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AIMS AMP Capital Industrial REIT: An opinion.

Monday, July 20, 2015

It has been a long time since I blogged about AIMS AMP Capital Industrial REIT which, till today, is still my largest investment in the S-REIT universe.

From a reader:

Dear AK,
 
I noticed from one of your recent posts that you invest quite a lot into AIMS AMP Capital Reit & I have heard a lot of good word about this reit too from other people & so I am interested to invest in it. However, I read somewhere that they were known as Macarthur Cook Industrial Reit & during the 08/09 financial crisis, they actually diluted the shares of the unitholders, causing dividend yield to drop. From what I know, that was due to the managers not seeing in alignment with the unitholders. What are your thoughts on this & do you think it'll happen again in another crisis? Thanks!
 
Best Regards,
J




My reply:

Hi J,

MI-REIT was a disaster because the management, then headed by Chris Calvert who went on to lead Cambridge Industrial Trust, did not secure financing for an asset they committed to buy. So, when the global financial crisis struck, credit dried up and MI-REIT was in big trouble.

Back then, George Wang led AIMS and AMP Capital from Australia to recapitalise MI-REIT. The recapitalisation exercise was accepted and AA REIT was formed but not without some drama. Of course, George Wang and partners got MI-REIT for a song. Why would they pump in their own money, otherwise?

Anyway, the important thing is that George Wang et. al. turned around an ailing REIT. They put in so much of their own money in the REIT, they must make sure the REIT adds value for investors over the years. :)

AA REIT is a very different animal from the old MI-REIT. The REIT's income is more diversified and its finances are also more resilient. The REIT is now bigger and better. I don't know what is going to happen in the next crisis but chances of the REIT coming out of one fully intact are much higher today than back in 08/09.

Best wishes,
AK


Related posts:
1. 6M 2015 passive income from S-REITs.
2. A chance to create your own Dividend Machines.
For anyone who is interested, AK answered questions about AIMS AMP Capital Industrial REIT in an interview in the related post, earlier this year.

5 comments:

jammerwong2011 said...

HI AK,

I am thinking of investing in AIMS, but unsure if the current price is fair.
Thanks

jammerwong2011 said...

Hi AK,

I am thinking of investing in AA , may I know if the current price is fair?

Thanks and Regards,

AK71 said...

Hi Jammer,

This is quite subjective. I feel that it is fairly valued. Others might feel differently.

seefei said...

AA had a round of right issue last year. good entry point for those looking to buy. Concur with AK that the stock is fairly valued now. why not look at others that give you better value for your money?

AK71 said...

Reader:
Do u think aims amp is still good to enter at current price? I realised that there is no point in waiting for crash because i am missing out on the dividends. Even if got mini crash, the fall might still be lesser than the dividends given out while i am waiting. Haha

AK:
If you are happy with the numbers and the prospects, why not?
Of course, always keep a war chest ready. 😉
We never know when Mr. Market might feel like giving us a good bargain.

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