Am ARA in talks for 2 potential deals

KUALA LUMPUR: Am ARA REIT Managers Sdn Bhd (Am ARA), the manager of AmFIRST Real Estate Investment Trust (AmFIRST REIT), is looking to acquire more assets and is negotiating two potential deals with an estimated value of RM200 million to RM250 million combined, said its investment head Panneer Selvam.
He said the company has been continuously evaluating proposals and to date, these are the two deals that have met its requirements but it has yet to carry out due diligence on these two potential deals. He said the negotiations are at preliminary stages and it stands a 50% chance of securing the deals.
"In respect of acquisitions, AmFIRST REIT has been continuously looking at various propositions. We have set a certain benchmark so if those properties do not cross the hurdle of our benchmark, we will not proceed. We have to look at the quality of the buildings, capital value and it must have future upside. Only then we will consider," he told reporters after its AGM yesterday.
"The first hurdle would be the yield benchmark. It must be yield accretive, if not, must justify with capital upside or potential rental revision immediately upon acquisition. If those cannot be met, we won't proceed. Yield and capital value would be our basic benchmarks," he said.
He said its internal mandate is to look at commercial properties, malls and offices, or mixed development such as The Summit in Subang Jaya comprising a mall, office and hotel.
AmFIRST REIT currently has nine properties in the Klang Valley, Cyberjaya and Malacca with a combined value of RM1.3 billion under its portfolio. Its last acquisition was Jaya 99, a commercial property in Malacca, bought in 2012. It has not made any acquisitions since then.
"We are not confined to only the Klang Valley, as evidenced we have acquired Jaya 99 in Malacca. Likewise we don't restrict ourselves, we also consider properties that are located at major growth areas; it could be in other states as well," said Panneer.
He said Jaya 99 was a good proposition due to the number of multinational companies residing in the property, providing good capital value to AmFIRST REIT.
"As of now, we don't have any assets of equal quality to look at but we don't rule out in future if we have one to consider (in Malacca)," he said.
Am ARA acting CEO Zuhairy Md Isa said with its current gearing of 32.7%, it has a maximum headroom of RM400 million for acquisition purposes.
Shareholders approved the proposed authority to allot and issue new units of up to 20% of existing fund size and the proposed increase in the existing fund size of AmFIRST REIT from 686.4 million units up to a maximum of 823.7 million units in the REIT.
"If we need more than RM400 million to acquire, then we'll invoke the general mandate…roughly it's only about RM140 million on top of the headroom that we have before we breach 50% gearing limit," he said.