AIMS AMP’s Japan warehouse sale completion delayed

No apparent structural damage, says Reit; buyer arranging checks

THE completion of AIMS AMP Capital Industrial Reit’s 1.49 billion yen sale of a warehouse in Tokyo’s Saitama city has been delayed following the massive earthquake that hit Japan.

The manager of the Singapore-listed real estate investment trust, which was due to complete the sale of the Asahi Ohmiya Warehouse yesterday, said in a statement that ‘there appears to be no structural damage’ to the property. But an investigation of the warehouse and logistics property ‘is currently being arranged’ by the purchaser, Tokyo-listed Industrial & Infrastructure Fund Investment Corporation (IIF), in conjunction with the trust’s asset manager in Japan.

IIF, in a news release, said that it has pushed back the acquisition of three properties, including the Asahi Ohmiya Warehouse, and ‘will acquire these properties after IIF gets the report from external research agency that there exists no problem’.

AIMS AMP’s manager said that it has received legal advice that the purchaser has no right to rescind the purchase. But any repairs, if required, must be carried out before the sale is completed.

If there is no damage to the building, the sale can be completed ‘as early as this week’, said Nicholas Paul McGrath, chief executive of AIMS AMP Capital Industrial Reit Management Ltd, the trust’s manager.

‘Completion of the sale of the property will be rescheduled to the first practicable date following completion of the investigation and any required repairs’, the Reit manager said.

The trust, formerly known as Macarthurcook Industrial Reit, said in late February that it was selling the Asahi Ohmiya Warehouse ‘to free up capital to provide the trust with greater financial flexibility for future investment opportunities’.

Net proceeds would be used to repay its debt under a revolving credit facility, reducing aggregate leverage to 32 per cent from 33.6 per cent, it said. The 1.49 billion yen sale price is slightly above the property’s book value (as at end December 2010) of 1.46 billion yen.

The units of AIMS AMP eased half a cent each yesterday to close trading at 20 cents.

AIMS AMP Capital Reit Q3 DPU takes a dive

Rights issue dilutes payout from higher distributable income

AIMS AMP Capital Industrial Reit yesterday said that its distributable income for the third quarter surged 94.2 per cent year-on-year to $10.4 million, though its payout per unit fell largely on the back of its rights issues of new units.

Distribution per unit fell to 0.51 cent from 1.1368 cents a year ago – when it recorded a distributable income of $5.4 million. The number of units issued at the end of the quarter was 1.99 billion, compared with 1.5 billion over the same period a year earlier.

Gross revenue for the three months ended Dec 31 jumped 56 per cent to $19.6 million. Reit manager AIMS AMP Capital Industrial Reit Management Ltd attributed this to the additional rental income from the six properties it acquired since November 2009, and higher recovery of property tax and land rent from tenants.

With 0.1 per cent of the trust’s revenue due for renewal in the fourth quarter and ‘healthy occupancy’ of 98.5 per cent, the manager said it expects revenue for the final quarter of its fiscal year 2011 to be stable and sustainable.

Net property income rose 47.1 per cent to $14.5 million from $9.9 million a year earlier. Earnings per unit was 0.41 cent, compared with 0.8 cent a year earlier.

During the quarter, a major focus of the trust was the transaction for its acquisition of a ramp up warehouse at 27 Penjuru Lane for $161 million from AMP Capital, said Nicholas McGrath, the Reit manager’s chief executive.

This transaction, he said, ‘has resulted in a significant increase in the asset base ($818.8 million as at Dec 31, 2010) and market capitalisation ($427.2 million as at Jan 24, 2011) of the trust’.

The acquisition, which was completed in October last year, was partially funded by a fully underwritten renounceable rights issue of $79.6 million and partially funded by a new loan.

According to the Reit’s financial statement, its net asset value per unit as at end-December last year was 27 cents, compared with 31 cents on March 31, 2010.

Yesterday, the Reit’s shares closed unchanged at 21.5 cents.

Sale of 23 Changi South Avenue 2 Singapore 486443 above independently appraised value

•  Sale price: S$16.7 million
•  Book value as at 30 September 2010: S$16.2 million
•  Sale expected to complete in January 2011
•  Provides opportunity for future investment opportunities
•  In the interim, net sale proceeds will be used to repay debt under the Trust’s newly established revolving credit facility, reducing aggregate leverage to approximately 33.4% from approximately 34.8%
• Continued execution of Manager’s strategy to maximise returns for unitholders

AIMS AMP Capital Industrial REIT Management Limited, the manager (the "Manager") of AIMS AMP Capital Industrial REIT (the "Trust") wishes to announce that HSBC Institutional Trust Services (Singapore) Limited, in its capacity as trustee of AIMSAMPIREIT (the "Trustee"), has today issued an option (the "Option") to Premier Land (East) Pte. Ltd. (the "Purchaser") for the sale (“Sale”) of 23 Changi South Avenue 2 486443 (“Property”) for a consideration of S$16.7 million (the "Sale
Consideration").

The book value of the Property is S$16.2 million based on an independent appraisal by CBRE as at 30 September 2010.

Principal terms of the Sale
The Purchaser has today paid to the Trust S$167,000, equivalent to 1.0% of the Sale Consideration, as a non refundable option fee. The Purchaser will pay S$1.5 million, equivalent to 9.0% of the Sale Consideration, on exercise of the Option on or before 16 November 2010. The balance of the Sale Consideration will be paid in cash on completion of the Sale, which is expected to take place in January 2011.The completion of the Sale is conditional upon, among others, the approval of JTC Corporation to the Sale.

Rationale for the Sale
The Sale is consistent with the Manager’s strategy of recycling the Trust’s capital to maximise returns for unitholders. The Manager adopts a proactive approach towards managing the Trust’s properties with a view to enhancing their quality and value. The approach includes identifying properties within the Trust’s portfolio which have reached the optimal stage of their life cycle for divestment. This allows the Manager to free up capital to provide the Trust with greater financial flexibility for future investment opportunities.

Use of Sale proceeds
The Sale proceeds, net of sale related costs, will be used to repay debt under the Trust’s newly established revolving credit facility, reducing aggregate leverage to approximately 33.4% from approximately 34.8%. This increased headroom will provide the Trust with greater financial flexibility for future investment opportunities.

Level of Subscription

AIMS AMP Capital Industrial REIT Management Limited, as manager of AIMS AMP Capital Industrial REIT (“AIMSAMPIREIT“, and the manager of AIMSAMPIREIT, the “Manager“), wishes to announce that valid acceptances and excess applications for a total of 670,009,453 Rights Units (as defined herein), representing 130.5% of the total number of Rights Units available under the fully underwritten renounceable rights issue (the “Rights Issue“) of 513,309,781 new units in AIMSAMPIREIT (the “Rights Units“), were received as at the close of the Rights Issue on 7 October 2010 (the “Closing Date“).

The valid acceptances received include the acceptances by AIMS Financial Group, AMP Capital Investors (Luxembourg No. 4) S.A.R.L., Dragon Pacific Assets Limited, APG Algemene Pensioen Groep N.V., Universities Superannuation Scheme Limited, Indus Asia Pacific Master Fund, Ltd, Hunter Hall Investment Management Ltd and Cohen and Steers Asia Limited, of their aggregate pro rata entitlement of 326,512,107 Rights Units, representing 63.6% of the total number of Rights Units under the Rights Issue.

Details of the valid acceptances and excess applications received are as follows:

AIMS AMP Reit plans $79m rights issue

Funds raised to buy warehouse and logistics facility

AIMS AMP Capital Industrial REIT (AIMSAMPIREIT) is looking to acquire a ramp-up warehouse and logistics facility for $161 million, which will be partially funded through a rights issue.

It has proposed to acquire C&P Logistics Hub 2 – located at 27 Penjuru Lane – from DB International Trust (Singapore) Limited, which is the trustee of AMP Capital Business Space REIT.

As AMP Capital Business Space REIT is indirectly wholly-owned by AMP Capital Holdings, who is the sponsor and a controlling unitholder of AIMSAMPIREIT, the acquisition is considered to be a related party transaction.

The total cost of the acquisition is $163.1 million, which includes the $161 million purchase consideration, a $1.6 million acquisition fee for AIMSAMPIREIT’s manager AIMS AMP Capital Industrial REIT Management, and about $0.5 million in professional and other fees and expenses.

To help fund the acquision, AIMSAMPIREIT has proposed to issue 513.3 million new units through a fully underwritten and renounceable rights issue on a basis of seven rights units for every 20 existing units at an issue price of $0.155 per unit. The issue price represents a discount of 32.6 per cent to the closing price of $0.23 per unit on 19 August.

This will raise gross proceeds of some $79.6 million, of which $64.5 million will be channelled toward the acquisition.

Its sponsors, AIMS Financial Group and AMP Capital Investors (Luxembourg No. 4) SARL, have agreed to subscribe for their pro rata rights entitlements of 39.28 million and 82.5 million rights units respectively. Six unitholders, including Dragon Pacific Assets Limited and APG Algemene Pensioen Groep NV, have also committed to subscribing for their pro-rata rights entitlements and in some cases, to sub-underwrite a portion of the rights issue.

The warehouse facility, with a net lettable area of 975,823 sq ft, is leased out to C&P Holdings in a master lease that will expire in December 2012. It has a net property income yield of 7.7 per cent. Its annual rental for the rental year ending Dec 11, 2010, is $13 million.

Independent valuations by Colliers International Consultancy & Valuation (Singapore) and CB Richard Ellis put the purchase consideration at $162.5 million and $165 million respectively.

‘From management’s point of view, we think that we’re buying well, in a good part of the cycle. Certainly in our experience, market rents have bottomed, valuations have bottomed,’ said Nicholas McGrath, chief executive officer of AIMS AMP Capital Industrial REIT Management. ‘What we’re seeing now is increases in market rentals across our portfolio, which will translate to increases in valuations in the future.’

The acquisition also provides for the refinancing of the trust’s existing loan on improved terms. While the existing loan has an interest margin of 3.5 per cent, the $280 million new loan will have a weighted average interest margin of 2.16 per cent. The new loan is split into three tranches – a three-year $100 million term loan facility, a three- year $80 million revolving credit facility and a five- year $100 million term loan facility.

Mr McGrath also said that AIMSAMPIREIT will look to grow its presence in Asia in the medium to long term, especially in markets such as Japan and China. In Singapore, it will carry out enhancement works to increase the net lettable area at some of its properties.

It currently has 25 properties in Singapore and one in Japan.

If the acquisition goes through, its portfolio size will increase by 25.3 per cent to nearly $800 million.

The proposed acquisition is subject to unitholders’ approval at an extraordinary general meeting, which will be held on Sep 13.