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APW property fund an option for income investors - THE AUSTRALIAN

Listed real estate funds and real estate investment trusts continue to be sought by investors hunting for yield and income.

REITS were among the strongest performing sectors of the sharemarket in 2014, which has raised some concerns they’ve run too hard. But I still think there are some good REIT and property fund options for income investors.

I’ve recently looked at Industria REIT (IDR), which we view favourably. Aims Property Securities Fund, formerly the Macarthur Cook Property Securities Fund, is another attractive listed property fund.

While at the smaller end, with a market capitalisation of just $64 million, APW trades at a significant discount to net tangible assets, and is in a good position to drive sound returns in years to come. Along with a yield of more than 7 per cent, the combination of value and income makes it attractive for income investors seeking exposure to property.

APW, which is listed on the ASX and Singapore Exchange, invests in a diverse range of listed and unlisted property securities, including trusts, syndicates and REITs. APW’s holdings include positions in the Singapore-listed AIMS AMP Capital Industrial REIT and the ASX-listed Arena REIT.

Specialist property fund manager AIMS Funds Management Group manages the fund, which is diversified across geography, sector and portfolio managers.

The fund had a difficult period during the GFC but has bounced back strongly with management restoring its balance sheet and also buying back units. At the end of April this year, the company had no debt and cash of about $5 million.

Net tangible assets have increased 63.6 per cent since June 2013; and its cumulative unit price has grown 234.4 per cent since 2009.

APW plans to continue to pay regular income distributions to unit holders in the fund at a minimum payout ratio of 80 per cent.

I believe APW will pay out about 1c per unit over the coming 12 months, or about 0.25c per quarter, which suggests an attractive yield approaching 7.5 per cent, unfranked, and paid quarterly. With APW units trading at 13.5c, a significant discount to NTA of 19c, that makes it a solid choice for income investors.

Aims Property Securities Fund


Security price: 13.5 cents

Industry: Property

Forecast distribution: 

1 cent per unit

Darren Katz is head of distribution at Clime Asset Management.