AIMSAMPReit – Phillip

1QFY11 Results

• 1Q11 revenue of $16.0 million, net property income of $11.7 million, distributable income available to unitholders of $8.1 million.

• 1Q11 DPU 0.5376 cents

• Maintain Hold recommendation with fair value of $0.23

Stable results

AIMS AMP Capital Industrial REIT (AAC) recorded 1Q11 revenue of $16.0 million (+46.4% yy, +2.9% q-q), net property income of $11.7 million (+26.1% y-y, -1.2% q-q) and distributable income available to unitholders of $8.1 million (+100.1% y-y, +2.5% q-q). AAC paid out 97.5% of the distributable income. DPU for the quarter was 0.5376 cents (-64.4% y-y, 0.0 q-q). The improved y-y performance is due to the result of the recapitalization exercise whereby four buildings were acquired by the REIT which contributed positively. However DPU comparison was impacted as new units were issued during the exercise. On a q-q basis, results were little changed. Occupancy rate improved slightly over the previous quarter from 96% to 97.2%. Separately, AAC announced that it has commenced litigation against a former tenant for breach of lease agreement. The REIT had taken possession of the property and found new tenants for the space. Management does not expect material impact on the earnings.

Capital value of the portfolio maintain constant with slight revaluation upwards on the sole Japan property. Total portfolio value is $636.1 million. Total debt of the REIT is $190.4 million and gearing is at 28.8%.

There was not much development in 1Q10 and results were within expectations. Management mentioned earlier in the year that near-term strategy is to carry out asset repositioning by divesting properties and recycling capital into higher value uses such as reducing debt or acquiring quality assets. Management is also looking to refinance the existing debt with new facilities that charge lower cost. We are thus expecting management to carry out these activities in the course of the year.

In our modeling, we had assumed a 3% vacancy rate for the portfolio which was in-line with 1Q11 occupancy rate of 97.2%. We keep our estimates and maintain our Hold recommendation with fair value of $0.23. We have a FY11E DPU of 1.99 cents which translate to a dividend yield of 8.9%.