AIMS APAC REIT (AAREIT) is an industrial REIT with income-producing property assets across the Asia Pacific region. Its portfolio comprises 27 properties, with 24 in Singapore (representing 70.4% of portfolio value) and 3 in Australia (representing 29.6% of portfolio value), with a total portfolio value of S$2.12b (as of 30 September 2025).
AAREIT (though its trustee) plans to issue new SGD NC5 perpetuals at an initial price guidance (IPG) of 4.400% for accredited and institutional investors only. These perpetuals come with reset dates at the end of the 5th year and every 5 years thereafter – there will be no step-ups. The issuer may redeem (call) the bonds after 5 years (21 January 2031) or on every distribution payment date thereafter.
The bonds are expected to be unrated, while the issuer is unrated too. Net proceeds will be used to refinance the issuer’s existing perpetuals (AAREIT 4.700% Perpetual Corp (SGD)) and for general working capital and capital expenditure requirements.
Operational highlights:
AAREIT’s portfolio broadly remained stable despite a minor deterioration in its metrics over the past year. Rental reversion rose 7.7% year-on-year (YoY) in the first half ending 30 September 2025 (1HFY2026); while this marked a ‘slowdown’ from the +16.9% in 1HFY2025, we think it remains a decent rate. The strongest reversions were seen in the ‘Logistics & Warehouse’ segment (+10.3% in 1HFY2026), with the other two segments of industrial and business park being positive contributors as well at +2.9% and +0.6% YoY, respectively.
Portfolio occupancy also fell from 95.0% in 1HFY2025 to 93.3% in 1HFY2026. This comprised a 100% occupancy rate in Australia and a 92.3% occupancy rate in Singapore, though management highlighted that the 93.7% figure is still above JTC’s national average of 89.1%. Management also noted that this figure would have been 95.1% (instead of 93.3%) after excluding the impact of asset enhancement initiatives and transitory movement by tenants. We think occupancy rates remain high (notwithstanding the slight decline), suggesting AAREIT’s portfolio remains high-quality.
Financial highlights:
AAREIT’s recorded flat revenues at S$93.7m (+0.2% YoY) in 1HFY2026, while net property income (NPI) rose by +1.1% to S$68.4m in 1HFY2026. Management cited tailwinds from positive rental reversions (+7.7% in 1HFY2026) ‘across all segments of the portfolio, which continued positive momentum from last year (+16.9% in 1HFY2025). In particular, they highlighted the logistics and industrial segments as key drivers of revenue this time, though the impact on NPI was mitigated by higher property tax and electricity costs.
The majority of revenue / NPI gains were from its Singapore portfolio (rather than the Australia portfolio) with Singapore properties posting a NPI growth of 2.8% YoY, offsetting Australia’s NPI decline of 5.5% YoY (due to the weaker Australian dollar compared to the Singapore dollar).
Finance costs decreased 18% YoY from S$19.6m to S$16.0m. Fair value of investment properties declined YoY by S$2.4m in 1HFY2026, like the decline of S$2.6m in 1HFY2025. Nonetheless, AAREIT’s total return after tax still increased moderately by 9.5% to S$47.1m in 1HFY2026, and we think it is likely that this growth in profitability is likely to continue moving forward due to positive operating tailwinds, including an upcoming earnings accretive acquisition of the Framework building, and the recently completed renovation works at Clementi Loop.
Looking ahead, management guidance appears cautiously positive. Within Singapore, sustained manufacturing growth (observed through metrics like PMI) also gave management some confidence in demand ahead. As for Australia, ongoing infrastructure investment (e.g. extension of Sydney Metro line) is expected to underpin long-term demand for AAREIT’s assets. Nonetheless, uncertainties involving the global economy and global trade continue to linger – they could eventually weigh on sentiment if they persist.
In conclusion, we think AAREIT continues to be a decent issuer and a clear beneficiary of secular tailwinds within the logistics space. Its property portfolio appears high-quality – while it may be difficult for AAREIT to generate strong growth of rental reversions (double-digit growth) year after year consistently, we think it should remain decently profitable, barring a major downturn.
Credit highlights:
AAREIT reported an aggregate leverage of 35.0% as of 30 September 2025 (33.4% in 1HFY2025), which represents a sizeable buffer over MAS requirements of 50.0% (and ample debt headroom of over S$170m before hitting this limit). Additionally, AAREIT’s adjusted interest coverage ratio was 2.5x, exceeding the regulatory requirement of 1.5x. These two ratios suggest that AAREIT retains a comfortable buffer over its main regulatory requirements.
Regarding interest payments, we note that its blended debt funding cost has decreased from 4.4% in 1HFY2025 to 4.2% in 1HFY2026. We think this is a natural result of refinancing in an environment of easing rates (compared to several years of higher interest rates in the recent past). Management has reduced its reliance on fixed-rate debt, which now accounts for 70% of total debt (1HFY2025: 74%).
AAREIT’s debt maturity profile also shows light near-term refinancing pressures, with zero debt maturing in FY2026. However, looking ahead, AAREIT has 60% of its debt (S$358m) maturing in FY2027 and FY2028 (note that FY26 is 31 March 2026). Nevertheless, we remain comfortable with AAREIT’s ability to meet its debt obligations given its ability to generate strong operating cash flows (average of S$112m over the past 4 years) and healthy available liquidity of S$169.7 million in cash and undrawn facilities today.
Its debt maturities are fairly well-distributed: of its reported S$707m in gross debt, about one-third is due in FY2027, one-third in FY2028 and FY2029 combined, and one-third in FY30. Supposing AAREIT continues to benefit from tailwinds within the logistics segment, coupled with its existing $169.7m in cash and undrawn facilities today, we think AAREIT’s debt profile looks manageable.
Table 1: Peer comparison
|
Bond Name |
Issuer Name |
Years to Call |
Ask Price |
Yield to Worst |
Credit Rating (S&P / Moody’s / Fitch) |
|
AAREIT 4.400% Perpetual Corp (SGD)* |
AIMS APAC REIT |
5.000 |
100.000 |
4.400% |
- / - / - |
|
AIMS APAC REIT |
4.180 |
103.500 |
3.785% |
- / - / - |
|
|
ESR REIT |
4.185 |
106.300 |
4.095% |
- / - / BBB |
|
|
Mapletree Logistics Trust |
3.610 |
103.933 |
3.137% |
- / - / BBB- |
|
|
GLL IHT Pte Ltd |
4.122 |
103.617 |
3.400% |
- / - / - |
|
|
CDL Hospitality Trusts |
4.851 |
100.050 |
3.688% |
- / - / - |
|
|
*Bond is not yet issued, final price guidance is not yet confirmed Source: Bloomberg, Bondsupermart, iFAST compilations. Data as of 12 Jan 2026. |
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Overall, AAREIT’s credit profile appears solid to us, with no major red flags. Our analysis below takes the 4.40% IPG as our reference, though investors should note that the final price guidance (FPG) is likely to come in below the 4.40% IPG level. We list some peer comparisons in Table 1 above.
AAREIT’s new issue of IPG of 4.400% represents a pickup of around 250+bps over 5y SORA (1.8598% as of 12 January 2026). This 4.400% yield also represents a decent yield pickup compared to another one of its outstanding perpetuals (AAREIT 4.700% Perpetual Corp (SGD)), whose 3.785% yields imply a spread of roughly 61bps.
We also compare these new perpetuals with those from other issuers, all issued over the past year or so. Some of these issuers have similar businesses to AAREIT, with logistics and/or industrial exposure (such as EREIT and MLTSP), while others may have different business focuses but are still within the broader property space (such as GUOLSP and CDREIT).
Generally, these new AAREIT perpetuals will offer higher yields and spreads compared to most other bonds in Table 1 (see above).
We emphasise that perpetual bonds in general (including these new perpetuals) may be subject to several risks, including non-call risks, considering the smaller initial margin for this issue relative to those of AAREIT’s outstanding perpetuals. Other typical clauses include non-cumulative deferral and dividend-stopper clauses. Investors who are comfortable with these perpetual-related risks may consider this new issuance attractive, considering AAREIT’s solid outlook and the decent yield pickup relative to peers.
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