Australian Industrial REIT (ANI)

By Jason Fittler

ANI is a real estate investment trust.

It buys and holds Australian industrial properties. It collects rent from the tenants of those properties. ANI also benefits from any appreciation in the capital value of those properties.

Fife Capital Funds Limited (Fife Funds) is the Responsible Entity of the Fund.

ANI reported FY14 EPS of 12.7c, which exceeded the PDS forecast by 1.23cps. This resulted from acquisition activity and an earlier listing date than assumed in PDS. 

Dividend per share of 11.39c represents an 8.25% yield on IPO issue price of $2.00.

The portfolio is 100% occupied, with 5.1 year weighted average lease expiry. 

The net tangible assets increased to $1.94ps from $1.93 at listing. An $8.6m increase in property valuations was the driver.

While gearing increased from 29% to 33%, it remains within target range of 25-40%.

ANI was successful in expanding revolving credit facility by $30m and extending maturity dates.

Around 40% of the portfolio (by area) is due for expiry in late FY16 and FY17.  It is critical for the group to address these expiries to ensure smooth earnings and distribution growth in this period.

Major expiries include: Newton Rd, Wetherill Park, Temple Drive, Thomastown, Vic, Keon Parade, Keon Park, Vic and Frankston-Dandenong Rd, Dandenong Sth, Vic.

Our price target of $2.17 is based on a blended valuation of the 2015 estimated net asset value and) and 1year forward discounted cash flow.

At the current price the stock is reasonable value. But, contains some risk with leases expiring in the short-term.

It is an income property play for those looking for yield and less volatility.

For more information about Australian Industrial REIT (ANI) please contact us on 07 4771 4577.