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AIMS AMP Capital Industrial REIT: Stronger numbers.

Tuesday, April 5, 2011

The REIT's properties have been revalued higher year on year by 4% as at 31 March 2010. This means NAV per unit improves by 1c. See announcement here.

The REIT's unaudited financial results for the financial year ended 31 March 2011 will be released on 19 April 2011. See announcement here.

I am expecting the following:
DPU: 0.215c
NAV per unit: 27c.
Gearing: 32%.

DPU of 0.215c is, of course, due to the advance distribution of 0.285c earlier last month to exclude placement shares from income distribution for the period prior to the placement exercise.

NAV per unit, I have left unchanged despite the 4% higher property valuation because the REIT did dispose of Asahi Ohmiya Warehouse in Tokyo last month.

Gearing level is lower at 32% because funds from the same said divestment will be used to repay debt.

If my estimates are accurate enough, the REIT is currently trading at a 24% discount to NAV and a distribution yield of 9.76% (annualised DPU of 2c). A 32% gearing level is pretty safe considering the fact that property prices seem to be rising. There is also the fact that debts were refinanced last year at a much lower interest rate of 2.16% and the loans are not due for another two years at least.

I continue to like this REIT's fundamentals and would accumulate on any weakness.

Related posts:
AIMS AMP Capital Industrial REIT: Insights.
AIMS AMP Capital Indsutrial REIT: Lower gearing.


Kelvin said...

Actually I have always wonder, why does industrial REITs have higher yield (ie lower price) than other REITs, say retail? Many of the industrial reits are actually still offices, no?

AK71 said...

Hi Kelvin,

Ascendas REIT and Mapletree Logisitcs have distribution yields of 6+% which is not too high.

I think it probably has more to do with market perception of strength which is related to size of portfolio and the sponsors.

As for your suspicion that industrial REITs own properties which are akin to offices, you are not wrong to say that. In reality, many companies do have warehouses and offices combined in one location. Makes good business sense but these are not Grade A office buildings and cannot command the same kind of rent as well.

Finally, industrial buildings usually have shorter land leases in Singapore and this is an important consideration for the value investor. :)

Kelvin said...

Hey AK71,

Thanks for your reply. I finally understood why industrial yields are usually high if their sponsors ain't so-called strong.

And there's such a huge buy up of Saizen REIT today. And damn, I let go at 14.5 cents 'cause i wanted to switch to Sabana. Totally regretful!

Kelvin said...

Just read the the n announcement on sgx. No wonder there's such a strong buy up after 2pm.

I guess this year is just a bad year for the 'rabbits' like me. Always enter and sell at the wrong time. The only good thing that happened was the takeover bid for sinomem, which i have held for like a year. *roll eyes*

Wish all luck on holders of saizen!

WK said...

when is vivocity's ipo?

AK71 said...

Hi Kelvin,

Yes, good news for Saizen REIT today and I will be blogging about it later this evening. :)

Congratulations on Sinomem. It was a company I looked at 2 years ago when it was 10c a share but I chose E-pure (now SoundGlobal) instead at 20c a share. Tsk, tsk. ;p

AK71 said...

Hi WK,

You are referring to Mapletree Commercial Trust, I believe. It was shelved for a while because of market weakness. They are going ahead with the IPO now:

Mapletree Commercial Trust is set to raise as much as $924 million, including from cornerstone investors, in an initial public offering (IPO) in Singapore, underscoring a return of confidence to the market.

WK said...

No dates indicated yet huh?

AK71 said...

Hi WK,

Nope. No IPO date indicated. I guess retail investors would be the last to be offered as usual. Wait for updates.

I am not interested in IPOs, usually. So, I won't be keeping a lookout. :)

WK said...

but i m sure u r interested in vivocity,...

AK71 said...

Hi WK,

I do like VivoCity. In fact, I was just there this evening. ;)

However, I am not interested in the IPO. Too expensive, I feel.

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