AA REIT posts 9.1% fall in 1Q DPU to 2.50 cents

In a filing to SGX on Thursday, AA REIT says this was mainly due to the partial retention of 1Q distribution to fund the working capital and capital expenditure requirements of the trust.

Gross revenue grew 4.3% to $30.5 million in 1Q FY2018, from $29.2 million a year ago.

This was mainly due to the rental contribution from 30 Tuas West Road, which became income producing from Feb 27, 2017.

The increase was partially offset by the expiry of the master lease at 3 Tuas Avenue 2, and lower rental and recoveries from 20 Gul Way as three phases of the property reverted to multi-tenancy leases.

However, the growth in revenue was outpaced by a 17.6% increase in property operating expenses to $10.4 million.

This was mainly due to higher costs arising from the reversion of the three phases of 20 Gul Way to multi-tenancy leases, as well as in line with the increase in revenue from 30 Tuas West Road.

Consequently, net property income fell 1.4% to $20.1 million, from $20.4 million a year ago.

Portfolio occupancy fell 3.6 percentage points to 91.0% as at June 30, 2017.

Cash and cash equivalents stood at $7.4 million as at June 30, 2017.

Distribution for the quarter will be payable on Sept 21, 2017.

“The industrial leasing market emains challenging as supply continues to outpace demand in a soft market environment. This is likely to exert further downward pressure on rentals and occupancy,” says Koh Wee Lih, CEO of the manager.

“To strengthen our position against ongoing headwinds in the industry, we remain focused on retaining existing tenants and improving occupancy while looking for opportunities to enhance portfolio value through asset enhancement initiatives and acquisitions,” he adds.

Units of AIMS AMP Capital Industrial REIT closed at $1.50 on Wednesday.