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Aims AMP Capital Industrial REIT does a dilutive placement–Management screwing investors again?

A leopard refuses to change its spots. Aims AMP Capital Industrial REIT was formerly MacArthurCook REIT. It was listed at SGD 1 dollar and bleed slowly to 21 cents currently.

Those that have held on would have lost quite a fair bit. MacArthurCook sold to Aims and new investors thought that this will herald a change for the better, that they will right the wrongs of MacArthurCook.

This week they raised a private placement of $43 mil to fund the acquisition of a property located at 29 Woodlands Road.

Net property income would jack-up from 7.2% to 7.6%. Gearing inches up slowly to 33.6%

So why am I disappointed?

The private placement will increase the number of units by 15%. Or put it another way, small shareholders like us will get a smaller share of this dividend.

The projected NPI increase due to the property is 14% (5.4mil / 38.5 mil).

Net Net Minority share holders didn’t earn much. The dilution almost equates the increase in NPI.

Who Gains the most?

Aims have the greatest to gain sadly. REIT Managers earn trustee fees and asset management fees as well as transaction fees.

They have 2 tracks

  1. Only add property that enhances shareholder value. Asset Enhance the current property to enhance share holder value. Re-finance debt where it is favorable.
  2. Managers are graded by increasing the asset size by buying more assets to manage, generating more transaction. Whether it is yield accretive or not it doesn’t really matters much. They don’t care about the gearing.

Now A good manager would be doing more of (1) than (2). Some would argue that not all of them are the same, and that this change is for the better. But does their actions really show that?


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Thursday 26th of May 2011

Hi Drizzt,

I totally agree with you. The management of AIMs reits suck. They should all be sacked for robbing retail investors like us.

I have never understood why they can sell away a portion of our company for a price below its net asset value, yet buy that new property at the fully appraised value.

Group of retards we have there in the managemnet team.

More money has been stolen from the tip of a pen than that of a gun. Those idiots!


Friday 27th of May 2011

hi gary, the thing that we as investors can do is vote with your money. they say they are looking into china but to me it seems the value for industrial property might be in korea.


Saturday 19th of February 2011

Hi Paul,

I am an "ex-MI investor" as well. I blogged about my unhappiness with the proposed rescue by George Wang et al but there were no viable alternatives at that point in time.

In December 2009, I went in big and bought more units of the renamed REIT at 20.5c, recognising that it has emerged stronger from the unpopular rescue. See strategy here:

With all the income distribution collected since and the capital gains from the rights issue linked to the purchase of the Penjuru property, I have recovered all the paper losses of my old investment in MI-REIT and more.

However, I understand your feelings and sometimes it is better to let something go and close a chapter in our lives. Peace of mind is priceless. :)


Saturday 19th of February 2011

Dizzit + AK

Logically I understand what you guys are saying about what was a bad investment (MI-REIT) before need not be a bad investment now (AIMSAMPS)

I also agree with AK that AIMSAMPS may not be the most terrible investment now for new investors.

But for ex-MI investors like myself, even after taking part in all of its dilutive rights issue, I cannot see a recovery on the card for my initial investment. Which is why I am taking the decision to divest my AIMSAMPS stake, because

#1 I'm doing some portfolio balancing and and its a bit too overweigh on industrial REITs)

#2 I feel this to be a good time to consolidate some cash from divesting the deadweights in the portfolio

#3 I do not have confidence in AIMSAMPS management

I agree we should not be emotional about our investment decisions; but equally if divesting can get rid of emotional angst from your system, then it may be an action that is worth doing after all.


Saturday 19th of February 2011

Hi Drizzt,

There are differences.

The old MI-REIT didn't have a loan in place for a binding agreement to purchase a building under development (i.e. this requirement was not even built into their leverage numbers and could be intentional under the previous CEO as part of creative accounting).

At the time, MI-REIT was in a different situation where credit was starting to dry up after the sub-prime crisis. Comparatively, it is much easier to get loans in the current low interest rate environment and credit is ample. Although we are seeing signs of tightening, I do not believe that governments would choke credit out of the system.

MI-REIT also did not have a strong sponsor which is necessary to inspire some confidence. The current REIT has not one but two strong sponsors. Managing to refinance their loans and reducing the interest rates to 2.1+% last year says something about this, I believe. Usually, a lower interest on borrowing shows lenders' confidence in an outfit.

Technically, AIMS hit bottom when it took over MI-REIT. That was more than a year ago. Downside is limited from its current price.

Confident? Over-confident? People have called me many things about my conviction that AIMS is a great investment. Things could change, I agree, and time would tell. So, let's see how things pan out from here on. :)


Saturday 19th of February 2011

The bond issued by Capital Mall is capital guaranteed? 2% interest per annumm for 2 years...

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