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.

Singapore Short Stories: Man collects rent from his boss.

Everyday, Mr. Tan went to work in a local SME in an industrial estate on a sunny little island called Singapore.

Mr. Tan was a model employee and was always on time.

Mr. Tan was also rather frugal. 




He would prepare his own food to bring to work and saved a big portion of his earned income. 

Mr. Tan's biggest fear was to be destitute in his old age.

Mr. Tan always remembered what a famous man called Warren Buffett said:

"We never want to count on the kindness of strangers in order to meet tomorrow's obligations."




Mr. Tan was a regular guy and didn't have any dreams of greatness.

Sometimes, after a trying day at work, Mr. Tan would wonder if he could stop going to work and still receive an income? 

Being rather practical, he dismissed it as wishful thinking.

Then, one day, he had a conversation with the accountant in the company he worked for.

In the conversation, the accountant said that the company had to pay rent and salaries every month but the difference was that the landlord didn't have to work for the money while they had to.




Hey!

Get paid every month?

Didn't have to work for the money?

Idea!

A few years later, Mr. Tan still worked in the same local SME in the same industrial estate on the same sunny little island called Singapore. 

A big difference was that some of the rent paid by the company every month to the landlord ended up in Mr. Tan's bank account regularly, enough for Mr. Tan to stop working for a living if he had wanted to.




Now, how did that happen?

Let me ask my bowling ball.



Is this an easier way to be a landlord?

Related posts:
1. Building and preserving our wealth.
2. 2015 full year income from S-REITs.