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AIMS AMP Capital Industrial REIT and free money for AK (3Q FY2017).

Thursday, February 9, 2017

Many years ago when I decided to reduce my investment in industrial S-REITs, I was faced with the choice of reducing my stake in either Sabana REIT or AIMS AMP Capital Industrial REIT as both were the largest investments in my S-REITs portfolio. Yes, they were both about the same size.  

I decided that AIMS AMP Capital Industrial REIT was better run. So, Sabana REIT was given the boot.

Today, AIMS AMP Capital Industrial REIT is my largest investment in the S-REITs universe and a rough back of the envelope calculation tells me that with all the distributions collected over the years, my investment in the REIT is going to be free of cost very soon. 

Free? Yes, free!

This is massive for me not only because I like free things but because it is such a massive investment in my portfolio.

If an investment is 2% of our portfolio and it has become free of cost (like Sabana REIT is for me), ho hum. 

If an investment is 20% of our portfolio and it is going to become free of cost soon, it isn't ho hum x 10, is it? 

It is like my position in Sabana REIT x 10 being free of cost. OK, somehow, using Sabana REIT as an example doesn't seem very appealing but I am sure you get the idea.

Although doing well now, AIMS AMP Capital Industrial REIT is facing headwinds and things might get tougher in the next year or two but it has a competent manager that is focused on improving value for stakeholders. That is very comforting.

On hindsight, I am glad I decided to get on board with Mr. George Wang so many years ago and I look forward to receiving soon to be free money every quarter for many more years to come.


·         DPU of 2.77 cents per unit for the quarter (increase of 0.7 per cent from last quarter);
·         Increased gross revenue and net property income for 3Q FY2017 by 1.5 per cent and 2.7 per cent respectively q-o-q;
·         Executed 19 new and renewal leases in 3Q FY2017, representing 82,149.3 sqm (13.1 per cent of net lettable area);
·         Portfolio occupancy of 94.0 per cent, above the industrial average of 89.5 per cent;
·         Achieved TOP of third redevelopment property at 30 Tuas West Road on 27 December 2016, on time and below budget, delivering better financial returns than previously announced. Partial income contribution from the property will commence in March 2017 quarter, with full quarter income contribution in 1Q FY2018;
·         Increased Net Asset Value per Unit to S$1.48 from S$1.47 in the preceding quarter mainly due to recognition of the development profit of 30 Tuas West Road.
·         84.0 per cent of the portfolio’s interest rate is fixed taking into account interest rate swap contracts and fixed rate notes with weighted average debt maturity of 2.1 years;
·         Reduced overall blended funding cost (including funding of the Australian asset with Australian dollar loan) of 3.7 per cent from 4.2 per cent a year ago;
·         Aggregate leverage as at 31 December 2016 is at 34.6 per cent.
Related posts:
1. AA REIT: A private tour.
2. My history with Sabana REIT.

6 comments:

Sheryl said...

What do you mean by free of cost?

AK71 said...

It is just a way some investors look at numbers.

Example 1:
If you bought 1000 shares at $1 a share and the price went up to $2, if you sold 500 shares, the balance 500 shares are free.

Example 2:
If you get a dividend yield of 20% on an investment, in 5 years, your investment is free.

It is about a 100% recovery of capital.

Serendib said...

congrats AK! I'm in good company then I guess - I also had both in my portfolio and made the choice to cut Sabana. However, my AAREIT is not free yet as I did subscribe to the rights issue back in 2015(?)

AK71 said...

Hi Serendib,

Hello to a fellow unitholder. ;)

They have had more than one rights issue, I believe, and I took advantage of all of them. I have been an investor in AA REIT since the Global Financial Crisis. Went through the drama with Mr. George Wang when he led the buy out to re-capitalize MI-REIT.

Kevin said...

AIMS AMP Reit to raise S$50m with 3.6% five-year bond issue

http://www.businesstimes.com.sg/companies-markets/aims-amp-reit-to-raise-s50m-with-36-five-year-bond-issue

AK71 said...

See:
AIMS AMP Capital Industrial REIT levels up!

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