AIMS AMP Capital Industrial REIT (AA REIT) is probably one of the better run REITs in Singapore, creating value for unit holders in a sustainable manner and their recent action reaffirms my view.
Most REITs are leveraged to some degree. Although leverage could magnify gains, in an environment of lacklustre growth and rising interest rates, too much leverage could spell trouble.
I remember putting forth my concern on rising interest rate to AA REIT's CEO when I was invited to tour some of the REIT's properties. I wondered if it was possible to issue longer term bonds to lock in lower interest rates.
Mr. Koh Wee Lih told me that issuing longer term bonds could mean paying a higher coupon which made perfect sense, of course. So, if AA REIT should be able to issue bonds without shortening their tenors and enjoy paying lower coupons, what does that tell us?
AIMS AMP Capital Industrial REIT (AA REIT) announced it will be issuing S$50 million Fixed Rate Notes as part of its Medium Term Notes (MTN) Programme.
Mr. Market demands higher returns for junk bonds but accepts lower returns from investment grade bonds. I like the direction AA REIT is heading. Good job!
A tour of AA REIT's properties.