AIMS AMP Capital Industrial REIT: How much higher?

People are waking up to the stronger numbers as well as the attractive and potentially growing income streams of AIMS AMP Capital Industrial REIT.

It is interesting also to note that some analysts are reporting that the REIT has not one but two strong sponsors. In the distant past, few would even talk about the REIT in a positive light, much less the sponsors. This shows how durable the negativities created by the recapitalisation of the former MI-REIT were.

Personally, on hindsight, I am thankful for the negativities which made people avoid the REIT as it allowed me to accumulate more units of the REIT at prices way below its fair value.

The REIT is currently my second largest investment and is an important passive income generator for me. Keeping the status quo, it is expected to generate some 32% of my total passive income from S-REITs alone this year. Will I keep the status quo?

My current investment in the REIT forms part of my core investment for passive income. It is not for trading. Unless its unit price rises significantly, I am likely to keep the status quo.

Although fundamentally attractive, we can only wait and see how much higher Mr. Market is willing to pay for the REIT's units. $1.10 is the resistance to watch. Overcoming this convincingly could see $1.125 and $1.15 tested next.

Related post:
AIMS AMP Capital Industrial REIT: 3Q FY 2012.

First REIT: To sell or not to sell?

I have received questions from readers and friends if they should sell their units in First REIT given its stellar performance of late. I can't really advise if they should sell or hold on to their investments. I am not qualified to give advisories and neither do I have the inclination to do so.

I would say the following:

Fundamentally, First REIT is rock solid. One should, however, remember that its bumper income distributions in the last two quarters were due to contribution from the sale of its Adam Road property. If this contribution were removed, we are more likely to see a DPU of 1.6c per quarter. This means an annualised DPU of 6.4c. At today's high of 87c per unit, that would be a base distribution yield of 7.35%. Its larger peer, Parkway Life REIT, has a distribution yield of about 5.26% at a unit price of $1.825.

Technically, First REIT's unit price is continuing its march higher on strong volumes. There is vigorous accumulation going on if the OBV is anything to go by and although price action looks like it is becoming parabolic, the bullish momentum could push price higher to test 88c or even 89c. However, fatigue would very likely set in and a pull back to support at 82c could take place in time.

My remaining investment in First REIT is part of a core investment for passive income. It is unlikely that I would sell my remaining position. If I were trading First REIT, however, 87c to 89c would seem like very attractive prices for divestment. There, I have said it.

Related post:
First REIT: FY2011 results.