AIMS AMP Capital Industrial REIT (AA REIT) Q4FY18 - Actual DPU

Looking to the actual number in the DPU

The result of Q4FY18 compare to Q3FY18 based on the DPU alone will seem paint a good picture, if we dig deeper into the Income statement, we will see

1. Gross revenue is down from $28,867 to $28,032 (-2.89%)
2. Net Income is down from $19,233 to $17,669 (-8.13%)

However even with the 2 figure above,

1. Dividend Payout is up from $17,076 to $17,975 (5.26%)
2.  Dividend per unit is up from 2.62 cent to 2.63 cent 

Looking at the footnote, we will know that Q4FY18 dividend is supported by the retained earning from the past 3 quarters total amount is  $1,947 where in previous years it was $414 and $818.

If we to took away the amount then the payout will go down to $16,028 and with the increase of the total shares due to the private placement at $1.3, we will get 2.34 cent (the people who get the private placement enjoy the income that was retained in last 3 quarter huh? fair? this is reality...)

Few key notes from the management

1. Lower occupancies at 27 Penjuru Lane and 8 & 10 Pandan Crescent

The gross revenue achieved for 4Q FY2018 of S$28.0 million was S$0.8 million lower than that of 3Q FY2018. This was mainly due to lower occupancies at 27 Penjuru Lane and 8 & 10 Pandan Crescent. Some of the vacancies at 27 Penjuru Lane and 8 & 10 Pandan Crescent have since been filled and rental contributions will commence after the rent-free fit-out periods.

2. Higher operating expense

Property operating expenses for 4Q FY2018 of S$10.4 million were S$0.7 million higher than the property expenses for 3Q FY2018 mainly due to higher costs arising from the reversion of one additional phase of 20 Gul Way to multi-tenancy leases on 28 December 2017 and timing of repair and maintenance works carried out for the Group’s portfolio of properties.

3.One of the main drag (3 Tuas Avenue) will go to redevelopment so we will not see this producing the income so soon

The gross revenue achieved for FY2018 of S$116.9 million was S$4.3 million lower than the gross revenue for FY2017 of S$121.2 million (excluding property tax refund of S$1.1 million). This was mainly due to lower rental and recoveries from 20 Gul Way as five phases of the property reverted to multi-tenancy leases and the expiry of the master lease at 3 Tuas Avenue 2. This was partially offset by rental contribution from 30 Tuas West Road as it became income producing from 27 February 2017 and the maiden rental contribution from 8 Tuas Avenue 20 in 3Q FY2018.


What will be FY19 Dividend?

1. 51 Marsiling road that should start to contribute after the fitting period that will contribute $3.5 million in gross revenue per year however based on the rental income, it still unable to cover the deficit from the dpu income $1,947 which if multiple by 4 quarter it will be $7.7 million
2. Will the secured tenant at 27 Penjuru Lane and 8 & 10 Pandan Crescent after fitting period help?
3. One time event for Higher property operating cost help?
4. Manager able to secure more tenant? since the occupancy rate now is 90.5%
5. 18% lease to expired in FY19 with 3.5% in the master lease
6. 24% decrease in rental reversion in Q4FY18

*Currently vested with 15k shares