AIMS AMP Capital Industrial REIT: Good price?

A reader, Mark Wong, asked this in the comments section:

"Hi AK71

"The REIT is trading at $1.315 now. Will you consider this as a good price to enter? I have not yet holding any of the REIT at this moment."

As I feel that many do not read the comments section of my blog and I really think that my reply to Mark could be of interest to others, I am publishing my reply as a blog post instead:

"Hi Mark,

"I feel that the more important question is to ask whether you are getting the value you want. What do I mean?

"Referring to the blog post above, a realistically optimistic distribution yield at $1.08 a unit (the price of the rights units) is estimated at 9.26% , post rights issue.

"So, at $1.315 a unit, we are looking at a prospective yield of 7.6% with the added benefit of a stronger balance sheet which could allow the REIT to do more AEIs which could increase DPU in future. So, everything else remaining equal, we could see distribution yield inching up from 7.6%.

"By my estimate, the REIT is currently not trading at any discount to NAV whereas, previously, at a higher unit price, it was. $1.315 per unit is probably close to valuation.

"So, if you were to ask me, I would say that the REIT's units are fairly priced although $1.315 (post rights issue) looks "cheaper" than $1.415 (pre rights issue), that is just an illusion created by prices.

"There is nothing wrong with buying at a fair price, of course. So, I won't tell you if now is a good time to buy into the REIT. You have to answer that yourself."

Related post:
AIMS AMP Capital Industrial REIT: The rights' value.