AA Reit's Q3 DPU slips 4.6% to 2.50 cents

SINGAPORE - AIMS AMP Capital Industrial Reit (AA Reit) on Friday (Feb 1) posted a third-quarter distribution per unit (DPU) of 2.50 cents, down 4.6 per cent from 2.62 cents for the same period a year ago.

Gross revenue for the quarter ended Dec 31 was $29.8 million, up 3.3 per cent from $28.9 million previously, a result of maiden rental contributions from 51 Marsiling Road from April 27, 2018, and 8 Tuas Avenue 20 from December 2017.

Property operating expenses for the quarter rose to $10.4 million from $9.6 million in the year-ago period, mainly due to the increase in property tax expense and repair and maintenance costs for the property at 20 Gul Way as six phases of the master leases had reverted to multi-tenancy leases.

Net property income was 1.1 per cent higher at $19.4 million.

Distribution to unitholders edged up 0.8 per cent to $17.2 million for Q3, comprising taxable income of $15.8 million from Singapore operations, tax-exempt income distribution of $0.9 million, and capital distribution of $0.5 million from distributions remitted from the group's investment in Optus Centre, Australia.

AA Reit's distribution policy is to distribute at least 90 per cent of the trust's Singapore taxable income for the full financial year. For the quarter under review, the manager will distribute 98.2 per cent of the Singapore taxable income available for distribution to the unitholders.

In Q3, portfolio occupancy increased slightly to 93.9 per cent from 93.6 per cent in the preceding quarter.

According to the Reit manager, AA Reit's ongoing redevelopment of the property at 3 Tuas Avenue 2 and asset enhancement initiative at NorthTech remain on track for completion in the second half of 2019. These two projects are in line with AA Reit's approach to enhance its portfolio through organic growth initiatives, said the manager.

It will continue to stay the course on active asset and lease management and to optimise AA Reit's portfolio through sector and tenant diversification across its portfolio of 26 properties, said the manager.

Koh Wee Lih, CEO of the manager, said: "While the operating environment remains challenging, there are market expectations of a gradual recovery in the industrial market in the coming years."

"We constantly look for ways to optimise and strengthen AA Reit's portfolio, including potential acquisitions as well as opportunities to unlock organic value through our asset enhancement and development strategy."

The counter closed at $1.38 on Thursday before the results were released.