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AIMS AMP Capital Industrial REIT: Insights.

Wednesday, March 30, 2011

With the advanced distribution of 0.285c per unit on 28 March, the next distribution is going to be modest and I estimate it to be about 0.215c per unit. This is likely to be payable sometime in June.

In the recent madness of heavy selling, I increased my exposure to this REIT at 20c and 19.5c. It is currently my largest investment in the stock market by market value. With an expected DPU of 2c per year and with a set of stronger numbers in its books, this is a strong proposition for anyone who is investing for income.

As it is climbing out of oversold territory after the recent sell down, there could possibly be room for capital appreciation as well from the current levels. The ADX is declining and this suggests that the downtrend is weakening and the -DIs are falling as well. The MACD is rising and already set to form a higher high. Things are looking more benign but I am under no illusion that any upward climb would be up a wall of worries and that the REIT's unit price remains in a longer term downtrend which started on 17 Sep 2010. That resistance is currently at 22c.

In an article today in The EDGE, it was revealed that the manager "also aims to grow its portfolio by about $200 million, its chief executive officer Nicholas McGrath told Reuters in an interview. “We have an increasing bias towards business parks and high-tech space,” said McGrath". So, more rights issues and private placements are probably to be expected. As long as these are beneficial to unitholders, I have nothing to complain about. Indeed, I am sitting on some nice paper gains from its last rights issue while the distribution yield remains very attractive.

Apart from acquisitions, "AA Reit is also looking at redeveloping and enhancing several of its warehouses, logistic and manufacturing facilities as they currently have underutilized plot ratios. This would help the reit to boost its gross floor area and rental income, McGrath said." This, I find most heartening. I am looking forward to more good news from this REIT.

Related post:
AIMS AMP Capital Industrial REIT: Lower gearing.


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