Our Mission and Approach

AIMS AMP Capital Industrial REIT seeks to provide Unitholders with access to income from a diversified portfolio of income-producing industrial real estate located throughout Asia. As the Manager, we aim to achieve this by investing in a diversified portfolio of income-producing real estate located throughout Asia that is used for industrial purposes, including, but not limited to warehousing and logistics, manufacturing, and business park activities.

Investment Guidelines

We will invest in accordance with the following guidelines:

• Investing in real estate used for industrial purposes (comprising primarily warehousing and logistics, manufacturing, and business park purposes) and real estate-related assets in relation to the foregoing;
• AIMS AMP Capital Industrial REIT's investment strategy is regional in scope. The Manager will focus on investing in Singapore in the near to medium term but will remain true to the investment mandate for the Trust over the longer term seeking opportunities across Asia where the two Sponsors have a presence, such as China, and increasing that geographical footprint as the Sponsors' own businesses expand across Asia;
• Investing with an aim to develop the portfolio's geographic and asset diversity;
• Investments will generally be for the long term. However, where the Manager considers that any investment in the Trust's portfolio has reached a stage that offers only limited scope for future growth, or no longer meets the Trust's investment objectives, the Trust may dispose of the investments and the net proceeds may be used for new investments;
• Such investments in the future may be by way of direct property ownership by the Trust or indirectly through the ownership of special purpose vehicles whose primary purpose is to hold or own real estate assets or real estate-related assets.

Investment Objectives and Strategies

The Manager's key investment objectives, in line with AIMS AMP Capital Industrial REIT's principal investment policy, are to deliver regular and stable distributions to Unitholders, and to achieve long-term growth in distributions and the NAV per Unit. Income distributions will be provided to Unitholders on a quarterly basis for the three months ending 30 June, 30 September, 31 December and 31 March of each year. The Manager aims to achieve these objectives through the following three key strategies:

• Acquisition Growth Strategy: Capitalising on growth opportunities through the sourcing and acquisition of income-producing assets that are aligned with AIMS AMP Capital Industrial REIT's investment strategy to enhance portfolio diversification by geography, asset, tenant profile, and to enhance yields and returns to Unitholders. The Manager will also consider investing in strategic assets that provide strong potential for future earnings and capital growth. Potential acquisitions are subject to the regulations as set out in the Property Funds Guidelines and in line with AIMS AMP Capital Industrial REIT's investment objectives.
• Active Asset Management Strategy - Leveraging and enhancing the property portfolio's competitive strengths to increase property yields by implementing proactive measures to optimize occupancies, rental and other income whilst prudently managing outgoings and expenses. Such measures include prudent control of property outgoings, active leasing and marketing of any vacancies and expiring leases, programmes for the regular maintenance of building structures, and asset refurbishment and enhancement projects to increase the competitive positioning of the assets.
• Capital and Risk Management Strategy - Employing an appropriate mix of debt and equity in the financing of acquisitions and asset enhancements and utilising interest rate and currency hedging strategies where appropriate to optimize risk adjusted returns to Unitholders.

Acquisition Growth Strategy

The Manager will pursue acquisition opportunities that will provide strong cash flows with opportunities for income and capital growth. Acquisition opportunities are supported by:

• the sufficiently wide investment policy to invest in completed income-producing properties that are used for industrial purposes in the Asian region. This will increase the Manager's opportunity to identify and negotiate the purchase of assets that meet AIMS AMP Capital Industrial REIT's investment criteria and are capable of adding value to AIMS AMP Capital Industrial REIT's portfolio and for Unitholders over time;
• the Manager's ability to benefit from AIMS' and AMP's financial strength, market reach and network of contacts throughout the Asian real estate and capital markets.
  
  The Manager's intention is to hold the properties that AIMS AMP Capital Industrial REIT acquires on a long-term basis. However, where the Manager considers that any property has reached a stage that offers limited scope for further growth, the Manager may consider the disposal of the property and use the net proceeds for investment in alternative properties that meet AIMS AMP Capital Industrial REIT's investment guidelines, to repay AIMS AMP Capital Industrial REIT's debt and/or to make a special distribution to Unitholders.
  
  The Manager utilizes its network of relationships, including AIMS and AMP, its ability to identify under-performing assets and its access to capital to achieve favourable returns on invested capital and growth in cash flow.
  
  In evaluating acquisition opportunities, the Manager focuses on the following investment criteria with respect to each property under consideration:
  • Risk-adjusted return thresholds and maintaining or enhancing AIMS AMP Capital Industrial REIT's distribution yield to Unitholders: The Manager seeks to acquire properties that are potentially yield-accretive and with the potential of achieving long-term growth in the NAV per Unit.
  • Value-adding opportunities and asset enhancement potential: The Manager will take into account opportunities to increase occupancy rates, enhance value through pro-active asset management and improve returns to Unitholders. The potential to add value through selective renovations or other enhancements works will also be assessed, subject to compliance with the prevailing planning and other relevant regulations.
  • Tenant mix and occupancy characteristics: The Manager seeks to acquire properties with opportunities to increase rental and tenant retention rates relative to competing properties in the respective property markets. The properties should have or have the potential to realize healthy occupancy rates with established tenants of good credit standing which assist to minimize rental delinquency and turnover. Key considerations will be the impact of an acquisition of AIMS AMP Capital Industrial REIT's entire portfolio of tenants, trade sector exposure and lease expiry profile.
  • Credit Quality: The Manager will evaluate the credit standing of tenants and will carry out the relevant enquiries and checks where necessary (particularly in the case of single-lessee properties). The Manager will target to maintain a diversified tenant base in order to minimise AIMS AMP Capital Industrial REIT's exposure to any single tenant. The Manager will aim to attract tenants from a range of industry and operator types and build a tenant list incorporating representation from investment grade rated tenants, listed companies and international and local brand name tenants.
  • Lease expiry profile: The Manager will seek to acquire properties that improve the weighted average lease expiry profile of AIMS AMP Capital Industrial REIT's property portfolio and/or provide added diversification to the lease expiry profile to minimise AIMS AMP Capital Industrial REIT's exposure to lease expiry in any one year. The Manager will assess the risk of a tenant vacating upon expiry of its lease term and will factor any likely re-letting period into purchase price considerations. Shorter lease durations may provide opportunities for rental growth if passing rents are below market levels.
  • Location of assets: The Manager assesses properties in terms of their micro-market locations, as well as their accessibility to major roads and public transportation, which could be a significant determinant of future capital value and attractiveness to future tenants. Strategic locations in established and recognised industrial precincts, proximity to users of industrial services as well as convenient access to major roads, infrastructure nodes like airports and seaports, a skilled workforce and public transportation provide long-term tenant demand and rental support.
  • Building and facilities specifications: The Manager will acquire buildings with good quality specifications which are in compliance with legal and zoning regulations, with due consideration being given to the size and age of the buildings, state of maintenance and whether they can be used, or easily altered for use, by other tenants upon expiry of the existing tenancy or tenancies. The buildings will be assessed by independent experts relating to repairs, maintenance and capital expenditure requirements in the short and medium-term.

Active Asset Management Strategy

The Manager's strategy for organic growth is to actively manage the properties in AIMS AMP Capital Industrial REIT's portfolio and develop strong relationships with tenants by providing value-added property related services. Through such active property management, the Manager will seek to maintain high tenant retention levels, reduce vacancy levels and minimise the associated interruptions in Rental Income, as well as the costs associated with marketing and leasing space to new tenants. The Manager plans to meet its objective of increasing the yields of existing properties and maximising returns from AIMS AMP Capital Industrial REIT's property portfolio through the following strategies:

• Maintaining high occupancy rates while improving rental rates
  While the Existing Properties continue to enjoy high occupancy rates, the Manager will work with the Property Manager to actively manage lease renewals by:
  • engaging in lease negotiations with tenants well ahead of the expiry of those leases with an aim to maintain high tenant retention levels, and minimize vacancy periods and their associated interruptions in rental income, as well as the costs associated with marketing and leasing space to new tenants;
  • identifying and rectifying leases with below-market rents and manage rental arrears to minimize bad debts; and
  • active marketing to secure new tenants for impending vacant space.
  By taking the foregoing measures, the Manager seeks to manage the lease expiry profile of AIMS AMP Capital Industrial REIT's property portfolio to evenly spread out the expiry period of the tenancies within each property and the portfolio as a whole, thereby minimizing the risk of a concentration of lease expiries in any particular period.
• Continuing to minimize property expenses
  The Manager works closely with the Property Manager to minimize property operating expenses, without compromising the quality of services, to further increase Net Property Income.
• Attracting new tenants and exploring expansion needs of existing tenants
  The Manager intends to maintain high occupancy rates by actively marketing any vacancies, pursuing new leasing opportunities and managing lease renewals through conducting negotiations with tenants in advance of their lease expiry. The Manager's leasing strategy will target new tenants for AIMS AMP Capital Industrial REIT's existing properties while exploring the expansion needs of existing tenants. The manager also seeks to provide seamless services to its existing tenants by exploring ways to meet the needs of these tenants as they expand their operations throughout Asia, thus creating asset acquisition and leasing opportunities.
• Asset enhancements The Manager will constantly review the trade mix and market position of the properties for re-positioning, explore and identify areas of improvement that will increase the income and value of the properties. This involves working with the Property Manager to achieve better efficiency and higher rental potential by reconfiguring units, converting ancillary areas into productive lettable space and enhancing the design layout and tenant amenities of assets. When existing tenants require additional space or when there is a demand for such space by new tenants, the Manager may carry out asset enhancement work so as to meet the expansion needs of existing tenants or demand for space by new tenants.

Capital and Risk Management Strategy

The Manager aims to optimise AIMS AMP Capital Industrial REIT's capital structure and cost of capital within the borrowing limits set out in the Property Funds Guidelines and intends to use a combination of debt and equity to fund future acquisitions and asset enhancement works.
The objectives of the Manager in relation to capital management are to:

• maintain a strong balance sheet by adopting and maintaining an optimal gearing ratio with a combination of debt and equity to achieve a sustainable, low cost of capital;
• secure diversified funding sources from both financial institutions and capital markets as AIMS AMP Capital Industrial REIT grows in size and scale;
• minimise the cost of debt financing; and
• manage the exposure arising from adverse market movements in interest rates and foreign exchange through appropriate hedging strategies.