ARA Logos posts 8.9% rise in H2 DPU to 2.927 S cents

DBS analysts have maintained a "buy" call for ARA Logos Logistics Trust (ARA Logos) with a higher target price of S$0.80, implying an upside of 17.8 per cent.

This comes as ARA Logos announced its results on Tuesday, unveiling a rise in its distribution per unit (DPU) by 8.9 per cent to 2.927 Singapore cents for the six months ended Dec 31, 2020.

On an adjusted basis, DPU was 2.646 Singapore cents, up 16.3 per cent from 2.275 cents the year before. This excludes a one-off distribution consisting of S$2 million of the remaining retained distributable income released as part of H2 2020 distributable income and capital distribution of S$1.3 million.

Gross revenue was up 8.6 per cent to S$59.6 million for the half year, from S$54.9 million the year prior. This was mainly due to the commencement of new leases at ALOG Commodity Hub, ALOG Gul LogisCentre, ALOG Changi DistriCentre 1 and Pandan Logistics Hub as well as additional revenue from DHL Supply Chain ARC, partially offset by the lease expiry at 11-19 Kellar Street, Berrinba, Australia.

Net property income (NPI) was S$46.1 million, rising 10.7 per cent from S$41.6 million a year ago.

Distributable income increased 14.9 per cent year on year to S$33.5 million, from S$29.2 million.

The distribution will be paid out on Feb 26, after books closure on Feb 3.

DBS analysts said that they like ARA Logos for its high and growing yields that are in excess of 7 per cent, backed by resilient pure-play logistics portfolio.

Despite the ongoing Covid-19 pandemic, its portfolio has demonstrated its resilience by reporting robust occupancies of more than 97 per cent, while reversions stayed positive and are expected to remain so in the coming year, said the analysts.

Leveraging on the sponsor's network, ARA Logos can look to grow in key logistics hubs in Australia, China and South Korea, they added.

Meanwhile, for the full year ended Dec 31, 2020, DPU was 4.9 per cent lower at 5.25 Singapore cents, from 5.523 cents a year ago. This was after factoring in the enlarged unit base with private placement units issued on Nov 11 and preferential offering units issued on Jan 25.

On an adjusted basis, excluding the one-off capital distribution of S$1.3 million in FY2020, DPU was 8.8 per cent higher at 5.152 Singapore cents, from 4.736 cents a year ago.

Gross revenue was 3.4 per cent higher at S$117.4 million, while NPI grew 4.8 per cent to S$90 million.

The increases in gross revenue and NPI were largely due to the commencement of new leases at certain properties as well as additional revenue from DHL Supply Chain ARC. This was partially offset by transitory downtime between leases at Pandan Logistics Hub and ALOG Cold Centre and the lease expiry at 11-19 Kellar Street, Berrinba.

The manager has further released the remaining S$1 million retained distributable income to unitholders. The total distributable income of S$2.5 million retained in Q1 2020 was fully released back to unitholders as at Dec 31, 2020.

As at Dec 31, 2020, aggregate leverage was lower at 39 per cent compared with 40.1 per cent a year ago, said the manager. Committed occupancy was at 98.5 per cent with about 2.6 million square feet of leases successfully inked in FY2020, on the back of proactive leasing efforts.

ARA Logos' portfolio weighted average lease expiry by net lettable area stood at 2.8 years as at Dec 31, 2020. The portfolio saw significant positive rental reversion of 9.8 per cent and 4.8 per cent in H2 2020 and FY2020 respectively.

Karen Lee, chief executive of the manager, said: "Backed by our sponsor, Logos, we will continue to execute our portfolio rebalancing and growth strategy to drive long-term sustainable returns for our unitholders."

Units of ARA Logos were trading 0.7 per cent or 0.5 Singapore cent lower at 67.5 cents as at 4.15pm on Tuesday.