PETALING JAYA: I REIT Managers Sdn Bhd, the management company of AME Real Estate Investment Trust (AME REIT), plans to expand AME REIT’s portfolio beyond Johor into central and northern Peninsular Malaysia by pursuing yield accretive asset acquisitions from third-party vendors.
This is in addition to AME REIT leveraging on the future property development projects of its sponsor AME Elite Consortium Bhd as a ready source for high-quality tenanted industrial properties, workers’ dormitories and warehouses for acquisition. Besides developing its existing projects in Johor, AME Elite is also actively seeking to develop industrial parks in the central and northern Peninsular Malaysia, leading to AME REIT’s potential acquisition pipeline.
AME REIT has an initial portfolio of 34 industrial and industrial-related properties in Iskandar Malaysia, Johor valued at RM557 million. These industrial properties and dormitories are fully tenanted as at June 15 and July 15, 2022 respectively, thus providing visible and stable cash flows.
Upon its listing on the Main Market of Bursa Securities Malaysia Bhd, AME REIT has ample debt headroom of up to RM240.8 million to pursue potential acquisitions, based on the prescribed limit of 50% of total asset value. AME REIT’s pro forma statement of financial position would have total indebtedness of RM46.5 million, representing 8.1% of its estimated total asset value of RM574.5 million.
I REIT Managers chairman and executive director Simon Lee Sai Boon said the mandate to acquire third-party properties beyond Johor provides AME REIT the flexibility and opportunity to expand the reach of our property trust to generate stable cash flows and potential long-term income and capital growth.
“On top of that, we would be able to ride on our sponsor’s established branding and intention to replicate their managed industrial parks concept in central and northern Peninsular Malaysia. Internally, our asset management strategies, which focus on optimising and maintaining high occupancy rates, aim to achieve stable rental growth and maximise investment returns.
“The prospects for industrial and industrial-related properties remain positive, with resilient demand supported by growth in the electrical and electronics (E&E) as well as logistics and e-commerce sectors. Hence, we are optimistic of AME REIT’s future outlook,” said Lee in conjunction with the launch of AME REIT’s initial public offering (IPO) prospectus today.
The IPO exercise entails an offering of 254.8 million units, representing 49% of total 520 million units in AME REIT.
This comprises a retail offering of up to 174.8 million units at a retail price of RM1.15 per unit, comprising up to 156.6 million units offered to the shareholders of AME Elite on the basis of 1 unit for every five shares held in AME Elite on Aug 15, 2022, 10.4 million units made available to the Malaysian public and 7.8 million units to eligible directors and employees of AME Elite and its subsidiaries.
Meanwhile, the institutional offering consists of at least 80 million units which will be made available to Malaysian institutional investors and selected investors, including bumiputra investors.
There will be no proceeds raised as the IPO does not involve any issuance of new units.
Hong Leong Investment Bank Bhd is the principal adviser and sole underwriter for AME REIT’s IPO exercise, and joint bookrunner together with RHB Investment Bank Bhd.
AME REIT’s unaudited pro forma statement of comprehensive income shows that the pro forma net property income (NPI) of its portfolio had grown steadily from RM24.1 million in the financial year ended March 31, 2020 (FY20) to RM26.1 million in FY21 and RM31.9 million in FY22. This has in turn, led to the growth in pro forma distributable income from RM19.8 million in FY20 to RM24.2 million in FY21 and RM29.1 million in FY22.
For FY23, AME REIT is expected to achieve revenue of RM41 million, with a NPI of RM37.6 million and a distributable income of RM34 million, based on a full financial year’s results and assuming that listing date was April 1, 2022.
AME REIT aims to distribute 100% of its distributable income for the period from the listing date to March 31, 2023, and thereafter, to distribute at least 90% of its distributable income to unitholders. Distributions will be made on a quarterly basis or such other intervals as the management company may determine at its absolute discretion.
With the IPO prospectus launch, applications for the retail offering opens today and will close on next Wednesday. Barring unforeseen circumstances, AME REIT will be listed on the Main Market of Bursa Malaysia on Sept 20, 2022.
