SINGAPORE (Oct 27): Maybank Kim Eng is maintaining its “buy” call on AIMS AMP Capital Industrial REIT (AA REIT) with a target price of $1.60.
This came after the REIT announced its 2Q18 results on Thursday, declaring a 7.3% y-o-y decrease in DPU to 2.55 cents, which were in line with the research house’s estimates.
See: AA REIT declares DPU of 2.55 cents for 2Q18, down 7.3% from 2Q17
In a Thursday report, analyst Chua Su Tye says, “We have kept our forecasts unchanged as we see a recovery lag for industrials against positive macro growth momentum support of the 7.8% div yield, while potential AEI/ redevelopment upside has not been factored in.”
The analyst says that the REIT’s performance reflects an overall weak leasing backdrop for industrial properties during the quarter and conversion pressures at 20 Gul Way.
AA REIT’s portfolio occupancy fell to 88.8% from 91.0%, but Chua believes that this should improve moving forwards as 8 Tuas Ave 20, which is currently 43.4% occupied, and is being progressively backfilled following its redevelopment.
See: AA REIT secures first tenant for newly-completed Tuas redevelopment
Meanwhile, the REIT’s greenfield build-to-suit (BTS) development at 51 Marsiling Road remains on track to complete in the current quarter and is pre-committed to Beyonics International on a 10-year master lease with rent escalations.
As at 12.50pm, units in AA REIT are trading at $1.44 or one time FY17 book with a DPU yield of 7.7%.
