AIMS AMP Industrial Trust

AIMS AMP Industrial Trust: is actively mining its existing portfolio for asset enhancement opportunities. CEO Nicholas McGrath notes the rate of growth has moderated and with more supply to be delivered, won't be surprised to see rents fall 10% from now over the next 24 months. But he remains "optimistic about the strength of the market". He believes the economics of AEI is attractive since the Reit does not have to pay an additional premium for land, given that it is redeveloping assets that have underutilised their gross plot ratio. AIMS AMP’s latest redevt project, for instance, will see it invest $25.4 m to transform its two-storey warehouse and adjoining three-storey building at Defu Lane into a high-value six-storey industrial facility. This will more than double their gross floor area (GFA) to 202.9k sf, from the current 97.4k sf. Its first property to undergo redevt saw the asset treble GFA from 378.1k sf to ~ 1.16m sf. The site at 20 Gul Way saw 10 single-storey buildings converted into a five-storey ramp-up warehouse. It is also expected to increase annual rental income from $3.6 m in FYMar11 to $16.3 m upon completion. Mr McGrath adds, while he is “averse to market acquisitions”, he prefers the opportunity to buy something at 6.5-7% initial yield, and then redevelop and wait 12 or 15 months and then generate (an initial yield of over) 9.5%. With two redevelopment projects under its belt, the Reit is already on the lookout for a third asset to redevelop. Says he has “a high degree of confidence” that over the next 3-6 months, he will crystallise a further opportunity to do further redevt. The trust trades at 6.6% yield.