AIMS AMP Capital Industrial REIT ("AACI REIT") announced its 3Q FY15 (Y/E Mar) results this morning before trading hours and we tuned in to the Analyst Briefing conference call. These are the key takeaways from the briefing.

Joint-venture (JV) profits largely due to non-operating revaluation gain – AACI REIT's exposure to the Optus Centre, Sydney, Australia is through its 49% interest JV. The valuation of AACI REIT's interest rose by A$10.1 million (S$11.2 million) to A$195.0 million due to the uplift in property revaluation. This resulted in S$15.23 million share of results of JV for 3Q FY15. (1Q FY15: S$3.72 million; 2Q FY15: S$3.90 million)

Details on lease expiry profile from FY16 to FY18 – The Manager shared that FY16 lease expiry (19.1%) is mainly from 27 Penjuru Lane, while the FY17 (15.5%) and FY18 (24.6%) lease expiry are mainly from 20 Gul Way. Tenants are typically engaged 6 to 9 months before their lease expires; Manager expects rental reversions in the high single-digit region. (Portfolio Net Lettable Area: 621 thousand sq m)

Master lease vs. Multi-tenanted profile – Tenant profile is now split 50/50 between the two types. The Manger opined that this is a good mix, with organic growth through inbuilt rental escalations and opportunity to increase rent. The Manager expects the tenant profile to shift towards multi-tenanted over time as Master leases roll off.

Growth strategy through acquisitions and now include build-to-suit (BTS) projects – The Manager shared that the growth strategy of the REIT is through acquisitions and is currently looking for suitable BTS projects.

Acquisition strategy focused in Singapore and Australia – The Manager guided that acquisition opportunities are primarily in Singapore, but with the guiding principle of including overseas locations where they or the Sponsor has expertise in, i.e. Australia. (Portfolio currently consists of 25 properties in Singapore and 1 in Australia.)

Investment Action

No stock rating or price target provided, as we do not have coverage on AACI REIT.

Source: Phillip Securities Research - 31 Jan 2015