AIMS APAC REIT’s DPU Rose 4%, but Leverage Climbed to 37.4%

AIMS APAC REIT (SGX: O5RU) reported distribution per unit (DPU) of 4.908 Singapore cents for the six months ended 30 September 2026, up 4.0% from 4.720 cents a year earlier. Net property income grew faster, but the trust’s leverage also rose sharply. For a dividend investor, the question is whether stronger rental income can keep supporting the payout after the change in funding. The unaudited results were announced on 15 October 2026. [S3, p. 30] [S3, p. 21] [S3, p. 38]

Property income did more of the work

Net property income rose to S$75.9 million from S$68.4 million, while distributions attributable to the half-year increased to S$40.5 million from S$38.6 million. The manager attributed higher revenue to rents and recoveries at existing properties, contributions from acquisitions and the stronger Australian dollar when translated into Singapore dollars. The sale of 8 Senoko South Road partly offset those gains. These drivers matter because acquisition and currency effects may not recur at the same rate as rent growth. [S3, p. 30] [S3, p. 36]

The distribution statement offers another check. The amount added to the taxable distribution pool during the half-year rose to S$39.1 million from S$32.4 million. That is the current-period addition after the statement’s adjustments; the larger amount available for distribution also includes balances brought forward. Capital distribution fell to S$2.1 million from S$6.2 million. The higher DPU therefore did not depend on a larger capital-distribution component. [S3, p. 4]

For the September quarter alone, the approved 2.571-cent distribution comprises 2.411 cents of taxable income and 0.160 cents of capital distribution. The record date is 28 October 2026 and the scheduled payment date is 11 December 2026. The manager said its distribution reinvestment plan will apply. These are the timetable and terms disclosed in the 15 October announcement. [S3, p. 40] [S3, p. 31]

The funding mix changed

At 30 September, aggregate leverage was 37.4%, up from 26.8% at 31 March: a 10.6 percentage-point increase. The trust redeemed S$250 million of 5.375% perpetual securities during the half-year. The manager said additional loan drawdowns used to fund that redemption and the Hazelmere acquisition were the main reasons borrowings increased, alongside currency translation on Australian-dollar debt. [S3, p. 21] [S3, p. 22] [S3, p. 34]

Perpetual securities are recorded as equity in these statements, whereas bank loans are borrowings. Replacing part of the former with the latter therefore raises reported leverage even though both forms of funding have costs. Group borrowings rose to S$817.6 million from S$567.8 million, while perpetual-security principal outstanding fell to S$375 million from S$625 million. [S3, p. 20] [S3, p. 22]

The manager said the replacement perpetual securities carry lower rates and estimated roughly S$3 million of annual savings from redeeming the older issue. That estimate should not be read as a forecast increase in DPU: the added borrowing has a cost too. In the reported half-year, borrowing costs fell to S$15.4 million from S$16.0 million, but the amount reserved for perpetual-security holders rose to S$13.8 million from S$12.3 million. [S2, p. 2] [S3, p. 3] [S3, p. 36]

Cash coverage needs a wider view

Net operating cash flow improved to S$70.0 million from S$54.9 million. Yet the cash-flow statement places S$14.8 million of borrowing costs paid and S$14.9 million of payments to perpetual-security holders under financing activities. It also records S$11.7 million of investment-property capital expenditure under investing activities. Operating cash flow alone is thus an incomplete measure of cash left for unitholders. [S3, p. 12]

Cash distributions to unitholders during the half-year were S$35.2 million. The distribution statement records S$40.6 million distributed during the period; the difference reflects S$5.4 million paid through newly issued units under the reinvestment plan. Those payments relate to the March and June quarters, whereas the S$40.5 million headline distribution belongs to the current reporting half-year. Keeping the periods and cash-versus-unit payments separate avoids overstating cash paid. [S3, p. 12] [S3, p. 13] [S3, p. 4]

The higher DPU has support from improved property income and a larger current-period addition to the taxable distribution pool. The next results should show whether that improvement persists after the new borrowing structure has affected a full reporting period. At 30 September, interest coverage was 2.8 times under a measure that includes distributions on hybrid securities; that and leverage are useful checks alongside the next DPU. [S3, p. 4] [S3, p. 21]