AAREIT

AAREIT: AIMS’ 2QFY14 DPU was up 10% y/y to 2.75¢, in line with consensus, led by income contribution from Phase 2 of 20 Gul Way and improved occupancy at 56, Serangoon North Ave 4. NPI of $18.2m (+3% y/y) was in line with consensus. StanChart highlights that AAREIT offers FY14-16 DPU and EPU CAGR of 5.2% and 7.8% respectively, the highest among industrial SREITs. We expect 103 Defu Lane, Phase 2E and Phase 3 of 20 Gul Way to contribute 12% of portfolio NPI by end-FY14/15. StanChart continues to expect AAREIT to acquire $100m of assets over the next 12 months at average 7% NPI yield, fully utilizing proceeds from its equity raising in April 2013 and raising gearing to 35% from 25% currently. StanChart mentions that AAREIT’s asset portfolio has one of the most underutilized plot ratios among SREITs, and expects management to continue undertaking redevelopment initiatives after its ongoing projects ar completed by March 2015. The house upgrades to O/PF with TP raised by 5% to $1.66