Friday, August 30, 2013

AIMS AMP Capital Industrial REIT: Operationally solid (Macq)

AIMS AMP Capital Industrial REIT
Price (at 09:04, 27 Aug 2013 GMT) S$1.39
Valuation S$ 1.95
Operationally solid

AIMS AMP Capital REIT presented at Day One of our Asean conference in Singapore.

Strong rent reversions. AAREIT achieved average rent growth of 15% in FY13 (81 leases and 33% of portfolio) and a further 14.2% of rent reversions in 1Q FY14 (31 leases and 5.6% of portfolio).

DPU growth from redevelopment projects. Over the next 18 months, AAREIT expects completion of phase 2E of the Gul Way and Defu Lane projects in May/June 2014 and phase 3 of Gul Way in Dec 2014. These projects will drive its DPU growth post the current fiscal year. These projects are also substantially leased, which ensures income stability and predictability.

Gearing of 25.4%. Debt is 100%-fixed at an all-in interest cost of 4.08% and average debt maturity of 3.0 years. The major capex will be for Gul Way phase 2E & 3 and the Defu Lane redevelopment. On completion, the gearing is expected to increase to circa 31%.

Earnings and target price revision
No changes to DPU estimates and TP.

Price catalyst
12-month price target: S$1.95 based on a DCF methodology.
Catalyst: Completion of redevelopment projects over the next 12-18 months and yield-accretive acquisitions.

Action and recommendation
AAREIT’s share price has corrected about 20% in the past three months. We think this is overdone, given that its redevelopment projects are substantially pre-committed ahead of completion over the next 18 months. The shares are on 0.94x P/BV and offer a stable yield of 7.7% in FY3/14E.

Source/Extract/Excerpts/来源/转贴/摘录: Macquarie-Research,
Publish date: 27/08/13

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