% pa, with weighted average debt maturity of 3.8 years. About 88% of its loans are hedged, with 65% fixed, 23% via forward swaps), with every 50bps increase having a minimal c.1% DPU impact. The REIT is also minimally impacted by rising utility costs compared to other industrial REITs as these have been modified to passthrough based on its current lease structures. AAREIT has hedged 68% of its FY23F AUD income via forward currency contracts, in addition to a high natural hedge of 62%