Amazing A-REIT revenues up 5.6% YoY to $119.9m

This included a S$1.0m capital distribution arising from the interest income from a finance lease with a tenant. DPU of 3.20 S cents represented a 5.0% YoY and 2.1% QoQ decline, due to an enlarged unit base largely arising from the private placement of 206.2m new units on 11 Apr 2011. On an annualised basis, the latest distribution represents a yield of 6.0%.

A-REIT highlighted that it experienced improved occupancy rates and also managed to achieve positive rental reversions of between 1.4% and 11.7% throughout all segments of its portfolio. Looking ahead, the group believes that it could potentially benefit from the improving industrial rental market as majority of its leases due for renewal (~10% of its revenue) have passing rates that are below the existing market rents.

Nevertheless, increasing macroeconomic uncertainty and slowing industrial production could pose challenges for the group ahead. We maintain our HOLD rating but our S$2.08 fair value estimate is UNDER REVIEW due to a change in analyst coverage.