AIMS APAC REIT (formerly: AIMS AMP Capital Industrial REIT)

Announcement Regarding AA REIT's Tenant - CWT Pte. Limited

AIMS APAC REIT (formerly known as AIMS AMP Capital Industrial REIT) ("AA REIT"), refers to the announcement dated 16 April 2019 released by CWT International Limited on The Stock Exchange of Hong Kong Limited titled "Inside Information Announcement and Continued Suspension Of Trading". 

CWT Pte. Limited ("CWT"), a wholly-owned subsidiary of CWT International Limited,  is a tenant of AA REIT at 20 Gul Way and 30 Tuas West Road (collectively, the "Properties"). As disclosed in AA REIT’s results presentation slides dated 1 February 2019 on the unaudited financial results of AA REIT for the third quarter ended 31 December 2018 ("3Q FY2019"), CWT is one of AA REIT’s top 10 tenants, and the gross rental income received from CWT’s leases represented 8.4% of AA REIT’s 3Q FY2019 gross rental income.

With respect to CWT’s leases, the Manager wishes to inform that:
* CWT has not defaulted on its rental payments under the various lease agreements entered into with AA REIT in relation to the Properties (the "CWT Lease Agreements") and there are no arrears due from CWT as at the date of this announcement;
* AA REIT presently holds security deposits ranging from three to six months of rental in the form of bank guarantees amounting to approximately S$4.5 million; and
* AA REIT’s exposure to CWT’s leases will be further reduced due to the expiries of the CWT Lease Agreements, with the final CWT Lease Agreement expiring in July 2021. Based on AA REIT’s 3Q FY2019 gross rental income, approximately 5.1% of AA REIT’s gross rental income from CWT will progressively expire in the current financial year ending 31 March 2020

More details in https://links.sgx.com/FileOpen/AA_REIT_A...eID=553541

AIMS APAC REIT Secures Ten-Year Master Lease for Ongoing 3 Tuas Avenue 2 Redevelopment

AIMS APAC REIT (AA REIT) today announced it has successfully secured a master tenant for its property at 3 Tuas Avenue 2. The redevelopment of the property, which was originally projected to be completed in the second half of 2019, is now expected to be completed in the first half of 2020 due to redesigning of the property’s base-build to cater for the master tenant’s operational requirements. However, the redesigning of the property’s base-build will not have a material impact on the overall redevelopment cost of the property.

The master tenant, a global medical device company with headquarters in USA, will occupy the entire premises of approximately 268,000 sq ft upon completion. The tenant has committed to a ten-year master lease on a triple net lease basis, with rental escalations every two years during the initial term, and options to renew the lease for up to a further 20 years after the expiry of the initial ten-year term. The project development cost is estimated to be S$48.2 million and the property’s value on an “as-if-completed” basis is circa S$51.8 million . The property is expected to provide an approximate initial net property income yield of 7.3%.

More details in https://links.sgx.com/FileOpen/AA_REIT_s...eID=570785

ESR Cayman Ltd increases its stake in AIMS APAC REIT from 5.238% to 9.088%.

http://investor.aimsapacreit.com/newsroo...061119.pdf

This is after AMP recently exited as a major investor (10%) through a share placement that saw AIMS share price drop from 1.48 to a low of 1.34. Following this sale, APG (Dutch pension fund and also a very very long term holder) reduced its stake from 8% to below 5%.

George Wang controls about 17%, the rest is free float with some institutional, HNW and Hedge Fund investors having 5% stakes, so this is a REIT that could be in play.

ESR Cayman has cash (having just listed on the HKSE) and presumably wants growth.

ESR Cayman controls the old Cambridge REIT which subsequently merged with Viva Business Trust and renamed itself "ESR REIT".

ESR Cayman has control over 5% of AIMS APAC REIT through ESR REIT (the old Cambridge REIT ) which made a failed take over of MacArthur Cook REIT (subsequently renamed AIMS AMP REIT and now AIMS APAC REIT) and was stuck with the 5%.

ESR REIT(aka "Cambridge") is interesting because it has subsequently merged with Viva Business Trust and because its controlling shareholders also controls the manager of Sabana REIT and seems keen on consolidating REITs, so this could be an opening move to take control of or merge AIMS APAC REIT with ESR REIT.

By buying full control of the Manager earlier this year (from AMP which subsequently also sold its common shares) , George Wang is in an easier position to negotiate a sale if that is what he wishes. Having said that, he makes good fee income from the manager, the REIT keeps (successfully) redeveloping old properties to maximise plot ratios and is now expanding into Australia, so maybe he would not be interested in exiting....

SGX announcement, on November 15th, that ESR has increased its stake to 10%. This could be a move towards consolidation or just ESR deploying excess cash from its recent IPO into a high yielding asset.....

Just curious. Can ESR unseat the Aims Apac manager if they exceed 17% of George Wang holdings ?

(18-11-2019, 12:00 AM)corydorus Wrote: Just curious. Can ESR unseat the Aims Apac manager if they exceed 17% of George Wang holdings ?

The short answer is no. For REITs (in Singapore), the Manager is a separate company. It is currently owned by George Wang and his companies. So ESR can do a takeover of the listed shares but they would then need to either buy over the Manager from George Wang or (if my memory from Sabana serves me right) get a majority or super majority vote to change the Manager and get MAS approval that the new Manager is experienced etc.. In theory, they should be able to do that given that they own several Managers (ESR REIT and Sabana REIT). The alternative is to refuse to approve the renewal of the mandate to issue new shares by the REIT at the AGM. This means that the REIT cannot grow (as it will hit its debt limits without additional equity issuance). I believe that was what the Sabana shareholders did when they were unhappy with their prior manager and also what the Cambridge REIT shareholders threatened to do when they were upset about the amount of performance fees due to the Manager. The value of the Manager falls significantly when they cannot grow assets as that means they cannot grow their own fee income.

Having said all this, I believe that most shareholders believe that George Wang has done a good job focusing on redeveloping buildings with unutilised plot ratio, so any change in Manager would probably only occur is he sells out his stake in the Manager, enters into a JV Management with ESR or ESR makes a very compelling offer for the shares in the REIT and then try to unseat the Manager

AIMS APAC REIT seeks to raise $100 mil through private placement and preferential offering
May 31, 2023

AIMS APAC REIT (AA REIT) O5RU 0.00% is seeking to raise around $100.0 million through a private placement and preferential offering.

The REIT is looking to place between 56.04 million and 57.66 million units at an issue price of between $1.214 and $1.249 apiece to raise proceeds of $70 million. The non-renounceable preferential offering will raise another $30 million through the issuance of up to 25.38 million new units to existing eligible unitholders at between $1.189 and $1.224 per new unit.

Existing unitholders will be eligible to an advanced distribution of between 1.7 cents to 1.9 cents per unit for the period between April 1 and May 30. The record date to be entitled to the advanced distribution and the eligibility to participate in the preferential offering is at 5pm on June 9.

The issue price range for the private placement represents a discount of between 4.0% and 6.7% to the adjusted volume weighted average price (VWAP) of $1.301 per unit, subtracting the estimated advanced distribution of about 1.80 cents per unit.

The issue price range also represents a discount of approximately 5.3% and 8.0% to the VWAP of $1.319 per unit of all trades done on the SGX-ST on May 30, up to the time the underwriting agreement was signed on May 31.

This is the REIT’s first equity fund raising (EFR) exercise since 2017. It is said to be able to help the REIT unlock greater value organically through active enhancement and re-development strategy. It will also enable the REIT to pursue growth opportunities through targeted acquisitions. In addition, the EFR will allow a “greater alignment of interests” between the sponsor group, which is made up of AIMS APAC Capital Holdings and the relevant AIMS entities, as well as its unitholders. Finally, the EFR is said to improve trading liquidity in the REIT.

The sponsor group, which owns about 75.01 million units, or 10.35% of the total units in AA REIT, has provided an irrevocable undertaking to the manager and the joint bookrunners and underwriters, which are DBS Bank, Maybank Securities and RHB Bank Berhad. AACH and the relevant AIMS entities will accept, subscribe and pay in full for its total provisional allotment of the new units under the preferential offering. They will also make applications for the number of excess new units under the preferential offering which are not taken up by other unitholders.

Units in AIMS APAC REIT closed at $1.31 on May 30.

I was reviewing the FY2023 annual report of AIMS Apac REITs (AA REIT).  In Page 7 of the AR, there is a line item that says "Perpetual Securities holders’ funds" with value 124.6M, 373.6M and 373.6M for FY21, FY22, and FY23 respectively. 

Any VB care to explain what that is and how should I view this in light of the loans they have to repay? Thanks! 

AA REIT AR 2023 page 5
Assets = Liabilities + Unitholder Fund + Perpetual Securities Fund
Liabilities = Borrowing + Other liabilities
Aggregate Leverage = Borrowing / (Unitholder Fund + Perpetual Securities Fund)

Perpetual Securities
https://www.moneysense.gov.sg/articles/2...securities

• Perpetual securities are often referred to as "perps", or perpetual bonds and perpetual notes.
  
• Perpetual securities have no maturity date, but an issuer may choose to redeem the after a specified period of time.
  
• You could end up holding the perpetual securities forever, without any reward.
  

Unlike the plain vanilla bond which is a debt, the perpetual securities is considered an equity.  Grouped together with Unitholder Fund for the computation of Aggregate Leverage.

Q(n) How to view this in light of repay
As perpetual securities have no maturity date, there will be no repayment/redeem unless the issuer choose to do so.  

Why is there a demand for this securities, because it tends to offer higher interest rate compared to the vanilla bond. (to the PS holders)

Given its higher interest cost, why would the issuer raise funding via Perpetual Securities.
Perpetual securities helps to improve on the REIT risk profile with more debt headroom before its aggregate leverage reaches 45% (a limit set by the Monetary Authority of Singapore).

In times of improving REIT financials and lower interest rate, the issuer may choose to redeem the Perpetual Securities with high interest rate and reissue another with lower rate.

Disclaimer - I do not know the terms and conditions of Perpetual Securities issued by AA REIT.  I do not have any REITs in my portfolio.  Above are merely my understanding.

(29-07-2023, 08:07 PM)heyjojos Wrote: I was reviewing the FY2023 annual report of AIMS Apac REITs (AA REIT).  In Page 7 of the AR, there is a line item that says "Perpetual Securities holders’ funds" with value 124.6M, 373.6M and 373.6M for FY21, FY22, and FY23 respectively. 

Any VB care to explain what that is and how should I view this in light of the loans they have to repay? Thanks! 

hi heyjojos,

Search "perpetual" in VB.com and it should give you enough information.

https://www.valuebuddies.com/thread-9381.html
https://www.valuebuddies.com/thread-2091.html