AMP wants to regain trust of MI-Reit holders

Medium-term focus will be acquisition of industrial property in S’pore, Japan

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.

Simon Vinson, head of new business initiatives and Asian property at AMP Capital Investors, said that unitholders’ concerns raised at a tumultuous general meeting recently ‘will become front and centre in the way we will operate’.

Such concerns include not consulting unitholders early enough on a controversial recapitalisation plan and the real estate investment trust’s (Reit) own governance and investment processes, Mr Vinson told BT in an interview yesterday.

The rescue plan – approved by narrow margins at the meeting on Nov 23 – was presented to unitholders less than two months before the deadline for the Reit to meet $315 million in obligations.

Angry unitholders said that the deal diluted their holdings significantly and was too favourable to the new investors. Led by Cambridge Industrial Reit (CIT), which owned a close to 10 per cent stake, the unitholders mounted a week-long campaign to oust MI-Reit’s manager but this faltered when CIT said that its plan to take over as manager was blocked by the Monetary Authority of Singapore.

Yesterday, Mr Vinson said that AMP would focus in the short term on regaining investors’ trust by better managing the Reit, before thinking of fresh acquisitions.

While the Reit is now among the lowest geared among those listed in Singapore, the travails of the past year, particularly uncertainty over whether it could raise funds to keep it afloat, have depressed unit prices and raised distribution yields.

This would make yield-accretive acquisitions difficult, Mr Vinson admitted. ‘But the management team and sponsors are capable of showing investment performance that, over time, will bring the unit price up to net asset value,’ he said.

In the medium term, AMP will explore opportunities in industrial property in both Singapore and Japan, he said.

Source: Business Times, 3 Dec 2009