AIMS AMP Industrial REIT

[momoeagle]

So far my experience with REITs and Trusts is that it is always overpriced at IPO.
It's Probably Overpriced holds mostly.

So far, the only counter on my monitor that seems to defy is Mapletree Commercial Trust. It did touch 80 cts, but it came back pretty quick to near it's IPO price. (Not Vested).

Trust - agree.
REITs - Depends. Not all REITs are overpriced at IPO.

Suntec IPO $1.00 now $1.25. 25% up
Frasers CT IPO $1.03 now $1.52 47% up
CDL HTrust IPO $0.83 now $1.72 66% up
MLT IPO $0.68 now $0.905 33% up
PLife IPO $1.28 now $1.79 39% up

Even the 3 recent REITS - MCT, MIT and CLT are all positives and above their IPO price.

So dun over generalise.

Nice info!

Seems like the MapleTree family are doing well!

[momoeagle]

AIMS mentioned about coming with a Distribution Reinvestment Plan.

Any comments? I'm not sure if there will be a discount to the market price on their DRP.

[lonewolf]

I generally dun bother because I dun owe enough units for the DRIP to be significant; nor do I think any discount (if any) would be significant to deal with the eventual odd units. So cash for me - always.

[KopiKat]

I generally dun bother because I dun owe enough units for the DRIP to be significant; nor do I think any discount (if any) would be significant to deal with the eventual odd units. So cash for me - always.

For me, I'm only interested in DRP for Growth Stocks as I plan to continue adding to my collections as long as the company continue to grow. I'm therefore ok to have odd lots as I don't plan to be selling anyway.

For REITs or other Trusts, I can always see opportunities to buy at a lower price (than DRP discounted ones), usually after it xd and before the next cd. So, I'd rather buy full lots from the open market if I want to add to my collections.

[Zelphon]

I generally dun bother because I dun owe enough units for the DRIP to be significant; nor do I think any discount (if any) would be significant to deal with the eventual odd units. So cash for me - always.

For me, I'm only interested in DRP for Growth Stocks as I plan to continue adding to my collections as long as the company continue to grow. I'm therefore ok to have odd lots as I don't plan to be selling anyway.

For REITs or other Trusts, I can always see opportunities to buy at a lower price (than DRP discounted ones), usually after it xd and before the next cd. So, I'd rather buy full lots from the open market if I want to add to my collections.

I will be taking the cash instead if DRP..
In fact, I am pondering whether to diverst from AIMS AMP REIT..

Reason being that a lot of people are either investing in commercial properties directly or buying REITS...

Nowadays I can see a lot of commercial properties being launched and build.. similar to the condo launch craze nowadays...

We could be in the middle of a huge industrial/commercial property bubble in SG...

Hmmm...

[Stocker]

What is our aim for buying reits ?

[propertyinvestor]

Why armed guards at shareholders' meeting?

GUARDS armed with revolvers are a common sight at banks, but at a shareholders' meeting? At a recent extraordinary general meeting (EGM), the manager of MacarthurCook Industrial Reit (MI-Reit) took the unusual step of hiring five armed security guards from Certis Cisco.

A Reit is an industrial real estate investment trust.

The meeting, which was held at the Marina Mandarin Hotel on 23 Nov, was attended by about 250 shareholders, The Straits Times reported.


But why armed guards when there hasn't been a reported case of violence at such meetings?

Mr Nicholas McGrath, chief executive of the manager of MI-Reit, MacarthurCook Investment Managers (Asia) Limited, told The New Paper: "The board of directors felt that it was important for security guards to be present to ensure events were run in an orderly manner."

The board is composed of a mixture of Singaporeans and foreigners.

He said armed security guards from Certis Cisco were hired as MI-Reit's manager did not have its own in-house security guards.

A Certis Cisco Security spokesman said: "Only Auxiliary Police Officers (APOs) are armed when they are on duty. We have deployed our APOs at companies' AGMs (annual general meetings) or EGMs, although such requests are few.

"Singapore Police Force's Security Industry Regulatory Department regulates the types of events for the deployment of APOs."

She added that each on-duty APO is armed with a revolver and a T-baton.

Duties

When contacted, a police spokesman said APOs are usually deployed to assist with security and crowd control duties for events such as the National Day Parade and F1.

She added: "They can also assist with crowd or traffic management at sports events like marathons, triathlons, and particularly those requiring lane or road closures."

On whether AGMs or EGMs are events where armed guards can be deployed, the spokesman said: "This would be assessed on a case-by-case basis, depending on considerations such as location and crowd size."

Mr David Gerald, president and chief executive of the Securities Investors Association (Singapore), said he wasn't at the meeting and wasn't aware of the presence of the armed security guards.

He added: "It's quite unusual; one needs to know what was the fear. I would advise the company not to overreact."

He said it was rare for external security officers to be present at companies' AGMs and in-house security guards are sometimes present only for crowd control.

There were raised voices at the EGM.

Said Mr Ang Kong Meng, an accountant in his 50s, who was present, said: "The minority shareholders were very angry. They wanted a recount as the margin between the votes was very small and there could have been human error, but it was rejected."

He said that at one point, there was a lot of shouting among unit holders who were unhappy with the way the meeting was conducted.

"I saw security guards rush in from outside when they heard the noise," he said.

"I think the security guards overreacted. Mostly, it's just grumbling among unit holders and some cursed. It was not very heated."

He felt that it was unnecessary to have armed security guards present at the EGM. Another investor who was present at the event heard about the presence of the armed security guards, but said he did not see them.

Said Mr Martin Lee: "It was more heated than a normal meeting, but it didn't get out of control. It was still quite civil."

As for hiring armed security guards for the event, he said: "I suppose they were taking precautions in view of the huge turnout."

While meetings do sometimes become heated, Mr Gerald said shareholders are mostly well-behaved. He said: "I haven't seen any altercation or physical violence. Singaporeans are not used to violence."

A check with four listed companies on their security measures during AGMs revealed that they either had no security guards present during such meetings or deployed only unarmed in-house security guards.

Said Ms Koh Ching Ching, a spokesman for OCBC Bank: "We usually deploy the security guards from our premises to assist at the external venue where the AGM is held. "This is for crowd control and to ensure the safety of shareholders attending the AGM."

About the EGM

THE MacarthurCook Industrial Reit (MI-Reit) extraordinary general meeting (EGM) was held to debate a contentious $430 million rescue plan, reported TheStraits Times.

The manager of Cambridge Industrial Reit, Cambridge Industrial Trust Management Limited, a key stakeholder in MI-Reit, opposed the rescue plan and had wanted to take over as manager.

But this was rejected by the Monetary Authority of Singapore due to a potential conflict of interest.

In the lead-up to the EGM on 23 Nov, the two real estate investment trusts took out separate full-page advertisements in newspapers setting out their respective positions.

At the EGM, unit holders had to vote for a total of five resolutions, two of which attracted only about 52 per cent of the votes.

The MI-Reit manager, MacarthurCook Investment Managers (Asia) Limited, eventually won over enough unit holders for the rescue plan to be approved.

[d.o.g.]

AIMS mentioned about coming with a Distribution Reinvestment Plan.

Any comments? I'm not sure if there will be a discount to the market price on their DRP.

A dividend reinvestment plan allows shareholders/unitholders to forego their cash dividend/distribution in exchange for new shares/units. It is often portrayed as a win-win: the company/trust gets to conserve precious cash to fund growth, and the shareholder/unitholder gets to increase his/her stake in the company/trust.

In effect, the shareholder has traded his cash dividend in the hope of either a bigger cash dividend in future, or a future capital gain.

Where the company is able to earn a high return on capital, this can make sense i.e. the company can make very good use of the money retained, for the future benefit of the shareholder. Retaining $1 today can result in $2 or more of value some time in the future.

Unfortunately, the long-term record of companies that retain their earnings for the future benefit of shareholders is poor. In general, the companies that pay dividends do so BECAUSE they earn a high enough return on capital that they generate excess cash. The companies that retain all their earnings do so BECAUSE they are unable to earn a satisfactory return on capital.

About the only company that has defied this truism is Berkshire Hathaway - and even Warren Buffett admits that the companies that Berkshire Hathaway owns are limited in their ability to use capital, the most famous being See's which generates a ton of cash but is simply unable to use that cash to grow. As a result all the cash from See's has gone into other businesses, many of which also generate excess cash that in turn goes into yet other businesses.

Back to REITs. Does this dividend reinvestment strategy apply to REITs? REITs have been brought to market on the basis of being stable, cash-generating securities.

If the unitholder chooses to forego his dividend, then why on earth is he investing in a REIT? You bought a milk cow and decided not to take the milk. Do you think that because of this the cow will grow faster and yield more beef when you eventually sell it?

Can retaining cash enable the REIT to grow faster? No - the underlying return of a REIT is inherently low. Even if a REIT paid nothing in distributions it could not grow very fast, because it simply doesn't earn enough on capital. REITs can generate acceptable returns only with significant gearing. It is the amount the REIT can borrow, not the extent to which cash is retained, that determines how fast it can grow.

So, as far as dividend reinvestment plans for REITs (and indeed any company) go, the choice is clear: take the cash. Unless the manager is Warren Buffett, in which case you have no choice anyway because Berkshire Hathaway does not pay dividends.

But if dividend reinvestment/scrip plans are bad, then why do companies use them?

1. The company is short of cash but doesn't want to announce this fact. So it decides to give shareholders a "great opportunity" to increase their stake in the company, often at a discount. Controlling shareholders may also wish to avoid alienating minority shareholders (whose support they need for placements and rights issues), so they keep the dividend, but take scrip themselves to help the company. In such a case, the cash is not being used for growth, but for survival.

2. It enables controlling shareholders to slowly squeeze out minorities. The controlling shareholders cannot increase their stakes meaningfully by buying in the open market, as this would drive up the price. But with scrip dividends they can have millions of shares issued to them at a fixed price without moving the market. This tactic is most useful for illiquid, undervalued shares.

[brattzz]

On no.2,
Squeezing out the minorities if the companies are debt free and have lots of CASH in hand!

[momoeagle]

Thanks a lot d.o.g. for the info, I know my choice now