THE Singapore-listed AIMS AMP Capital Industrial REIT is venturing into development in a bid to grow the trust in the highly competitive Singapore market.
The trust, with a market value of $S557 million ($430m), is managed by a joint-venture company, owned by AMP Capital Investors and the Sydney-based AIMS Financial Group, controlled by entrepreneur George Wang.
Nicholas McGrath, the real estate investment trust’s chief executive, said its first major development was a multi-storey warehouse in Tuas, on the western tip of the island.
However, under the Singapore government’s REIT regulations, development projects are limited to no more than 10 percent of the value of a listed trust’s asset base.
The warehouse project is being built in two phases, costing $S155m, and will have a completed value of $S214m.
Mr McGrath said the first phase would supply 67,130 sq m of space when completed at the end of this year. Work, due to finish next year, is under way on phase 2 to add another 45,360sq m.
When fully leased, the project would boost distribution by 15 percent per unit. It would lift the trust’s total asset value from $S940m today to $S1.1 billion, Mr McGrath said. “We have 25 industrial assets in our portfolio. Up to half of them have under-utilised plot ratios,” he said, adding that there were also opportunities to renovate and expand some of its warehouses.
Mr McGrath said the focus was on organic growth through upgrading existing assets.
“There are two key areas where we could significantly add value. One is development. The other is to increase rents as leases expire,” he said.
Over the next 18 months, almost 50 per cent of all its leases will come up for renewal.
Mr McGrath said in the year to March 31, it increased rents by 10-15 percent on all the leases that expired.
The trust, the former MacarthurCook Industrial REIT, first listed in Singapore in 2007, had a $S217m recapitalisation in the wake of the global financial crisis, and has since doubled the value of its asset base. It bought industrial properties, worth about $S300m, owned by AMP Capital.
Last financial year’s earnings were $S84m and are poised to grow to just over $S100m when the Tuas warehouse is leased and completed in 2014.
The trust’s gearing had remained under 30 per cent. Over the past couple of years, Mr McGrath said, it had returned an annual yield of 8.5 per cent.
AMP Capital Investors had originally intended to list its own industrial trust in Singapore, but the global financial crisis put paid to the plan.
AMP formed a joint venture with AIMS, which gained the Singapore trust when it took over MacarthurCook Funds Management, founded by Craig Dunstan, in Australia, in 2009.
“We are now recognised in the market as being one of the better performers. Our stock price rose 25.7 per cent from January this year,” Mr McGrath said.
The trust’s share price has risen higher than the average increase of Singapore’s REITs (15.4 percent) and the Straits Times Index for all industrial stocks (7.1 percent). It has also been closing its discount to net asset value of around 11 per cent.
AIMS AMP Capital Industrial REIT is one of seven listed industrial trusts on the Singapore Stock Exchange with a collective market value of $S17.7bn, at March 31 this year.
The largest is Ascendas Industrial REIT, followed by Mapletree Logistics REITs and Mapletree Industrial REIT. AIMS AMP Capital REIT is the smallest by market value.
by: Florence Chong From: The Australian (July 19, 2012)