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AIMS AMP Capital Industrial REIT: Higher DPU and 20 Gul Way.

Wednesday, July 27, 2011

AIMS AMP Capital Industrial REIT has once again delivered results which are above expectations. I was expecting a quarterly DPU of 0.5c but, instead, 0.53c has been declared. XD: 2 August. Payable on 14 September.

What's more? This is only 96.8% of total amount for distribution, not 100%. Annualised, it would be 2.12c which means a distribution yield 9.64% at the unit price of 22c/unit.

Gearing level has decreased to 30.4%.

Interest cover ratio has increased to 6.4x. It was 5.0x before.

NAV/unit is at 26.8c. So, the REIT is still trading at a significant discount to NAV.

It has been said before that many of the REIT's properties have great potential for redevelopment or Asset Enhancements as many of its properties have not maxed out their plot ratios. Unitholders have been waiting for this and today, the management announced that it will be redeveloping the property on 20 Gul Way.

20 Gul Way, currently with total gross floor area of 378,064 sq feet will become a five storey ramp up warehouse facility with total gross floor area of 1,159,536 sq feet! The total value of assets under management for the REIT will cross $1b upon completion of works in two phases!

Upon completion of both phases, everything else remaining equal, we are likely to see an increase in DPU per year by 0.293c if the redevelopment were to be funded 100% by debt. However, we must remember that it will take years to complete redevelopment work.

Phase 1 is estimated to take 15 months to complete while Phase 2 is estimated to take another 13 months to complete. The whole redevelopment is estimated to be completed in 2013 and is definitely a step in the right direction.

See 1Q FY2012 results here.
See announcement on 20 Gul Way here.


Anonymous said...

Thanks Ak71

Had been following your blog and invested small amountin AIMS AMP. So far had received dividend and glad the share price has gone up. Thank you very much.


Paul said...

I think my impressions of GW and company is well documented on yr blog; but I must give credit where credit is due.

I'm impressed with the redevelopment plan for 20 Gul way. I may be wrong, but I think AIMSAMP may indeed be the first I-REIT to undertake such an asset enhancement plan.

Of cos, not everything is rosy. The placement of 2.5 million worth of units to CWT will dilute unitholder's holding. The 150 million loan to redevelop the place will increase its leverage to 41%.

AK71 said...

Hi Emily,

I am sure you did your due diligence before plonking in hard earned money in the REIT. Credit is all yours. ;)

Congratulations. :)

AK71 said...

Hi Paul,

There might be times when bad investments become good ones and when good ones could become bad ones.

I like to think that this REIT became a good investment since its "rescue" by George Wang et. al. So far, it has been very rewarding. :)

As you have pointed out, its gearing level will go up quite a bit redeveloping 20 Gul Way. Any further acquisitions or redevelopment efforts is likely to see the management going to unitholders for funds in order to avoid over-leveraging.

Rights issue? I hope so. :)

Anonymous said...

huah ah everyone.

Rights issue ? Oh Yes
Double huat ah for everyone.

Looking forward to your next insightful update AK. ^-^


Raelynn said...

dear AK,

i'm holding some units of Starhill Global and i'm in a dilemma. i bought the units at $0.54, hence based on the annualised DPU and my purchase price, the yield is approx 7%. however, the price has risen to $0.64 (approx), which means if i were to sell, i would take profit. do you think it is more prudent to take the profit or more prudent to take the yield?? there are analysts data that has had an even higher target price than $0.64, but hey, we all know that target prices are not always reached...

AK71 said...

Hi SnOOpy168,

Thank you for the jubilant "huats". With the US and European markets sinking overnight on debt fears, we need all the luck we can get. :)

AK71 said...

Hi Raelynn,

Well, this is a question only you can answer. Is a 7% yield from a retail S-REIT still attractive to you? Or is locking in the gain more attractive?

Everything is relative. So, you might want to compare against other retail S-REITs and see if Starhill is now over-valued.

Buy at a price you would not sell at and sell at a price you would not buy at. :)

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