ARA LOGOS Logistics Trust Review @ 2 February 2021

Basic Profile & Key Statistics

ARA LOGOS Logistics Trust (ALOG) is a pure Logistics REIT that owns 27 properties in Singapore and Australia.

Performance Review

Gross revenue and NPI increased YoY by 8.6% and 10.7% respectively mainly due to commencement of new leases at certain properties as well as additional revenue from DHL Supply Chain ARC. Distributable income from operations increased by 22.6% YoY.

2H DPU increased by 8.9% YoY; excluding one-off items, DPU from operations increased by 16.3% YoY.

Rental reversion is 9.8% for 2H FY2020 and 4.8% for FY2020.

The acquisition of Australian properties is still in progress; private placement and preferential offer are completed, the next would be the Ivanhoé and LOGOS issuance for up to approximately S$70.0m and S$ 18.7m worth of New Units.

Lease Profile

• Occupancy is high at 98.5%.
• WALE is short at 2.8 years where the highest lease expiry of 27.5% falls in this year.
• Weighted average land lease expiry is short at 44.99 years.

Debt Profile

• Gearing ratio is moderate at 39%.
• Cost of debt is high at 3.22%.
• Fixed rate debt % is low at 69.1%.
• Unsecured debt % is moderate at 72.2%.
• WADE is slightly long at 3.1 years where the highest debt maturity of 41% falls in 2024.
• Interest coverage ratio is slightly high at 4 times.

Diversification Profile

• Top geographical contribution is high at 74%
• Top property contribution is high at 25.6%.
• Top tenant contribution is high at 14.1%.
• Top 10 tenants contribution is high at 52.8%.

Key Financial Metrics

• Property yield is high at 6.7%
• Management fees over distribution is slightly low at 13.2% in which unitholders receive S$ 7.58 for every dollar paid.
• Distribution on capital is high at 4.7%
• Distribution margin is moderate at 49%.
• 2.15% of past 4 quarters DPU is from income support.

Trends

• Slight Downtrend - Interest Coverage Ratio, Property Yield
• Downtrend - DPU, NAV per Unit, Distribution on Capital, Distribution Margin

If we only look at the period after the synergy with LOGOS in April, then all the above items mentioned are stabilized.

Relative Valuation

• Dividend Yield - Past 4 quarters DPU @ 5.25 cents / average yield @ 8.58% = S$ 0.61
• Price/NAV - NAV @ S$ 0.573 x average P/NAV @ 1.08 = S$ 0.62

Author's Opinion

Favorable	Less Favorable
High Occupancy	Short WALE
High Property Yield	Short Weighted Average Land Lease Expiry
High Distribution on Capital	High Cost of Debt
	Concentrated Debt Expiry
	High Top Geographical Contribution
	High Top Property Contribution
	High Top Tenant & Top 10 Tenants Contribution

ALOG performance has been improved as compared to last year in terms of gross revenue, NPI and DPU from operations. And with the acquisition, ALOG fundamental would definitely be further improved especially for its lease profile and diversification profile. Althought gross revenue, NPI and distributable income are expected to increase after acquisition, the Pro Forma DPU shown is slightly dilutive due to enlarged unitholders base.

For more information, you could refer to:

SREITs Dashboard - Detailed information on individual Singapore REIT

SREITs Data - Overview of Singapore REIT

REIT Analysis - List of previous REIT analysis posts

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REIT Investing Community - Facebook Group where members share and discuss REIT topic

*Disclaimer: Materials in this blog are based on my research and opinion which I don't guarantee the accuracy, completeness, and reliability. It should not be taken as financial advice or a statement of fact. I shall not be held liable for errors, omissions as well as loss or damage as a result of the use of the material in this blog. Under no circumstances does the information presented on this blog represent a buy, sell, or hold recommendation on any security, please always do your own due diligence before any decision is made.