We are delighted to announce two exciting new changes to the APN Asian REIT Fund ARSN 162 658 200 (“Fund”).
Change from quarterly to monthly distributions
Effective from 1 January 2016, the Fund is paying distributions monthly (previously paid quarterly).
We understand a large number of investors appreciate frequent and regular income payments from their investments and we are pleased to be able to increase the frequency of the Fund’s distributions. The annualised distribution amount paid by the Fund will not change as a result of the move to monthly distributions. Investors will receive the same annual distribution amount, but paid in 12 monthly payments, rather than in four quarterly payments.
The first monthly distribution was paid on 10 February 2016 and distributions will be paid monthly thereafter.
Based on the unit price of $1.5867 (at 15 March 2016), the monthly distribution rate of 0.8333 cents (paid on 10 March 2016) equates to a distribution yield of approximately 6.30%1.
Investors are also reminded of their ability to participate in the Fund’s Distribution Reinvestment Program which continues to be available.
Special 50% reduction in management cost
The Fund currently charges investors a 1.20% pa management cost. We are offering a special 50% reduced management cost for all existing investors and those new investors who apply by 30 June 2016. This will reduce the cost to these investors by 0.60% pa and will make a material difference to their returns.
APN has made this change to reward investors who have participated in the Fund’s success to date and to increase the income returns for existing and new investors who hold units during the period ending on 30 June 2016.
The details of the change and the offer are as follows:
- The special 0.60% pa management cost will apply for three years from 30 June 2016 until 30 June 2019. After 30 June 2019, the management fee will revert to 1.20% pa.
- The benefit will be paid by way of an issue of bonus units at the current issue price, which will be paid quarterly.
- Existing investors and new investors who apply before 30 June 2016 will receive the 50% reduction on management costs on their total investment balance until 30 June 2019.
- New investors applying for units after 30 June 2016 will be charged the full management cost of 1.20% pa.
- The fee reduction will apply from 17 March 2016.
Capitalising on Asia’s booming middle class
Asia’s transforming economy and social structures present a wealth of investment opportunities over the next decade and beyond. By 2030, middle class consumers in the Asia-Pacific region will increase to over 3 billion people according to the Brookings Institute, which will represent a hefty two-thirds share of the global middle class. With billions set to enjoy higher living standards, the desire for additional goods and services will create large new consumer markets.
A vast array of real estate is required to support this fast rising urbanisation – from housing and retail shopping centres through to recreational centres, hospitals, warehousing and office buildings. The rise of the middle class consumer in numbers has important ramifications for all economies in the Asian region – the developed Asian markets where the Fund is focused, will benefit enormously in many ways, from rapidly increasing tourism numbers (and spending power) to the export of services (eg education), as well as more office space demand from financial services and wealth management firms looking to expand regionally.
Why Singapore, Japan and Hong Kong REITs?
In line with APN’s long held “property for income” philosophy since 1998, the Fund aims to deliver value by investing in high quality commercial real estate backed by stable and consistent rental cash flows. The three main markets the Fund invests in are mature, developed Asian markets (Singapore, Japan and Hong Kong).
Accessing quality commercial real estate in Asia is difficult. The large upfront capital required to purchase a property is not only prohibitive for most investors, but requires specialist local investment knowledge. Direct property also bears the burden of illiquidity.
REITs provide an avenue for investors to access high quality, professionally managed commercial real estate across predominantly Singapore, Hong Kong and Japan. In normal market conditions, REITs can offer liquidity, require small upfront capital to access and provide exposure to a diversified portfolio of underlying commercial real estate that generates regular income from tenants on long leases.