AIMS APAC REIT 3Q FY2026 Results: Strong Financials, Solid Leasing, and Prudent Capital Management

Key Highlights from 9M FY2026 Financial Results

• Steady Revenue and Income Growth: Gross revenue for the first nine months of FY2026 rose 1.4% year-on-year to S\$141.1 million. Net property income (NPI) increased by 4.1% to S\$103.7 million, driven by steady income growth and lower property expenses.
• Improved Distributions: Distributions to unitholders reached S\$59.3 million (+3.1% y-o-y), with distribution per unit (DPU) at 7.25 Singapore cents, up 2.5% from the previous year.
• Portfolio Occupancy and Leasing: Portfolio occupancy improved to 95.4% (from 94.5% at end-2024), with committed leases pushing this higher to 96.6%. Rental reversion remained positive at +8.0%, though down from +21.2% in the prior period. Tenant retention rate was 69.4%, compared to 76.3% last year.
• Portfolio Strength: The REIT’s portfolio remains diversified, with logistics and warehouse assets contributing nearly 50% of gross rental income (GRI). Singapore properties account for 76.4% of GRI, underscoring local market dominance.
• Defensive Tenant Base: The top 10 tenants contribute nearly 50% of GRI, drawn predominantly from essential and defensive sectors such as food, telecoms, logistics, healthcare, and data centres. Notable tenants include Woolworths (12.4% of GRI), Optus, and Illumina.

Capital and Financial Management

• Leverage and Debt Profile: Aggregate leverage increased to 36.6% (from 33.7% end-2024), providing balance sheet headroom for growth. Weighted average debt maturity stands at 2.3 years, down from 3.2 years. Interest cover ratio (ICR) improved to 2.6 times, and 65% of borrowings are on fixed rates.
• Perpetual Securities Issuance: Post quarter-end, AA REIT issued S\$150 million in subordinated perpetual securities at a competitive 4.10% distribution rate, bolstering financial flexibility and supporting future initiatives.
• Hedging Strategies: 74% of expected AUD distributable income hedged into SGD; the REIT continues to adopt natural hedging for Australian assets to manage forex risk.
• Debt Maturities and Refinancing: No significant debt maturities in the near term; active discussions ongoing with new and existing lenders to refinance FY2027 debt, optimising the funding structure and preserving balance sheet flexibility.

Leasing and Asset Management

• Active Leasing: In 9M FY2026, the REIT signed 25 new and 49 renewal leases totalling 1.7 million sq ft, representing 20.5% of the portfolio’s net lettable area. Rental reversions for renewed Singapore leases were robust, especially in Logistics & Warehouse (+10.5%) and Hi-Tech (+11.7%) segments.
• Staggered Lease Expiry: Weighted average lease expiry (WALE) is 4.1 years, providing income visibility. Notably, business park assets enjoy a WALE of 6.0 years, while hi-tech stands at 4.8 years.
• Portfolio Optimisation: Over 98% of single-user leases have built-in rental escalations (2.0% to 3.25% p.a.), supporting organic rental growth.

Asset Enhancement & Development Track Record

• Proven AEI and Redevelopment Execution: The REIT continues to rejuvenate its portfolio, with recent asset enhancement initiatives (AEIs) driving long-term value and tenant retention. Projects include modernisation, securing long master leases, and repositioning of assets for higher-value uses. Notable examples: Optus Centre, 26 Tuas Avenue 7, and 1 Kallang Way 2A.
• Development Pipeline: Development potential of up to 800,000 sq ft in Singapore and up to 1.5 million sq ft additional gross floor area in Australia post lease expiries, supporting future organic growth opportunities.
• Disciplined Acquisitions: AIMS increased its stake in AA REIT by 7% to 18.66% in July 2025, reinforcing sponsor alignment and long-term commitment. Recent strategic acquisitions include the Framework Building in Singapore (acquired Nov 2025).

Market Outlook and Value Drivers

• Singapore Macro Environment: Despite macro uncertainties, structural fundamentals remain favourable. Manufacturing, particularly biomedical and electronics, saw robust growth (+15% y-o-y in 4Q 2025). Industrial property demand is underpinned by supply-chain resilience and e-commerce growth.
• Australia Market Dynamics: RBA raised the cash rate to 3.85% in Jan 2026 amid inflationary pressures, but demand for high-quality industrial assets remains resilient, supported by infrastructure investments and urban population growth.
• Strategic Positioning: AA REIT is well-positioned to benefit from macro and structural trends, with a focus on accretive acquisitions, value-add initiatives, and proactive capital management to underpin sustainable growth.

Potentially Price-Sensitive Information for Shareholders

• Aggregate Leverage Increase: The rise in leverage to 36.6% provides more headroom for future growth but may be watched by the market for further debt-funded expansion or acquisition-related announcements.
• Perpetual Securities Issuance: The S\$150 million perpetual securities issue post quarter-end enhances the REIT’s financial flexibility and signals preparedness for further expansion or investment opportunities.
• Strong Rental Reversions: Sustained positive rental reversions, especially in key segments, support DPU growth and may influence investor sentiment positively.
• High Portfolio Occupancy: Portfolio occupancy rates above the JTC national average and rising tenant retention reinforce the REIT’s defensive qualities, potentially attracting yield-focused investors.
• Ongoing Refinancing Discussions: Active negotiations for upcoming debt maturities mitigate refinancing risk, a key consideration in the current interest rate environment.
• Sponsor Commitment: AIMS’ increased stake in the REIT and ongoing asset enhancement initiatives signal confidence in long-term value creation.

Distribution Details

• Upcoming Distribution: DPU of 2.53 Singapore cents for the period 1 October to 31 December 2025; ex-date is 13 February 2026, with payment slated for 26 March 2026.

Conclusion

AA REIT’s 3Q FY2026 results underscore its resilience, prudent capital management, and ability to deliver stable returns through market cycles. With a diversified and defensive portfolio, robust organic rental growth, and proactive asset and capital management, the REIT appears well-positioned for sustainable performance. The recent increase in leverage, perpetual securities issuance, and ongoing sponsor alignment may be closely watched for their impact on future growth and distributions. Investors should monitor upcoming refinancing activities and further acquisition or asset enhancement announcements, which could be catalysts for share price movement.

Disclaimer: This article is for informational purposes only and does not constitute investment advice or a recommendation to buy or sell any security. All forward-looking statements are subject to risks and uncertainties. Please consult with your financial advisor before making investment decisions.

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