AIMSAMPReit – BT

AIMS AMP beefs up asset quality for better returns

Over 20% of Reit's portfolio undergoing enhancements

AIMS AMP Capital Industrial Reit intends to "sweat" its assets over the next few years by raising the overall quality of its portfolio to provide better returns for its shareholders, said Andrew Bird, director of AMP Capital's property and management business.

With more than 20 per cent of its current portfolio in Singapore undergoing asset enhancements, the industrial real estate investment trust (Reit) intends to focus on improving the quality of its overall assets this year, instead of acquiring new properties.

In particular, Mr Bird, who was also newly appointed as chairman of the board of AIMS AMP Capital Industrial Reit Management (the Reit's manager) yesterday, said that with the completion of the group's $155 million development at 20 Gul Way later this year, the Reit's portfolio – comprising mainly warehouse and logistics assets – which currently stands at around $940 million, is expected to cross the $1 billion mark.

The soon-to-be completed asset at Gul Way (which has already been fully pre-committed) is also expected to enjoy positive rental reversions upon completion, and is forecast to boost the Reit's overall distribution per unit (DPU) by 15 per cent once cashflow starts rolling in.

Said Mr Bird: "The Gul Way property is a great example of us adding value to existing assets. So rather than going out and doing aggressive acquisitions and capital raisings we are seeking to add value to assets we already have thus moving the quality of assets up which is a good thing for investors."

He also added that another part of their strategy would be to sell some of its smaller, lesser quality assets with the final aim to "unlock better returns" for the Reit's overall portfolio.

Commenting on rising concerns over a potential supply glut in the industrial space segment, Mr Bird said: "Markets go up and down whether it is in Singapore or elsewhere in the world. The manager's job is to look forward over the horizon to see where the opportunities are and manage the portfolio to the best of their ability to maximise shareholder returns."

He also pointed out that demand continues to outstrip supply for quality warehouse assets in Singapore, an area that the Reit specialises in, and it remains confident of its outlook going forward.

But touching on the topic of the counter's lacklustre liquidity triggered a more furrowed expression on the face of the industry veteran.

Despite having one of the highest yields in the local Reit universe, the listed counter has been suffering from bouts of poor investor interest over the past few years.

"That is one of the things we are very focused on as a sponsor and shareholder. This is very close to our hearts," he said.

Fortunately, efforts have been starting to pay off of late, with institutional interest picking up over the past few months, said Mr Bird, who also attributed the higher trading volumes to a five-for-one share consolidation carried out sometime last year.

That said, the leader admitted that liquidity continues to remain an issue despite the improvement in trading activity over the past six months, and said he will continue working on sprucing up the Reit's overall marketability to investors in the coming months.

"We have built steady momentum in the trust and we need to continue that on," he said.

Since the start of the year, the industrial Reit has rallied by 24 per cent, outperforming many of its sector peers.

Yesterday, the counter closed half a cent or 0.4 per cent lower at $1.185.