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AIMS AMP Capital Industrial REIT is a fine investment for income.

Wednesday, March 29, 2017


30 & 32 Tuas West Road

This was a recent chat with a reader:

Reader:
http://www.commercialguru.com.sg/property-management-news/2016/9/136176/the-future-of-tuas
30 32 tuas west road and 8 10 tuas ave 20 are so close to the upcoming tuas west road MRT station!

AK:
Yes! I saw it for myself ๐Ÿ™‚

Reader:
u took a look during your site visit?

AK:
During the tour they gave me ๐Ÿ™‚

Reader:
haha. hard to get the shares cheaply though.

AK:
Now, too many people want in.
It is now a fair price

Today, the price is S$ 1.38 a unit.

In early September 2015, I had a chat with another reader who had reservations about investing in AIMS AMP Capital Industrial REIT (AA REIT) for income.

See the chat:
http://singaporeanstocksinvestor.blogspot.sg/2015/09/a-chit-chat-session-with-ak-on-reits.html

What was the unit price back then? $1.35 a unit.

How much income did AA REIT distribute from then to now?

23 Dec 15: 2.8c

23 Mar 16: 2.85c

22 Jun 16: 2.95c


22 Sep 16: 2.75c


22 Dec 16: 2.75c


23 Mar 17: 2.77c


Total DPU: 16.87c


Now, don't ask me how much have I received over the years. I am too lazy to find out.

Some ask me if this is a good time to invest in the REIT. Basically, they want to know if the REIT's unit price is going to fall in future. They don't want to buy and end up losing money.

I would tell them it depends on what they are after. 

If they want to invest in real estate for a constant stream of income, AA REIT is a good enough choice. 

If they are looking for capital appreciation, then, they might want to look elsewhere.

Related post:
AA REIT levels up.

20 comments:

L HL said...
This comment has been removed by the author.
AK71 said...

Hi AL,

I am only talking to myself in the blog.

I have absolutely no idea what Mr. Market is going to do. ;)

AK71 said...

Matthew Seah:
ah! I see declining DPU there

AK:
Ask why and ask if this is long lasting

ScOpIoN said...

Hi AK,

I want to check on the re-investment of the dividends by AAREIT. Do they offer it all the time or selective periods only? I've emailed them and have received no reply from them.

AK71 said...

Hi Scopion,

I have no idea if they will offer it every quarter.

To me, if it happens, it happens. ;)

Kevin said...

Hi AK,

Not forgetting what will happen to the demand for Tuas' industrial spaces when PSA starts operations at Tuas. :P

AK71 said...

Hi Kevin,

AA REIT for the win!

Should be AAA rated. ;p

redponza said...

Hi AK, may you share why the DPU dropped and if this is long lasting?
I am new to this counter, thanks.

AK71 said...

Hi redponza,

In a nutshell, there is an oversupply of industrial space and, of course, the economy has not been growing as much.

You might want to search for news on industrial REITs in Singapore. Of course, you might also want to read my past blog posts on AA REITs and other industrial REITs to get an idea. :)

AK71 said...

Standard & Poor’s (“S&P”) has reaffirmed its investment grade rating of ‘BBB-’ with a stable outlook.

The stable rating reflects S&P’s expectations that AA REIT will continue to generate steady cash flows with its portfolio of good quality assets, stable occupancy rates and well-staggered lease expiry profile.

S&P also believes that AA REIT’s strategy of continuously improving its asset quality through asset enhancement initiatives and redevelopments has allowed the REIT to better withstand the current soft industrial property market than some of its peers.

12 April 2017

Cindy said...

HI AK

The occupancy level at AA Reit is reducing YOY and is now only 93% (FY 16 annual report) though its higher than the industry average of 90% and the tenant weighted average lease to expiry is also the lowest of his history at 2.8. Also they have around 60% of their assets pledged as securities to the banks. Are these any concern to you?

You also mentioned previously that AA has a lot of headwinds...what headwinds are these?

I just attended the dividend machine workshop in May and AA reit is one of the stocks that I am starting to analyse. From the above numbers, it does not seem healthy but it has a good and consistent dividend yield post their 2009/2010 crisis and P&L and gearing ratios are improving.

For one that is building a dividend portfolio fresh, can AA be considered?

AK71 said...

Hi Cindy,

All industrial properties landlords are facing the same challenges. The numbers at AA REIT show that they are no exception.

For anyone who is interested in investing in industrial REITs even in the current climate, investing in better managed ones like AA REIT is the way to do it.

We have no control over macro economics and can only make the best of the situation and I think AA REIT is doing just that.

To have it or not to have it? It depends on what one is comfortable with. ;)

TFP said...

Hi AK71, could you explain how to justify investing in Industrial Reits when the property has short leasehold period vs investing in Reits which holds 99/999/freehold office property? Yield maybe only a certain percentage more. But the numbers of years lease is so much more.

Thank you.

AK71 said...

Hi TFP,

All investments are good at the right price.

If a property has only 10 years left to the lease but offered me 20% a year in returns for the rest of its life, I would still buy it. ;)

CS said...

Hi AK, AA is currently trading at a premium of 6% to its NAV. Given the fact that the REIT is well managed, I am wondering is it worth it to enter the market now when the shares is traded at a premium to its NAV. Could you please enlighten me what's the acceptable range of premium to NAV for industrial S-REIT like AA? Thank you very much.

AK71 said...

Hi CS,

No. I won't tell you that. Instead, I will tell you this:

Ask why would you pay a premium to NAV? Usually, it is because you believe that someone is going to pay a higher price for the properties or that the REIT is able to increase asking rents in future.

Kevin said...

Hi AK and CS,

Industrial REITS have shorter land leases and therefore should command a higher yield. At the current yield of below 8%, it is rather unattractive.

Do take note that the STI have gained 15% YTD and for the past 3 years there was a correction around the National Day period. ;)

AK71 said...

Hi Kevin,

This was one reason why I decided to accept a lower yield from FLT. ;)

Why Frasers Logistics Trust?

Potatoish said...

Dear AK,

I haven't seen you around or commented on your blog in a loooong time. Glad to see you are well and kicking :P

The stock market seem brimming in health. Good REITS despite the increasing interest rates sem to also be doing well. AA is one of the main bulk of my portfolio too for income than capital gain.AA Tuas site is not leased yet right? I have been busy to check :D

Been busy trying to accumulate my emergency funds and with work...

Cheers
JQ

AK71 said...

Hi JQ,

I have been spending most of my time well and kicking (monsters) in Neverwinter. ;p

Before AA REIT embarks on any redevelopment, they would secure a tenant first, always. You can rest easy. ;)

Glad to hear that you have been productively busy. I have been unproductively busy. -.-"

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