• Skip to main content
  • Skip to secondary menu
  • Skip to primary sidebar
  • Home
  • About KK
  • Resources
    • Income Tax Calculator
  • Freebies
  • Blog
  • Ask KK

Risk N Returns

Personal Finance and Investment Ideas

  • Email
  • Facebook
  • RSS
  • Twitter
  • Start Here
  • Current Portfolio
  • Personal Finance
  • Invest

RnR Weekly 201019: Life Updates, KORE Earnings, AA REIT placement and More

October 20, 2019 By KK

RnR Weekly is a recurring series where I cover the past week’s major news stories and earnings results in the markets from a Singaporean perspective.

In this week’s edition, I discuss some life updates, KORE’s recent earnings, AA REIT’s secondary placement and more.

Life Updates

Some of you may be wondering where I’ve been over the past 2 months as I’ve been rather irregular with my blog updates. In fact, I wonder if this post should still be named a “weekly” post 🤣  

Anyway, long story short, working and studying is tough man. Taking 3 modules in 1 semester while working is kinda crazy. I find myself living week by week, completing work deadlines while being mindful of upcoming assignment and test dates. 

In fact, I just completed all my midterms over the past 2 weeks. No rest for the weary though, as I now find myself staring at project proposal deadlines.

That said, I find the knowledge I’ve gained over the past months have been fascinating, even for those “boring” accounting modules. 

I’m glad I took this course and look forward to applying the learning to my job as I go along. In the meantime, hope you guys will bear with the content drought. I’ll reassess my content schedule when I complete my first semester.

Recent Earnings

Earnings season is back upon us, so I finally have some results (and dividends) to dive into.

Keppel Pacific Oak US REIT Q3 2019

0
Q3 DPU (cents)
0 %
Annualised Yield
0
NAV
0
Price to Book
0
WALE (CRI)
0 %
Occupancy
0 %
Gearing
0
Interest Coverage
0
Debt Maturity (yrs)

From an overall perspective, the quarter was fine with flat quarter on quarter DPUs. Using these figures, KORE’s valuation seems close to fair value. 

Some potential flies in the ointment include gearing close to 40% and some market statistics noted in the announcement:

The first slide shows a projected increase in vacancies, decline in absorption and increase in office building deliveries in the coming years. This indicates an overall increase in supply and potential fall in rental rates.

The second slide shows negative absorption in most submarkets KORE is in. Also an indicator of oversupply.

Will see if this is corroborated on Manulife US REIT’s results next month.

For more KORE related articles, check them out here.

AIMS APAC REIT Secondary Placement

The other piece of news I would like to discuss is the AIMS APAC REIT Secondary Placement. This exercise sparked a >8% sell off in the REIT in the past week.

 

Source: Google Finance

I think there was some confusion by retail investors as to the implications of this placement exercise, thinking that the REIT was raising funds without acquiring a building. 

To clarify this, let’s take a look at the facts based on regulatory filings:

  • As part of the exit early this year of AMP Capital from the REIT, AIMS acquired AMP’s stake in the REIT manager and renamed the REIT from AIMSAMP Capital Industrial REIT to AIMS APAC REIT.
  • With regards to AMP’s units in the REIT, a call option was issued to AIMS, giving AIMS the right to acquire AMP’s units in the future.
  • This option was exercised this week. Based on SGX filings, AIMS seems to have acquired the units at $1.40.
  • AIMS simultaneously placed these newly acquired units to new institutional / accredited investors. The placement initially had a indicative price range of $1.35 – $1.41. The placement exercise price was eventually set at $1.35, which implies an immediate loss of 5 cents and set at the low end of the range.
  • A substantial shareholder, APG Asset Management NV, seems to have subsequently sold over 4% of their position via married deal and market transactions at a blended price of about $1.35. This caused them to cease to be a substantial unitholder. 
As such, to clarify, this was an insider selling exercise and not a equity fundraising by the REIT. Existing unitholders did not suffer any dilution and fundamentally the REIT has not changed.
 
However, this exercise has called into question the Sponsor’s commitment to the REIT due to the following:
 
  • AIMS did not hold on to the units it bought from AMP, indicating a potential lack of confidence in the REIT. This has also led to the Sponsor’s ownership of the REIT declining to just under 8% of outstanding units.
  • The way the placement was conducted also indicated a fire sale or lack of interest in the REIT, due to the low placement price and willingness to accept an immediate 5 cent loss.

How should investors' react?

I was initially indifferent to the secondary placement. However, after reading through the subsequent SGX filings, the Sponsor did not give me the comfort that they have the confidence or the intention to support the REIT going forward.

I am a little conflicted over whether I should sell as current management seems to have done an ok job at managing the REIT. However, given this action and the not so rosy outlook for the Singapore manufacturing sector, I’m tempted to let go of this REIT 🤔

I think I’ll reassess my position after the upcoming earnings results. Do let me know your thoughts on this as well.

For more AIMS APAC REIT coverage, do check out my REIT dashboard.

Reads / Videos of the Week

Inside Bill's Brain: Decoding Bill Gates on Netflix

Bill Gates is somebody I’ve watched from afar and been fascinated with. So when Netflix released a 3 part documentary on him, I could not resist.

Follow his life and marriage through the years and learn about 3 key initiatives his foundation has been pursuing: Re-imagining sanitation, eradicating polio and revamping nuclear energy.

That’s all for this week. Till next time.

Happy Hunting,
KK

If you love the articles I write, follow me on Facebook, Twitter, InvestingNote, StocksCafe or subscribe to my blog and never miss another article!


Related

Filed Under: Invest Tagged With: AIMS APAC REIT, Keppel-KBS US REIT


Primary Sidebar

Subscribe to Blog via Email

Enter your email address to subscribe to this blog and receive notifications of new posts by email.

Join 338 other subscribers

Search my site

Top Posts & Pages

  • My Guide to the CPF Investment Scheme (CPFIS)
    My Guide to the CPF Investment Scheme (CPFIS)
  • Singapore Savings Bonds (SSBs) - August 2019 Issue
    Singapore Savings Bonds (SSBs) - August 2019 Issue

Archives

  • January 2022 (1)
  • November 2021 (1)
  • October 2021 (1)
  • September 2021 (1)
  • August 2021 (1)
  • July 2021 (1)
  • June 2021 (1)
  • May 2021 (1)
  • March 2021 (1)
  • February 2021 (2)
  • January 2021 (2)
  • December 2020 (2)
  • November 2020 (1)
  • October 2020 (1)
  • September 2020 (1)
  • August 2020 (3)
  • July 2020 (3)
  • June 2020 (1)
  • May 2020 (2)
  • April 2020 (2)
  • March 2020 (1)
  • February 2020 (7)
  • January 2020 (4)
  • December 2019 (4)
  • November 2019 (4)
  • October 2019 (2)
  • September 2019 (3)
  • August 2019 (7)
  • July 2019 (7)
  • June 2019 (8)
  • May 2019 (7)
  • April 2019 (8)
  • March 2019 (12)
  • February 2019 (8)
  • January 2019 (4)
  • December 2018 (4)
  • October 2018 (4)
  • September 2018 (6)
  • August 2018 (6)
  • July 2018 (3)
  • June 2018 (6)
  • May 2018 (4)
  • April 2018 (6)
  • March 2018 (9)
  • February 2018 (6)
  • January 2018 (10)
  • December 2017 (7)
  • November 2017 (2)
  • October 2017 (1)
  • September 2017 (3)




Copyright © 2023 | Risk N Returns