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Balancing AIMS AMP Capital Industrial REIT and Sabana REIT.

Friday, June 24, 2011

I have been kept busy the last couple of days. By the time I took a shower and called it a day, it was technically night since it was already past 11pm. It is the same thing today. Hopefully, I will be more settled in another week or so. Till then, I can only hope to blog more regularly.

So, what have I been doing in the stock market?

I increased my investment in Sabana REIT while reducing my investment in AIMS AMP Capital Industrial REIT. Having these REITs in equal weightage in my portfolio is an aim of mine. This is something I said I would be doing in an earlier blog post too. If you missed it, read it here. That was just last month.

At that time, AIMS AMP Capital Industrial REIT was trading at 20.5c/unit while Sabana REIT was trading at 91c/unit. Today, they are trading at 22c/unit and 93c/unit respectively. In the last few weeks which saw a bloodbath in the stock market, they have appreciated in price. How's that for resilience and, dare I say, capital gains?

More importantly, it has made the reason to balance my investments in the two REITs more compelling. A gain of 1c from 20.5c to 21.5c is a gain of 4.88%. A gain of 1.5c from 91c to 92.5 is a lesser gain of 1.65%. So, partially divesting AIMS AMP Capital Industrial REIT and buying more units of Sabana REIT makes even more sense now (i.e. sell the former at 21.5c and buy the latter at 92.5c).

The DPU of AIMS AMP Capital Industrial REIT is 2c. With unit price increasing from 20.5c to 21.5c, it means distribution yield decreasing from 9.76% to 9.3%.

The DPU of Sabana REIT is 8.81c. With unit price increasing from 91c to 92.5c, it means distribution yield just decreasing from 9.68% to 9.52%.

See how the distribution yield of Sabana REIT is now higher than that of AIMS AMP Capital Industrial REIT when just a few weeks ago it was lower? This is attractive to me as Sabana REIT's numbers are stronger and more of its properties are of better quality too. You can also say that the lower distribution yield of AIMS AMP Capital Industrial REIT tipped the scales even more in favour of Sabana REIT now.

I have been putting sell orders at 22c for AIMS AMP Capital Industrial REIT but they were, unfortunately, not filled. At 22c, its distribution yield would be 9.09% and even if I were to buy units in Sabana REIT at 93c, the distribution yield would be a more attractive 9.47%.

Finally, if you are wondering how I managed to buy any Sabana REIT units at 92.5c today when it traded at 93c, I didn't buy any today. I bought yesterday and the day before.

Buy Books, Spread Literacy


Anonymous said...

good morning.

last night, i was about to send a "Earth calling AK, come in AK" (to borrow a line from Mark & Mindy) msg .... Glad that you haven't forgot about us.

I had increased my holdings in AAReit @ 21.5c and using my CPF for the 1st time. Wondering if the dividend paid will go to CPF account or my bank account ?

Huat ah...


AK71 said...

Hi SnOOpy168,

Yup, I am still around. ;)

Dividends received from your investments using CPF OA would be credited to your OA and not your bank account.

I am not so keen on using CPF OA for the purchase of units in REITs although it makes sense as the returns are much higher.

I have heard from friends that if there should be a rights issue, it could be troublesome. I avoid stress where I can. :)

Anonymous said...

Ah yes. the Rights issue using CPF$. Perhaps I would sell the rights to mark down the avg cost instead.

From my brokerage's portfolio screen, there is a separate section for CPF funds. This make it easier for me to track & trace. Using CPF funds, the settlement is like the "next working day".

Have a good weekend.


AK71 said...

Hi SnOOpy168,

As long as you have it all sorted out, go for it. :)

Have a good weekend too.

Anonymous said...

Weekend queued and got in for super banana reit (Sabana) @ 92.5c this morning.

Was thinking of 93/92/92.5. Aiyo, so PPMM, just take 92.5 and queue lah. Hoped that the 9+% yield is positively there for me to collect hor.

^-^ & have a great week ahead everyone


AK71 said...

Hi SnOOpy168,

My 92.5c buy order was filled this morning too. Good luck to us all. :)

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