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AIMS AMP Capital Industrial REIT: 2nd AGM.

Saturday, July 2, 2011

Northtech
Some readers are concerned that I am divesting my investment in AIMS AMP Capital Industrial REIT. Is there a change in its fundamentals? Is it going down from here?

 
I did blog about my reasons for partially divesting my investment in AIMS AMP Capital Industrial REIT. In a nutshell, I am just re-balancing my portfolio to reduce over-exposure to this REIT. It is a risk management exercise, nothing more.

 If my total portfolio size were twice or thrice as large as it is now, I would probably not reduce my investment in the REIT. I could, in fact, increase my long position in the REIT. Now, how's that for re-assurance?

 The presentation at the second AGM shows a robust set of numbers:

Earnings per unit: 2.75c
Gearing: 31.9%
Interest cover ratio: 4.9x
No debt due until October 2013.

27 Penjuru Lane

What I would like to see is the REIT increasing the share of high tech space and better quality logistics buildings in its portfolio. Currently, high tech space account for only 17.7% of its portfolio.

Although its acquisition of 27 Penjuru Lane and 29 Woodlands Industrial Park E1 (Northtech) are steps in the right direction, it has to do more and stay vigilant, looking out for more yield accretive purchases.

The management also plans to carry out asset enhancements for selected properties in the year 2012. I like this since many of the REIT's properties have yet to take advantage of their plot ratios to the maximum. So, even without further acquisitions, we could see the REIT's distributable income increasing with asset enhancements.

After two years, this REIT seems well managed by the team from AIMS and AMP Capital and my leap of faith has paid off nicely so far. I look forward to more good news in future.

Substantial shareholders:
AMP Capital Investors (Luxembourg No. 4) S.A.R.L. 15.35%
Dragon Pacific Assets Limited 11.98%
APG Algemene Pensioen Groep N.V. 9.42%
Universities Superannuation Scheme Limited 8.19%
George Wang 7.19%

See presentation slides here.

My very first blog post on the REIT in December 2009:
AIMS-AMP Capital Industrial REIT (MI-REIT).

Related posts:
AIMS AMP Capital Industrial REIT and Sabana REIT.
Balancing AIMS AMP Capital Industrial REIT and Sabana REIT.
Mr. Market is always right.

10 comments:

Anonymous said...

Good morning AK

Nice to hear of your views about increasing the tech company as the tenants base. Would be nice if you can share this idea in their coming AGM ? I won't be able to attend as I am too far away at this moment.

I was sharing their past Annual Report with a newbie friend of mine. Encouraging her to look at REITs as investment for the long term.

Realized that George Wang is a Chinaman. What is wrong with that ? I am most afraid of any S-chips thingy about possible accounting issues and those chinese company mentality of having relatives on their payroll as their full time "flower pots". These we will never know. Of course, as investors, we need to be assured that the investment is safe, sound and providing positive (& generous) returns.

Cheers

SnOOpy168

AK71 said...

Hi SnOOpy168,

I think the management is trying to increase high tech space in its portfolio. This was mentioned by them before. I don't have to tell them. ;)

One reason why I like Sabana REIT so much is because almost half of its portfolio is made up of high tech space which is able to command a higher rental psf.

High tech space must be a significant part of AIMS AMP Capital Industrial REIT's portfolio going forward.

George Wang is from China but he is practically Australian now. Haha.. Anyway, this might surprise you but he is one reason why I am so confident in the REIT. Go read up on his credentials and he has a track record to boot too. Definitely not an S-chip! :)

Anonymous said...

Perhaps I am still new to this world of REITs that I didn't understand earlier. thanks.

Have a good weekend and looked forward to your insights next week.

Huat ah...

SnOOpy168

AK71 said...

Hi SnOOpy168,

Good luck to us all. :)

Paul said...

George Wang is the reason why I want to get out of this REITs.

Nowadays, I'm starting to think that anything linked to Australia is doomed to fail.

How many REITs previously headed by Australian foreign talent has either gone bust or probably in the process of doing so eg. MacArthurCook, Allco, Babcock and Brown, M

And look at all the problems Singapore companies have in Australia - Singtel, SPAusNet, CitySpring, ABC. Probably more.

Yes. Maybe I'm been overly critical, paranoid and maybe a little emotional. But when its come to my money, I rather be critical, paranoid and emotional than lost all my money.

AK71 said...

Hi Paul,

I cannot see the logic in your comment.

You are assuming that you will lose money if you invest in this REIT because George Wang is part of the REIT's management. This is although he has not given us any reason to believe so (quite unlike Chris Calvert during his tenure in MI-REIT and, now, CIT).

Paranoia is an extreme emotion. So, I think you are being more than just a little emotional. ;)

Well, in the end, if you are not comfortable with something, avoid it. Simple. :)

Paul said...

AK

I thought you were vested in AIMSAMPS in the days when it was still MI-REIT?

Not sure about your history. I'm sure I've read about to but I'm not so inclined to dig it up now.

Surely you remember the whole mess that was the Cambridge 'attempt' to take over MI-REIT. Do you remember who it was that sell a big chunk of MI-REIT to Cambridge in the first place?

Mr George Wang. Why did he sell it to Cambridge? Because he was going to get a sh*tload back cheaply. So he might as well cash in then.

Of cos he din realise Cambridge will screw him up and make an attempt to take over management of MI-REIT. Which was why he was scrambling to buy back shares from the market in the lead-up to the EGM.

My mistake was not cashing in then and sell the shares back to him.

You are right. I may not loss all my money because of GW. And a lot of MI-REIT problem was not created by GW. But his actions prior to taking over MI-REIT does leave a lot to be desired.

Honestly, he did not take over MI-REIT out of the goodness of his heart. Why was it necessary to laden the REIT with so many of his own properties? And properties of questionable qualities.

Yes. I think I should take the lessons learnt from CitySpring and applies it to AIMS. When in doubt, just run!

AK71 said...

Hi Paul,

I was a MI-REIT unitholder. I was none too pleased with the recapitalisation exercise but I recognised that as the only viable option.

I also recognised that the REIT at 20c/unit represented great value after the recapitalisation exercise and loaded up instead of avoiding it back then. It has turned out to be very rewarding.

I invest based on current realities as much as I can. The past could serve as a reference but the past could invoke the "memory effect" which might hold us back from making money now.

CitySpring Trust, I divested late last year when the unit price at that point allowed me to exit with minimal losses. The reason for divestment, I shared in my blog.

Current day AA REIT's numbers still appeal to me although Sabana REIT's numbers look better. ;)

I won't fault George Wang for doing what he did. He is a businessman. I would have done the same if I were shrewd enough.

No businessman would take over distressed assets because he had a good heart. It's to make money. No question about that.

For me, as long as I can make money being on the same boat, that's all that matters. To make the decision, I look at current day realities. :)

Anonymous said...

MI-REIT unit-holders had to lose money - it is foolish to expect GW to bail them out for their own mistakes in buying a highly leveraged REIT with unfinanced capex ! Their losses stem from mis-management from the previous management team and has nothing to do with GW actions. It is definitely harsh but if I was GW, the last thing on my mind is to bail the previous unit-holders out. I would much rather focus on re-building the REIT and help those who choose to join me in my 'vision' to make money alone with me.

I can only judge GW actions by how the REIT has performed since the recapitalization effort and I would say that it has done rather well - the Trust has purchased more high tech buildings, divested the Japanese property, stable DPU of 0.5 cents, gearing isn't high, loans are refinanced etc. There are risk involved with this REIT and its plans to expand into China and Australia may not necessarily work out well. Industrial assets are cyclical and the land leases are shorter than office/retail assets. Study the risk well before making any investment decisions.

I am not vested in any industrial reits.

Nick

AK71 said...

Hi Nick,

As the Chinese would say, "One needle see blood". ;)

Thanks for sharing your thoughts.

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