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AIMS AMP Capital Industrial REIT: Credit rating.

Wednesday, April 18, 2012

Life has been somewhat stressful for me lately. Lots of things happening. That explains the paucity of blog posts.

I am trying to get up to speed with things and also trying to catch up on my reading of business periodicals which I have neglected lately.

In today's The Business Times, I read that AIMS AMP Capital Industrial REIT has received an investment grade credit rating of BBB- from Standard & Poor's. This is good news indeed. This rating is the same as the one received by Sabana REIT last year in August.

This means that AIMS AMP Capital Industrial REIT would be able to access investment grade debt and capital markets from now on. It would also allow the REIT to gear up to a maximum of 60% if necessary.

Anyone who has been following my blog would know that I have been walking the talk when it comes to AIMS AMP Capital Industrial REIT. So, for anyone who has walked the walk with me although there has been no lack of naysayers, good on you. Congratulations!

Fair value for AIMS AMP Capital Industrial REIT, I believe, remains closer to S$1.25 per unit which would see its distribution yield compressing to about 8% per annum.

Related posts:
1. AIMS AMP Capital Industrial REIT: How much higher?
2. OCBC Research: Industrial REITs.


INVS 2.0 said...

Hi Ak71,

Ah, finally a blog post from you.:)

Speaking of AIMS, it has been going high since the start of this year. The same goes for Sabana. I took out some cash to buy Saizen instead, after realising that it has been relatively stagnant. Could there be a chance of Saizen becoming the top DPU REIT? :)

FoodieFC said...

welcome back. been waiting for your post for over a week! Jiayou too!

AK71 said...

Hi INVS 2.0,

I hope to get back to regular blogging but at the same time, I am wondering about taking a sabbatical from blogging. Been quite busy with other aspects of my life. I am not a good juggler.

Sabana and AIMS are my largest investments in S-REITs even after divesting some 10 to 15% of my holdings as their unit prices strengthened. The divestments were based on TA and the possibility of their unit prices weakening to supports which, of course, did not happen.

FA wise, I see fair value of $1.10 for Sabana and $1.25 for AIMS. This is based on distribution yield compression to 8% per annum. So, their unit prices could go higher if Mr. Market agrees with me.

As for Saizen, since divesting some 90% of my investment in the REIT after its prices rebounded to test resistance after the dust of the triple disasters settled, I have not looked back.

The JPY has weakened to S$15 to JPY1,000 compared to its high of S$17 to JPY1,000 a few months ago. As we are receiving income in S$, the weaker JPY is a negative. This could be made up for by the acquisitions the REIT made in Tokyo which is a new area of investment for it.

I still like the idea of deriving passive income from freehold properties in a country where the majority of its population rent their homes. I also like how the REIT is trading at a big discount to its NAV/unit.

However, with the Japanese government keen on weakening the JPY further, I am not willing to add to my long position at this point in time.

Having said this, a conservative estimate of a 1c DPU per annum would mean a distribution yield of 6.89% based on a unit price of 14.5c. It beats leaving money in POSB. ;)

AK71 said...

Hi FoodieFC,

Thanks for the well wishes. :)

INVS 2.0 said...

Hi Ak71,

I bought Saizen at $0.143. Even at 1c per annum would translate into almost 7% DPU. Not bad. :)

Saizen only occupies a very small portion of my portfolio as I am aware of the JPY currency disadvantage. :)

AK71 said...

Hi INVS 2.0,

A distribution yield of 7% is not mean at all. :)

I forgot to mention that Saizen REIT still has some 17 outstanding warrant units for every 100 units in issue. There would be some dilutive effect on DPU.

By my estimates, even if all warrant units were to be exercised, as long as the JPY does not fall too much from the current level, a DPU of 1c per annum is not unrealistic.

My much reduced investment in Saizen REIT were entered at prices of 13c to 13.5c in late 2009 which are comfortable enough for me to hold indefinitely for passive income.

For others considering Saizen REIT as a source of passive income, I would say that current prices are pretty fair considering its relatively stronger balance sheet and income statement.

JCK said...

To Everyone

Thanks for the input on Saizen.

AK71 said...


You might be interested in this blog post:

Saizen REIT: 1H FY2012 DPU of 0.61c

JCK said...



AK71 said...


You are welcome. :)

Marco said...

I will consider Saizen if the dividend is paid in quarterly basis.

AK71 said...

Hi Marco,

It is unlikely that the income distribution would change to a quarterly one. You might have to scratch this one out. :)

SnOOpy168 said...



Whats your view on this and if you will participate ?



Ray said...

Hi AK,

Are you still vested in First REIT? What do you think is a fair value for that?


coven said...

Hi AK71

take care!

Been benefiting from your posts, and entered into AA one year ago. Good to finally see profits now :)

AK71 said...

Hi SnOOpy168,

With its unit price much higher now, it is less expensive for the REIT to raise funds via equity.

I am investing for passive income. So, I won't be taking part in the scrip dividend.

Furthermore, I have no intention of adding to my long position in the REIT at current prices.

AK71 said...

Hi Ray,

Yes, vested. :)

Once upon a time, I said that First REIT's fair value was 80c as that would see distribution yield compressed to about 8%.

First REIT: XR and fair value.

Obviously, things have changed. It would be interesting to see if First REIT's distribution yield would further compress to be similar to Parkway Life REIT's 5.4%based on a price of $1.83 a unit now.

A distribution yield compression to 5.4% would mean a unit price of $1.18 for First REIT. ;)

AK71 said...

Hi coven,

I am happy for you. :)

Please visit my sponsors if you see ads for any goods/services which interest you. You would be helping to take care of me that way. Thanks. ;p

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