AIMS APAC REIT Announces S\$100 Million 4.25% Perpetual Securities Issue

Key Highlights of the Announcement

• Proposed Issuance: AIMS APAC REIT, managed by AIMS APAC REIT Management Limited, will issue S\$100 million in 4.25% perpetual securities, known as the Series 006 Perpetual Securities.
• Issue Structure: The securities are perpetual in nature, meaning they have no fixed maturity date. They will be issued under the existing S\$750 million Multicurrency Debt Issuance Programme.
• Pricing and Distribution: The initial distribution rate is set at 4.25% per annum from 9 March 2026 to 9 September 2031. Thereafter, the rate resets every five years to a new rate based on the 5-year SORA OIS plus an initial spread of 2.59%.
• Redemption Flexibility: The issuer has the option to redeem all (but not some) securities on the first reset date or any distribution payment date thereafter, subject to giving advance notice. Redemption can also occur under certain exceptional circumstances (e.g., taxation, regulatory, accounting reasons).
• Optional Distribution Deferral: The issuer has the right to defer payments of any distribution at its sole discretion. These deferred distributions are non-cumulative, meaning missed payments do not accrue or compound.
• Restrictions on Junior Payments: If distributions are not paid in full, the issuer and its subsidiaries are restricted from paying dividends or redeeming junior or parity obligations until distributions are resumed, except in special cases (e.g., employee benefit plans, conversion of obligations).
• Use of Proceeds: Net proceeds will be used to refinance existing borrowings, fund capital expenditure or working capital needs, acquire investment properties, or refinance the existing S\$250 million fixed rate subordinated perpetual securities.
• Listing: Application will be made for the Series 006 Perpetual Securities to be listed and quoted on the Singapore Exchange (SGX-ST).

Details for Shareholders and Potentially Price-Sensitive Information

• Strengthened Balance Sheet: The perpetual securities will support the REIT’s ability to refinance debt and fund acquisitions, potentially improving its financial flexibility and supporting growth ambitions.
• Distribution Deferral Risk: The option for the issuer to defer distributions at its discretion, with no obligation to pay missed distributions, introduces a unique risk for investors. While this feature may provide financial flexibility to the issuer, it can impact the attractiveness of the security for yield-focused investors.
• Subordination: These securities are subordinated and unsecured, ranking pari passu with other parity obligations and behind all senior debt. In a liquidation scenario, holders would have lower priority for repayment.
• Redemption and Reset Features: The callability of the securities after 5.5 years and the floating reset of the distribution rate could impact the securities’ market value, depending on prevailing interest rates and the issuer’s credit profile.
• Potential Impact on Share Price: The issue of new perpetual securities can have implications for the REIT’s leverage ratios, cost of capital, and future distribution capacity. If used effectively to refinance higher-cost debt or fund value-accretive acquisitions, this could support the REIT’s share price. Conversely, excessive use of perpetuals could raise concerns about financial risk and distribution sustainability.

About AIMS APAC REIT and Sponsor

AIMS APAC REIT is a Singapore-listed real estate investment trust with a diversified portfolio of 28 industrial, logistics, and business park properties across Asia Pacific, mainly in Singapore and Australia. It is managed by AIMS APAC REIT Management Limited and sponsored by AIMS Financial Group, a diversified financial services group with operations across Australia and Asia.

The REIT is a constituent of several major indices, including the FTSE EPRA Nareit Global Developed Index, MSCI Singapore Small Cap Index, iEdge Singapore Next 50 Index, and iEdge Singapore Next 50 Liquidity Weighted Index.

Conclusion

The announcement of the S\$100 million perpetual securities issue is a significant development for AIMS APAC REIT. It demonstrates proactive capital management, provides flexibility for refinancing and growth, and could impact the REIT’s future distribution policy and leverage profile. Investors should pay close attention to the use of proceeds, the issuer’s approach to distribution deferrals, and the overall impact on the REIT’s financial health and distribution outlook.

Disclaimer: This article is for informational purposes only and does not constitute investment advice, an offer, or a solicitation to deal in any securities. The value of units and income from them may fall as well as rise. Investments in REITs and related securities are subject to risks, including the possible loss of principal. Past performance is not indicative of future performance. Investors should consult their financial advisors before making any investment decisions.

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