Alpha Integrated REIT · Squad Capital

Investment conclusionACCUMULATE SELECTIVELY; PREFER BELOW S$0.50 EX-DPUConviction: Moderate

Alpha Integrated REIT’s recovery has moved from thesis to reported cash earnings: 1H2026 occupancy reached 95.0%, NPI grew 10.8%, distributable income rose 10.4% and financing cost declined. At S$0.520 the units trade near NAV, so the remaining case is a high-single-digit cash yield plus modest DPU growth rather than a large rerating. Accumulate selectively, with a preference for an ex-distribution price below S$0.50.

Price used: S$0.520
Base-case IRR: 10%–12%
Horizon: 3–5 years
Portfolio role: Recovery income / selective accumulation

Principal risk: New Tech Park and portfolio concentration.

2. Quick metrics

Price (27 Jul 2026)S$0.520

Income yield7.8% annualised 1H run-rate; 7.4% trailing

Base-case IRR10%–12%

Annualised 1H DPU yield≈7.8%

Trailing distribution yield≈7.4%

Aggregate leverage34.9%

3. What the company does

Business overview

Alpha Integrated REIT is an internally managed Singapore industrial REIT. Its portfolio includes high-tech industrial, business-park and general industrial properties, with New Tech Park as the largest asset. The current thesis is an occupancy, rent and financing-cost recovery rather than rapid acquisition-led growth.

How it makes money

Collects rents from a concentrated Singapore industrial portfolio.
Captures upside through lease-up, positive rental reversions and asset enhancements.
Uses an internally owned manager, reducing external-manager leakage and acquisition-fee incentives.
Retains flexibility to claim capital allowances or retain distributable cash, which can cause declared DPU to differ from operating distribution capacity.

4. Core investment thesis

The recovery has converted into per-unit cash earnings

Occupancy reached 95.0%, NPI rose 10.8% and distributable income increased 10.4% in 1H2026. The result closes the main evidence gap in the earlier thesis: operating improvement is now visible in declared DPU rather than remaining only a leasing narrative.

Leasing and refinancing support the next DPU leg

Positive rental reversion, high tenant retention and a lower all-in financing cost can sustain modest DPU growth. With occupancy already near stabilised levels, FY2027 renewals and effective rents now matter more than further broad lease-up.

Internal management is beginning to show through in margins

NPI grew faster than revenue and the full 1H distribution was declared, strengthening the alignment case after internalisation. A longer record is still needed to prove the steady-state corporate cost base and capital-allocation discipline.

Near-NAV pricing and concentration cap the rerating case

At S$0.520 the units trade at roughly 0.98 times NAV before the 2.03-cent distribution. The income return remains attractive, but New Tech Park concentration, shorter leases and development execution require a price cushion rather than a premium valuation.

5. Main earnings drivers

Each row links an economic variable to the earnings mechanism, the assumption embedded in the base case and the company-specific KPIs that can validate or disprove it.

Driver	How it changes earnings	Current direction	Base-case assumption	Key measurable indicators
Occupancy, retention and lease expiry management	Maintaining occupied space protects recurring rent and NPI; vacancy, incentives and downtime reduce the effective contribution. With occupancy at 95%, retention through the larger FY2027 expiry schedule is now the central test.	Positive; recovery largely realised	Portfolio occupancy remains between 94% and 96%, tenant retention stays healthy and effective rents remain positive.	Portfolio and New Tech Park occupancy Tenant retention FY2027 lease expiries renewed Incentives and downtime Like-for-like NPI
Rental reversion and effective rent	Renewal spreads and higher signing rents raise revenue, but incentives, rent-free periods and vacancy determine the cash uplift.	Strongly positive, likely to moderate	Effective reversion remains positive after the 10.9% 1H2026 headline result and supports low-to-mid-single-digit revenue growth.	Headline and effective rental reversion Tenant retention Gross revenue growth NPI growth and margin
Financing cost, hedging and maturity	Lower interest expense passes directly into distributable income. Refinancing reduces maturity risk, while the 57.5% fixed-rate proportion leaves part of debt exposed to rate movements.	Improving	All-in cost remains near or below 3.8%, interest coverage stays above 4 times and the refinancing extends average maturity to about 2.4 years.	All-in financing cost Interest coverage Fixed-rate percentage Average debt maturity Refinancing spreads
Distribution conversion	The declared payout determines whether operating gains reach unitholders. Prior-period retention distorts reported growth, so distributable income and normalized DPU must be compared together.	Improved	FY2026 DPU reaches about 4.05–4.15 cents and future distributions broadly track recurring cash earnings.	Income available for distribution Declared DPU Cash retained Normalized year-on-year DPU growth
New Tech Park Phase 3 capital allocation	A new 19,508 sqm block can expand rent and NAV, but development creates value only when yield on cost exceeds funding cost and leasing risk is controlled.	Potentially positive; unapproved	The project proceeds only with approvals, acceptable pre-leasing, conservative funding and clear per-unit accretion.	Approvals and timeline Development cost Pre-leasing Yield on cost Funding mix and post-project gearing

6. Evidence for and against the thesis

This table tests each thesis claim with both supporting and disconfirming evidence. Confidence refers to the evidence currently available, not the attractiveness of the share price.

Thesis claim	Evidence supporting it	Contradictory evidence or unresolved issue	Confidence
The recovery has converted into per-unit cash earnings	Portfolio occupancy reached 95.0% NPI rose 10.8% versus 5.2% revenue growth Income available for distribution increased 10.4% The full 2.03-cent interim DPU was declared	Headline 19.4% DPU growth is flattered by prior-period retention; normalized growth is about 10% Occupancy is now near stabilised levels, reducing the remaining vacancy-recovery runway	High
Leasing and refinancing support the next DPU leg	Rental reversion was 10.9% and tenant retention 92.7% All-in financing cost declined to 3.76% Interest coverage improved to 4.2 times The S$75m refinancing should remove 2027 maturities	About 28.2% of leases expire in FY2027 Only 57.5% of borrowings are fixed-rate Headline rental reversion may overstate cash uplift after incentives	Medium–High
Internal management is beginning to show through in margins	NPI margin expanded about three percentage points Net finance costs declined 16.3% The full current-half distribution was declared	A longer post-internalisation record is needed to establish the steady-state corporate cost base Internal management does not by itself guarantee disciplined development or governance	Medium
Near-NAV pricing and concentration cap the rerating case	The S$0.520 cum-DPU price is approximately 0.98 times the S$0.53 NAV New Tech Park remains disproportionately important The portfolio WALE is only about 2.5 years	The ex-distribution price is closer to S$0.500, or about 0.94 times NAV The 7%–8% cash yield provides meaningful holding-period carry	High

7. Financial and margin profile

Metric	Current	Interpretation
1H2026 gross revenue	S$62.4m	+5.2% year on year
1H2026 NPI	S$37.2m	+10.8%; 59.5% NPI margin versus 56.5%
Income available for distribution	S$22.8m	+10.4%
Declared DPU	2.03 cents	+19.4% reported; about +10% after normalising prior retention
Portfolio occupancy / reversion	95.0% / +10.9%	Tenant retention 92.7%
Aggregate leverage	34.9%	S$339m borrowings; 100% unencumbered assets
Financing cost / ICR	3.76% / 4.2x	57.5% fixed-rate debt
Pro-forma debt maturity	2.4 years	After refinancing S$75m loan; no maturities until 2028

Margins and operating leverage

NPI grew more than twice as fast as revenue in 1H2026, lifting NPI margin from about 56.5% to 59.5%. This confirms genuine operating leverage from occupancy and cost absorption.
Net finance costs fell 16.3%, allowing property-level improvement to pass through to distributable income.
The next phase should be modelled more conservatively: with occupancy already at 95%, incremental growth depends on retention, effective rental reversion, financing savings and disciplined AEI execution rather than another large vacancy fill.

8. Balance sheet & capital allocation

Aggregate leverage: 34.9%
Pro-forma debt maturity: 2.4 years

Capital-allocation priorities and catalysts

Full-year DPU above 4.0 cents
Sustained positive effective rental reversion
S$75m refinancing and lower finance cost
Approvals, pre-leasing and attractive economics for New Tech Park Phase 3

9. Valuation summary

Metric	Current / normalized	Interpretation
Annualised 1H DPU yield	≈7.8%	4.06-cent run-rate at S$0.520; not a formal FY2026 forecast
Trailing distribution yield	≈7.4%	2H2025 1.83 cents plus 1H2026 2.03 cents
P/NAV	≈0.98x cum-DPU	NAV S$0.53; ex-2.03-cent distribution price is roughly S$0.500 and 0.94x NAV
NPI margin	59.5%	Expanded about 3.0 percentage points year on year
Preferred framework	DPU yield + P/NAV + NPI margin + ICR	Rerating potential is now smaller; per-unit cash growth matters more

10. Return scenarios (3–5 years)

Scenario	Assumptions	Indicative annual return
Bear	Occupancy falls below 92%, FY2027 renewals require incentives, financing cost rises and DPU settles at 3.6–3.8 cents; valuation falls toward 0.85–0.90x NAV.	1%–5% annualised
Base	FY2026 DPU reaches about 4.05–4.15 cents, occupancy remains 94%–96%, positive reversions moderate and DPU grows 2%–4% annually; exit valuation remains around 0.95–1.05x NAV.	10%–12% annualised
Bull	Occupancy stays above 95%, financing cost falls further, DPU reaches 4.4–4.6 cents over the holding period and New Tech Park Phase 3 is demonstrably accretive.	13%–16% annualised

Squad Capital estimates, not company guidance. Refresh when price, normalized earnings or risk changes materially.

11. Key risks

New Tech Park and portfolio concentration
28.2% of leases expiring in FY2027
Only 57.5% fixed-rate debt
Near-NAV valuation limits rerating
Concentrated controlling-unitholder ownership and lower trading liquidity

Thesis breakers

DPU growth falls below 2% despite positive property metrics
Occupancy falls below 92% or major tenants do not renew
Development capex raises leverage without visible per-unit accretion

12. Thesis monitoring dashboard

Only indicators capable of materially changing the forecast, risk assessment or investment conclusion are included here.

Thesis-critical indicator	Current reading	Base-case requirement	Status
FY2026 DPU and normalized growth	1H2026 DPU 2.03 cents; +19.4% reported and about +10% normalized	FY2026 DPU of about 4.05–4.15 cents without renewed material retention	On track
Portfolio and New Tech Park occupancy	Portfolio committed occupancy 95.0%	Remain at least 94% with acceptable incentives and tenant quality	On track
FY2027 renewal economics	10.9% reversion, 92.7% retention; 28.2% of leases expire in FY2027	Positive effective reversion and high retention through the FY2027 expiry concentration	Watch
Financing cost and coverage	3.76% all-in cost, 4.2x ICR and 57.5% fixed-rate debt	ICR remains above 4x and debt maturity extends to about 2.4 years after refinancing	On track
New Tech Park Phase 3 economics	Consultation and plan preparation for a proposed 19,508 sqm block	Approvals, pre-leasing and yield on cost support per-unit accretion without excessive leverage	Unproven

13. Primary sources

▣Investor relationsOpen ↗▣1H2026 SGX results announcementOpen ↗▣1H2026 distribution announcementOpen ↗▣Financial performanceOpen ↗▣Financial ratiosOpen ↗

14. Revision history

Date	Price	View	What changed
27 Jul 2026	S$0.520	Accumulate selectively; prefer below S$0.50 ex-DPU	1H2026 validated the occupancy, margin and DPU recovery. The conclusion improved from Await results, but near-NAV pricing reduces rerating upside. Headline 19.4% DPU growth is normalized to about 10% because 1H2025 was depressed by retained cash.
16 Jul 2026	S$0.510	Await results	Initial thesis required evidence that occupancy and NPI recovery would reach declared DPU.

Alpha Integrated REIT (M1GU)