AIMS AMP Capital Industrial REIT: 2Q2016 DPU 2.8c

One of the few friends I have complained that I don't do quarterly reports on REITs anymore. I told him don't be lazy. Go see the presentations and financial statements published by the REITs. 

Don't rely on what bloggers write. Sometimes, we blog practically useless stuff and we are wrong many times too. Yes, even very eminent bloggers are not infallible. Don't think got bloggers means he no need to work as an investor, I told him.

So, why am I doing this? 

Well, a reader just asked me whether AIMS AMP Capital Industrial REIT is good to buy. I think must be a new reader because readers who have been following my blog know that I don't answer such questions with a 'yes' or 'no'.

Anyway, the reader read some disturbing headlines in the papers regarding AIMS AMP Capital Industrial REIT and wondered if it was a good investment. I gave him a link to the financial statement and said he should find out for himself. Don't rely on newspaper headlines.

AIMS AMP Capital Industrial REIT remains my biggest investment in the S-REIT universe. The REIT continues to do what I expect it to do which is to generate meaningful income for me in a sustainable manner. The fact that they are doing this while staying prudent in their finances makes me happy.

As shareholders, I have said before that we should be more concerned with performance on a per share basis. The fact that net property income (NPI) increases is meaningless if distribution per unit (DPU) should decrease and we have seen this happening with a couple of other REITs recently especially if they continue to distribute 100% of their distributable income.

AIMS AMP Capital Industrial REIT improved on their quarterly DPU and 2.8c per unit will be distributed on 23 December 2015. 

7.82% distirbution yield based on $1.42 unit price.

They did this while reducing gearing level to 30.9%. NAV per unit is $1.52.

Their interest cover ratio is at 4.8x which is healthy and they don't have any debt due till August 2016. Financially, the REIT is very sound.

AIMS AMP Capital Industrial REIT faces the same problem that all industrial landlords in Singapore do. There is more supply and, so, more competition for tenants but the REIT has been doing a very good job of getting new tenants and renewing leases at modestly higher rates. This is a sign of diligence and also competence.

There is no reason for me to reduce my investment in the REIT at this point in time as it continues to do the job I expect it to do and, in fact, if Mr. Market should go into a depression and decide to sell the REIT cheaply, all else remaining equal, I would probably buy more even though it is already my largest investment in S-REITs.

For now, I am looking forward to more passive income in December.

See presentation: here.
See financial statement: here.

Related posts:
1. AIMS AMP Capital Industrial REIT: Opinion.
2. 9M 2015 passive income from S-REITs.

Saizen REIT: Net offer price of $1.172 per unit by Lone Star.

The news is out.

Purchaser is Triangle TMK which is a Japanese affiliate of Lone Star Real Estate Fund IV and Lone Star Funds. The Purchase Consideration is at a 3.4% premium to the appraised value of the Properties.

 

The Purchase Consideration is estimated to translate into an implied net offer price of S$1.172 per unit of Saizen REIT (“Unit”), or a slight premium to Saizen REIT’s adjusted net asset value (“NAV”) per Unit.

The Proposed Transaction is conditional upon, among others, approval from Unitholders at an extraordinary general meeting of Saizen REIT to be convened and is expected to be completed in the first quarter of 2016 and no later than 31 March 2016 or such other date as the parties may agree in writing.

 
See press release: here.




So, new shareholders who bought into Saizen REIT even at 92c or 93c a unit in the days before the trading halt yesterday would be in for a nice windfall too.

To be quite honest, I am pleasantly surprised because I was expecting an offer that is, perhaps, at a 5% or even 10% discount to NAV which means a price of $1.03 to $1.08 per unit.

I was being realistic because it is much more difficult to find a buyer who is able to buy the entire portfolio of more than 130 buildings at one go compared to selling one building at a time.

$1.17 a unit exceeds my expectation and I am in favour of the sale although I will miss having Saizen REIT in my portfolio. I have had it for so long and it has been good to me as a stable and meaningful income generator in the last few years.

Now, I notice some who are saying that Saizen REIT provides a good lesson on investing in REITs and that if we buy a REIT at a big discount to NAV, we are safe. This is not 100% accurate and, in fact, it could be a dangerous belief.

I did not buy into Saizen REIT just because it was trading at a huge discount to NAV but because the NAV was also realistic. This was just one of the many considerations I had. There were also other reasons which made Saizen REIT a great investment to me.





Interested readers might want to read my past blog posts on Saizen REIT and why I was so convinced that Saizen REIT was a fantastic investment. (Use the "Search ASSI" feature at the top of my blog.)

Now, with Saizen REIT set to be delisted, I will see my cash position swell as it is one of my 3 largest investments in S-REITs and accounts for slightly more than 20% of my passive income from S-REITs.

For me, it will be like getting 17 income distributions all at once which is better than getting them over a period of 8.5 years, for sure.

A dollar today is better than a dollar sometime in the future.





This is a good outcome and I must not be sentimental.

Congratulations to all my fellow shareholders who got in at the right time and held on till today.

Huat ah!

(Read comment made on 2 Nov 15 at 6.09 pm below.)

Related posts:
1. Possible delisting of Saizen REIT.
2. Saizen REIT: Deeply undervalued.
3. Saizen REIT: Sell the entire portfolio?