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Posts Tagged ‘AMP’

Reits R financial engineering

In Financial competency, Property, Reits on 17/05/2012 at 10:52 am

Reits have a new tool to juice up returns: perpetual securitiesor perps. Could “leverage up” without “debt”. Shld not technically use the word “bonds” even though they are effectively bonds.

http://www.todayonline.com/Business/Property/EDC120504-0000036/Perpetual-bonds–A-boon-to-Singapore-REITs

Could be burps if shumething goes wrong.

The central bank is worried that retail investors may not understand perps*. I’m worried reit managers may be seduced by investment bankers to use perps indiscrimately. Us investors get shafted. So invest in reits where the sponsor is big, stodgy and conservative (like F&N, or AMP), and has a big stake in reit.  If sponsor doesn’t meet the first criteria, think long and hard. I did in case of LMRT, and bot in.

Update: Comments on ST article abt central babk’s stance.

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*Bankers said MAS officials had voiced their concerns over retail holdings of perpetual bonds during at least two informal meetings in recent weeks.

The central bank’s scrutiny is preliminary and there is no suggestion of any wrongdoing on the part of the banks or companies involved in the recent flurry of perpetual bond issues. But the discussions show that the regulator is worried individual investors may be taking on too much risk without a full understanding of the product.

http://www.todayonline.com/Business/EDC120515-0000049/Perpetual-bond-rush-causes-alarm-in-Spore

M-Reit — Last chance to buy?

In Investments, Property on 28/12/2009 at 7:03 am

Later today, the new shares of MI-Reit start trading.  MI-Reit closed on X’mas eve at 21 cents.

Note AMP’s and other core shareholders have an average cost of just under 20 cents a share. And the rights was done at 15.9 cents a new share. There could be a lot of sellers out there at 20-21 cents.

Might not take much for the shares to trade below AMP’s cost e.g. the completion of the deal to buy four industrial buildings from AMP will now be delayed to Jan 11, 2010.

So might it be time to buy? A few weeks ago, BT reported, “The new co-sponsor of MacarthurCook Industrial Reit (MI-Reit) yesterday said that it [AMP] will focus on regaining unitholders’ trust before embarking on new acquisitions, likely industrial properties in Singapore and Japan.”

There is more incentive now for AMP (assuming the deal to sell the buildings go thru) to do what it said it would do: what with shares near or below its cost price.

Finally AMP has its name on the Reit which is now AIMS-AMP Capital Industrial Reit. The name change comes after AMP acquired 50 per cent of the Reit manager’s total share capital. The delay in deal completion is likely to be technical, given AMP’s name is on brass plate.

Too clever by half?

In Investments, Property on 03/12/2009 at 9:57 am

The new-cosponsor MacarthurCook Industrial Reit (MI-Reit), AMP, and the new investors looked like they got a great deal when the recapitalisation of MI-Reit was annced in early November. Their entry price was 19.9 cents (taking into acct the entry price of 28 cents and the  rights issue of 2 for 1 at 15.9 cents). In the case of AMP,  it didn’t pay any cash for its initial investment. It sold properties and got shares valued at 28 cents. Ask Cambridge Reit about this.

There was a bun fight as Cambridge Reit said the deals destroyed value.

At the time the deal was done, the share price was 30 something cents. Having gone ex everything, it is now hovering at 20 cents.

So an investor coming in at 20 cents comes in almost at price that AMP etc entered. Now if I were AMP or one of the other 28-cents investors, I’d not be pleased at the engineers who planned and executed the deal.

So it is no surprise to read in today’s BT: “The new co-sponsor of MacarthurCook Industrial Reit (MI-Reit) yesterday said that it will focus on regaining unitholders’ trust before embarking on new acquisitions, likely industrial properties in Singapore and Japan.”

Cheapos (sorry value investors) like me will wait to see if it mkt price can come closer to rights issue price. All it needs is for Dubai to scare the markets one more time or another bad set of US economic numbers.

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