Monday, August 23, 2010


AIMS AMP Capital Industrial REIT announces proposed acquisition, new debt facility and fully underwritten renounceable rights issue.

Key Highlights:
  • Proposed acquisition of a high-quality industrial property at 27 Penjuru Lane Singapore 609195 (the “Property”) for S$161.0 million;
  • New debt facility of S$280.0 million; and
  • Fully underwritten renounceable 7 for 20 rights issue to raise S$79.6 million, (collectively, the “Transactions”).
The property being bought is at 27 Penjuru Lane, Singapore 609195, a warehouse and logistics facility.

More details of the purchase can be found here

I have no idea why the mini-selldown today for AIMSAMPIREIT when this news was released. Perhaps it was dumping by a small minority who can't afford the rights. Afterall, there's a new major player into this REIT, namely Dragon Pacific Assets Limited, just before news of the rights issue was out.

To me, I view this positively. The rights issue is being used for acquisitions, and is yield accretive. In terms of just numbers, the pro forma dividend amount is not too far off from the original amount, 0.52 (post-rights) compared to 0.54 (pre-rights). At a rights issue of 7 for 20 priced at $0.155, this gives a nearly 13.4% dividend yield on the new units! Of course, this is a simplified calculation as I did not take into account the 0.02 dividend loss on the original units. Some more calculations will be done later.

Compared to CIT which offers a placement, a rights issue by AIMS gives investors like me a chance to participate, and at the same time, a chance to increase my holdings via excess rights as well. Rights given by an equity I have faith in is definitely better than one that appears to be in the doldrums (Berlian Laju).

Some further calculations:
Currently, I have 70 lots, which gives me a dividend of $1505 annually. With this rights issue, I'm entitled to 24.5 lots. Excluding any excess lots, my dividend from AIMSAMPIREIT would increase to around $1965, an increase of about $460, or nearly $18 per month, at a extra cost of $3797.50. This is akin to buying new units at 12.1% yield. And it also means that my yield increased from 10.14% to 10.5% based on my cost price. Of course, the more excess rights one can get, the better the yield will be.

The only downside is that while the price wouldn't have changed much, the NTA is down from 31c to 26c. However, the post-rights price would still be at a discount to the NTA.

My current plan would be to observe the price, and perhaps nibble a little if the price drops much more. The main bulk of my funds would be prepared to subscribe for the rights plus excess rights (24.5 lots as well).

After this purchase, I will most likely have to look into increasing my holdings in SPH, Starhub and Starhill to rebalance my portfolio.


    1. Hi JW,

      This was my reply to a comment by a reader on this topic:

      "I paid 20.5c to 22c per unit and for me, with the rights issue, my yield will average 10.2% to 10.8%. Very respectable, if I do say so myself. My current yield is 9.8% to 10.4%. So, this rights issue and acquisition is good for current unit holders."

      I think we have a good thing here. :)


    2. Based on the NTA drop from 31 cents to 26 cents, the unit price might have a possible plunge from the current 22 cents (based on 31 cents NTA) to about 18.5 cents (based on 26 cents NTA). The stock market has a tendency to follow the NTA rule of thumb for REITS. Regardless, this is a pretty good REIT to hold for the long term.

    3. Hi whenissued,

      if that's the case, I will increase my holdings further. I put my faith in the credentials of George Wang.

      Thanks for visiting! Hope to learn from you :)

    4. Hi whenissued,

      18.5c per unit, XR? With a DPU of 0.52c per quarter, I would accumulate big time as that is an annualised yield of 11.25%! :)

    5. Looks like i will subscribe to the rights as well.

      Fundamentally, its trading at discount to NAV/NTA.

      Technically, it looks like it has higher chance to go up or at least remain relatively at the same price.

    6. Hi Hyruga,

      if I'm not able to get sufficient excess rights, I might just jump in for more after rights start trading in the market.

    7. Hi JW

      I am a newbie who wants long term & high yield p.a seeking.

      On seeing the likelyhood of the rights issue and the yield, would it be wise to buy this counter now ? Also, given that the rights issue is at a discount, does it means that the price will average out.

      Lastly, if I am not in Singapore during the time of participating in this right. Is it possible to get it via internet banking or still have to do it via ATM ?



    8. Hi Jimmy,

      I'm in no position to advise. I can only tell you that the main advantage of having the mother shares is to have the opportunity to subscribe for excess rights. Other than that, there's basically not much diff to me.

      It's not possible to apply for rights through i-banking (I hope it is though). We will have to do it via ATM.


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