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AIMS AMP Capital Industrial REIT challenged.

Thursday, July 27, 2017

I have said before that AA REIT is not unique in the industrial REIT space. All industrial landlords in Singapore are facing difficulties presented by over supply and weaker demand. 

From the latest results presented by AA REIT, it is obvious that the difficult environment is not letting up anytime soon.

1. New and renewed leases are at a weighted average rental decrease of 4.3%.

2. Portfolio occupancy has declined from 94.6% to 91.0%.

Things are admittedly difficult but they are far from grim.

103 Defu Lane 10.

A competent management has kept gearing manageable at 36.3% and also managed to reduce overall blended funding cost to 3.6%.

Interest cover ratio is healthy at 4.9x and NAV per unit stands at $1.39.

We tend to be a bit less cautious when the stock market is doing better but it pays to go back to the fundamentals. Just two days ago:

Remember, price is what we pay and value is what we get.

Also, try to put things in perspective. This is hardly a crisis.

Things would probably look up when 2 development projects (51 Marsiling Road and 8 Tuas Ave 20) are completed in 2H 2017.

30 Tuas West Road. Published on 20 July 2017.
Slides presentation: HERE


Kevin said...

Hi AK,

I can't wait for Beyonics to begin their 10 year master lease over at 51 Marsiling Road. Any news on tenants for 8 Tuas Ave 20? ;)

I agree with you that the stock market is doing better but it pays to go back to the fundamentals and that is why we should not never be a boiling frog. ;P


Spur said...

Kekeke!!! Wonder what will be the reactions in the next bear market when prices go down -30% or -40% ....

Now bulling along .... most good assets are slightly over-valued or fairly valued at best....

Sigh .... just twiddling thumbs....

AK71 said...

Hi Kevin,

I will leave the worrying in the capable hands of the manager. I lazy. ;p

Thanks for that graphic reminder. ;)

AK71 said...

Hi Spur,

We cannot predict but we can prepare.

War chest is slowly but surely filling up. ;)

Unintelligent Nerd said...

Hi AK,

I sold 50% of my AIMS AMP REIT stake. Not because of this lah!

It took up 20% of my portfolio mah.

AK71 said...

Hi UN,

Once upon a time, AA REIT formed about 20% of my portfolio too. It has shrunk over time although I have not done anything significant to my investment. My portfolio size has grown. :)

AK71 said...

AIMS AMP Capital Industrial REIT Management Limited (the Manager) as manager of AIMS AMP Capital Industrial REIT (AA REIT) today announced that the Temporary Occupation Permit (TOP) for its redevelopment at 8 & 10 Tuas Avenue 20 (Property) was issued on 29 August 2017. With the redevelopment, the land parcels at 8 & 10 Tuas Avenue 20 are amalgamated and will now be known as 8 Tuas Avenue 20.

The redevelopment has transformed two adjoining two-storey detached industrial spaces into a three-storey contemporary industrial facility suitable for production and warehouse usage. The Property has 12 loading and unloading bays with dock-levellers, direct vehicular access to the second storey via a ramp and cargo lift access to the third storey.

The redevelopment increased the Property’s gross floor area by 35.2 per cent, from 117,521 square feet to 158,853 square feet.

Kevin said...

AIMS AMP REIT secures ten-year lease for Tuas Avenue 20 property. :) :) :)


AK71 said...

Hi Kevin,

That is very good news. Thanks for sharing this. :)

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