AIMS AMP Capital Industrial REIT: A private tour..

I was given an opportunity to take a tour of 4 of AA REIT's properties in the western part of Singapore and since the REIT is the largest investment in my portfolio, I accepted the offer right away after confirming that the tour is a private one. (Yes, I am still very shy.)

Everything tells me that my opinion of the management is right as they put investors' interests right at the front. 

Being AK, in jest, I said they must do that since Mr. George Wang has such a big personal stake in the REIT. 

Bad AK, bad AK!

Appointment time: 10AM.

Shuttling between properties, we had a good conversation going:

1. With the oversupply of industrial properties in Singapore, I am worried about the vacancy rate for warehouses the most. 

Apparently, the REIT is spending a lot of resources on as it is rather challenging and could get more so. 

I reckon the REIT is doing quite well, otherwise.





2. Of course, we have heard stories of how some local companies move across the Causeway to take advantage of the cheaper land in Johor. 

The biggest challenge is in finding labour and also the right type of labour for companies in the Iskandar region. 

There is plenty of land there but not enough labour. 

So, for many years to come, Singapore industrial properties will still be in demand.





3. Asset quality is a pertinent concern when we invest in REITs. 

The REIT is picky not only when it comes to buying and divesting properties, they are also picky when it comes to which existing properties to benefit from AEIs. 

Active portfolio management is something the REIT does well, I agree.





4. In a rising interest rate environment and also softening rentals, is there any plan to hold back a percentage of distributable income to lower the gearing level? 

To be fair, the REIT's gearing level is not very high at about 32% but expecting property values to decline, gearing level could bump up. 

The answer seems to be that the REIT rather distributes 100% of the available distributable income because they would have to pay corporate tax on whatever income they decide to retain even if it was just 5% or 10%.





5. Is there any possibility to refinance, locking in the still relatively low interest rates for a longer term? 

There is a MTN maturing later this year and the interest on that is 4.9%. 

They explained that a longer term loan could mean a higher interest and that a shorter term loan would mean a lower interest. So, there will be a trade off. 

Well, I am hoping for a new 7 years MTN with interest meaningfully lower than 4.9%.





OK, here are some other photos:

8 and 10 Pandan Crescent

20 Gul Way.

30 & 32 Tuas West Road being redeveloped.

Another 20 Gul Way in the making!

1A, International Business Park.

Oh, I also want to share these photos taken during the tour of the award winning (Green Mark Gold) 1A, International Business Park:

Definitely a beautiful working environment.

I cannot share everything that was discussed mostly because my memory is not what it used to be but I was very impressed by what I saw and what I heard.





Real estate can be a very good income generator. 

However, not all of us have the ability to invest directly in a piece of real estate. 

Even if we have a million dollars or two, we would be hard pressed to invest in a portfolio of real estate to reduce concentration risk. 

Investing in well managed REITs solves this problem.

Although I have never attended a single AGM by AA REIT, just by taking note of what they did over time, I could tell that AA REIT is a well managed REIT where investors' interests are not neglected. 

I am glad to have affirmation on this tour.





UPDATE (28 DEC 16)
AIMS AMP Capital Industrial REIT received Temporary Occupation Permit for its redevelopment at 

30 & 32 Tuas West Road which is valued at S$60.7m, up more than 4 times from its former value S$14.1m. 

It will deliver S$4.15m in rental income annually in year one with fixed annual rent escalations over the term of the lease – up from S$0.82m.






This is NOT a paid advertorial.

Related post:
2015 full year income from S-REITs.

A note on the CPF and a break from blogging.

Regular readers know that I only want to be a happy peasant. I was never royalty or an aristocrat. I am of the masses. 

DPM Tharman said before that the CPF is meant to help the working masses. That is why there is a limit to doing OA to SA transfer, to doing MS Top Ups to the SA and also to doing Voluntary Contributions to the MA.

For many people, it is easy to miss the big picture. A fixation on theoretical opportunity cost could turn out to be costly. 

In our investment portfolio, the CPF should be considered an investment grade bond component that gives us peace of mind (and relatively good coupons). It is not, however, the be all and end all in a sound retirement funding plan. 

We cannot build a house on just a cornerstone but to give up a cornerstone in a house, we must have a high level of certainty that whatever takes its place is going to be just as strong or stronger. 

If the alternatives have a higher level of risk or a greater degree of volatility, then, we would need a helping hand from Lady Luck to ensure the house remains standing in the years to come.

Be careful who we listen to when we build a house of our own.

I will be taking a break from blogging etc. for a few days. It is probably a good idea to get away from things familiar for a bit. 

Don't worry. I will be back. :)

In the meantime, keep building your house carefully. ;)

Related posts:
1. AK is showing off his CPF-OA and MA.
2. AK's SA outperformed in 2015.
3. Building a cornerstone in retirement funding.