Key Highlights
Financial Performance
AA REIT recorded a 5.7% YoY increase in gross revenue to S\$139.1 million and a 1.9% YoY rise in net property income (NPI) to S\$99.6 million for the first nine months of FY2025. Distributions to unitholders climbed to S\$57.5 million, while DPU grew from 6.990 cents to 7.070 cents. CEO Russell Ng attributed these gains to “sustained positive rental reversions across all segments of the portfolio.”
Portfolio Updates and Occupancy
The REIT achieved a positive rental reversion of 21.2% across 19 new leases and 41 renewals, representing 16.4% of its net lettable area. Committed portfolio occupancy stood at 96.3%, excluding temporary impacts from AEIs and tenant movements. The weighted average lease expiry (WALE) remained stable at 4.7 years, and 82.9% of gross rental income was derived from tenants in defensive industries.
Strategic Divestment
AA REIT announced the proposed divestment of 3 Toh Tuck Link, a non-core property, at a premium to valuation. According to the Manager, this move aligns with its capital recycling strategy to reinvest in growth opportunities and enhance portfolio value.
Sustainability Initiatives
The REIT launched significant sustainability efforts, including the installation of electric vehicle (EV) fast-charging stations at four properties and Phase 2 of a rooftop solar PV system across three properties. The solar panels, with a capacity of 3.65 MWp, aim to achieve AA REIT’s medium-term solar generation goals by FY2027. Additionally, a smart metering system and energy-saving lighting systems have been implemented to support the REIT’s target of a 42% reduction in carbon emissions by FY2030.
Capital Management
AA REIT reported prudent financial management with an aggregate leverage of 33.7% and no debt refinancing required until FY2027. It has financial flexibility of approximately S\$200.5 million in undrawn committed facilities and cash reserves. The weighted average debt maturity stands at 3.2 years, with a blended debt cost of 4.4% and an interest coverage ratio of 3.9.
Market Outlook
Singapore’s economic growth of 4.3% in Q4 2024 provides a positive backdrop, with strong demand for logistics and warehouse spaces expected to persist. Similarly, in Australia, AA REIT’s assets benefit from infrastructure investment and rezoning initiatives in high-growth areas like Macquarie Park. Despite macroeconomic uncertainties, the Manager remains optimistic about growth opportunities.
