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AIMS AMP Capital Industrial REIT has suffered from negative sentiments and from some bigotry in the local investment community, no thanks in part to the acrimonious recapitalisation process of the former MI-REIT.
However, investors who were objective enough to recognise the stronger recapitalised REIT would have enjoyed some rather attractive income in the last two years.
AIMS AMP Capital Industrial REIT has delivered once again!
1. Distributable income increase 48%, year on year.
2. DPU of 2.5c, payable on 7 Dec 11, has been declared.
3. NAV per unit: $1.365
4. Interest cover ratio: 6.4x.
5. Gearing: 30%.
Although the annualised DPU of 10c (based on this latest set of numbers) will give us a distribution yield of 10.53% at today's closing price of 95c per unit, bear in mind that 20 Gul Way's redevelopment has started in August. This will likely result in lower distributable income in the coming quarters.
For my estimates, please see:
AIMS AMP Capital Industrial REIT: Consolidation and corporate rating.
See 2Q FY2012 results here.
Thursday, 06 October 2011
Bloggy Award
39 comments:
Hi, AK
I am wondering how AIMS REIT achieved the 28.2% increase in Net Properties Income in 2Q FY12compared to 2Q FY11. It only acuqired NorthTech in Feb 2011 but sold 23 Changi South Ave 2 and Asahi Ohmiya Warehouse in Tokyo from 2011 till now. Or is if from the "Build-in rent escalation"? I am trying to verify whether such growth is sustainable.
BTW, in their presentation slides, the DPU of 0.50 for 2Q FY12 acutually decrease from 0.53 in 1Q FY12. I asuume that due to the private placement to CWT. Do you think a drop in DPU a concern?
Thank you.
Hi AK,
Thanks for letting readers know about all things regarding reits. These days, I'm just lazy to read from sgx announcement and I'll just pop by to check on anything new for the reits that we got. Thanks for the hard work to make lives easier for lazy folks like me!
Hi Zhang Zheng,
Northtech is a high tech industrial building which commands higher rental psf compared to 23 Changi South Ave 2, if I remember correctly.
As for getting rid of Asahi Ohmiya in Japan, that probably removed some costs as well as being the only property in Japan does not have any economies of scale in operations for the REIT in that country.
As for whether the DPU is sustainable, in the short run, we could see some weakness due to the redevelopment of 20 Gul Way and the placement to CWT. I estimated a 9% reduction in DPU. However, short term pain for long term gain. Frankly, it is not that painful either. ;)
The REIT is much stronger now than in the last financial crisis. I am not worried.
Hi LP,
Actually, I also don't look at all REITs. I only look at those I have an interest in. ;)
To be honest, I am also getting a bit lazier these days. I used to have a few blog posts a day or at least one a day. These days, I might skip a day or two, maybe, three. ;p
There are changes in my life and I am trying to adapt to a new routine and responsibilities both at home and at work. Will take time to get used to it all.
So, I lack the time and inclination to blog sometimes. I have only 24 hours a day like everyone else. ;)
I might take a leaf from SMOL's book and go on a long holiday one day and just take a sabbatical from blogging. Blogging should remain a hobby and not consume my life. :)
I think the 2.50 cent dividend is sustainable since the Management is only paying out 92%. I am guessing the remaining amount represents the rent from the current tenant of the redevelopment property. The placement to CWT is very small...negligible effect. What will be more interesting is that if my calculations are correct, AIMS gearing will hit 39.5% with a yield of 12% once the development is correct.
Nick
Hi Nick,
Thanks for sharing the nice set of numbers for the REIT.
Much obliged. :)
Hi AK71,
Thanks for the info. ^^
Looking forward to the completion of redevelopment.
Hi DW,
A good reason for us to look forward to 2013. ;)
whoever got those units @ 0.955 / 0.191 (old scheme), must be a happy man. AK, is that you out there ? Good for you.
sigh..... never my luck lor....
Hi SnOOpy168,
Nope, not me. I am innocent. ;)
Hi AK71,
I am one of many investors in this REIT. Hopefully the post-unit consolidation would have some positive impact on the stock as promised. :)
Hi AK,
did the stock code change after 5 in 1? Why I still see it at 20¢ at yahoo finance? Thanks!
Hi INVS 2.0,
I don't think they promised any positive impacts. No one can. :)
They listed some possible positives but, personally, I have never liked consolidations very much.
Nothing material has changed actually. It just messes up my records. ;-p
Hi Ah John,
It is now O5RU. If this code shows the price is 20c, I am emptying my piggy bank! ;p
messed up my CPFIS too. Now with an odd lot of 600. Either I keep or I sell. Due to the complex nature of the 35% ruling, I can't just simply top up and buy more. Duhhhh.
Hi SnOOpy168,
I don't think that is such a bad thing. Just keep collecting dividends. ;)
Hi Snoopy168
Next time should buy more or sell in advance. Odd lot is troublesome, I also don't know how to do with odd lots.
If we look at the long term stock price trend, actually all the way down, although slightly. Why? After 5 in 1, price also drop from $1 to 97.5¢.
Hi Ah John,
Price is all about sentiments. I have never been really good at deciphering sentiments. ;)
I know that the REIT has many substantial shareholders and they are not selling. They are holding some 45% of all the units in issue.
For me, I invest once I see value. There is definitely better value now. However, it could get even more compelling if sentiments should take a turn for the worse.
A turn for the worse? Yup, there could be lots of fear and that is when we should become greedy or greedier. ;p
Will you look at SuntecReit now? As yield estimate to be 9.3%. Though the stock price quite volatile.
Hi Ah John,
Personally, no. I do not think it attractive enough. At $1, I might consider. If I miss it, then, so be it. ;)
Technically, it is oversold and there could be a bounce up in price in the next week or two but the downtrend is clearly intact.
Hi AK,
actually, i'm really confused about the stock consolidation. my poems scrapbook is showing numbers that are giving me heart attack.
Hi Raelynn,
Nothing confusing. Whatever you used to own in number of units, you now own a fifth of that. ;p
Basically, the number of units in issue is now a fifth of what it used to be. :)
Hi AK,
Was wondering whether this week is a good time to enter AIMS AMP Reit. Last closed was at 0.97. What is your view? Debt/Asset is at 29.4% while its free cashflow Yld is at -78.7%.
Thanks :)
Hi Justin,
This is a common question I get. "Is it a good time to buy now?"
Anytime is a good time to buy as long as you are happy with the numbers in front of you. Simple answer.
A good time for you might not be a good time for me and vice versa, as you can imagine. ;)
Good luck. :)
Hi AK,
thanks for the reply. What about the free cashflow Yld at -78.7%? Sabana is at 11.5% while First Reit is at -28.3%. Is the high cashflow cause for concern for AIMSAMP? Thanks :)
Hi Justin,
In the evaluation of REITs, I do not look at free cash flow yield. With REITs, I look at distributable incomes and distribution yields, amongst other things.
Companies would like to have more money in the bank. However, REITs are not companies. They are trusts which distribute between 90 to 100% of their income to unitholders.
You might be interested in the concept of FFO if you must look at cash flow in REITs:
REITs, depreciation and FFO.
Hi AK,
I am noobie to long term investing and thus only invested in AIMS Reit since the beginning of this year (thus already sitting on paper loss). Have a tiny amt of spare liquidity that i wish to put to work.
But I am stuck at the crossroad between selecting another reit to diversify or to further invest in AIMS. My guidelines to select Reit are based on its Yield, discount to NAV and gearing and consistenty in dividend payout.
Concerns are if I shld look at other sector such as retail or hospitality, or same sector but different reit like Cambridge etc. Due to my super limited fund, My emphasis is on yield.
Thank you so much.
Hi EG,
If your emphasis is on yield, then, go for counters with strong numbers and high yields. Quite simple. :)
I like Sabana REIT, AIMS AMP Capital Industrial REIT, First REIT, LMIR, Cache Logistics Trust and Cambridge Industrial Trust.
As you already have AIMS AMP Capital Industrial REIT, you might want to diversify and get something else.
Finally, make sure you have set aside emergency cash and that you are investing with funds you would not need for the next few years.
Hi AK71,
Visiting this old thread.
This REIT has announced the sale of 31 Admiralty Road on 28/10/11, which the sale proceeds will be used to repay debt. Gearing ratio is now 30% but will be 28.7% after the sale.
Wow, this is really an attractive package.
What's your view on this?
Hi INVS2.0,
The redevelopment of 20 Gul Way will send gearing closer to 40%. ;)
Anyway, I don't have a problem with this REIT. I believe it will deliver the income that I am after.
Distribution yield is 10.4% now at 96c/unit. Upon completion of redevelopment works in two stages at 20 Gul Way, expect distribution yield to bump up to 12.5%.
Attractive enough for me :)
Hi Ak71,
Hmm, mind teaching me how to calculate the estimated increase in the gearing ratio and DPU after a redevelopment or any other project is announced? I can't figure out the increase to 12.5% and 40% ratio, etc. :/ Many thanks. :D
Hi AK,
Thanks a lot for your input. Narrowed down to mainly 3 choices that I have to do further studies on, AIMS/Sabana/First.
Not really in a hurry now as I believe thing are gonna get a lot worst in the near future. Might as well hold off and wait to see which is more resilience and get them cheaper (hopefully).
Hi INVS2.0,
I somehow missed out this comment when I was replying to all the comments yesterday.
Look at how much debt the REIT is going to draw down for 20 Gul Way. Add this to existing debt. Then, divide this by the expected total AUM by the time the redevelopment of the said property is completed. :)
Hi EG,
Sounds like a plan. ;)
Indeed, I am looking forward to accumulating on any further weakness as well. Good luck to both of us. :)
Hi Ak71,
Digesting the following steps:
Add the new debt to the existing debt to form the new gearing ratio.
Then divide the new gearing ratio by the AUM to get the new DPU. But what is AUM? :/
Hi INVS 2.0,
AUM = Assets under management.
DPU = Distribution per unit.
New debt + existing debt will not give gearing ratio. It gives us only the total debt.
Put total debt against the total AUM (updating the value of the asset to be redeveloped) will give you the gearing ratio.
To get the DPU, take total distributable income and divide it by the total number of units in issue.
Hope this clears things up for you. :)
Hi Ak71,
Ah, things are looking clearer! Thks. :) :)
Hi INVS2.0,
I am glad and you are welcome. :)
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