AME Real Estate Investment Trust (AME REIT), is planning its maiden post-listing acquisitions of three industrial properties in Iskandar Malaysia for RM69.3 million.
The company, which was listed on the Main Market of Bursa Malaysia in September 2022, said the proposed acquisitions would boost its proforma total asset value by 12.8% to approximately RM644.1 million.
RHB Trustees Bhd in its capacity as the trustee of AME REIT has entered into three conditional sale and purchase agreements with subsidiaries of AME REIT’s sponsor, AME Elite Consortium Bhd, for the sale and purchase of the three properties respectively.
The three properties consist of two industrial properties in i-Park @ Indahpura in Kulai and an industrial property in i-Park @ Senai Airport City (SAC) in Senai, with a combined agreed lettable area of more than 256,000 sq ft.
The proposed acquisitions would increase AME REIT’s ALA by 15.9% to approximately 1.9 million sq ft from 1.6 million sq ft at present.
All three industrial properties have existing lease arrangements for a tenure of 10 years with an option to renew for a further three to five years, and are expected to provide AME REIT with stable and sustainable income over the tenure of the leases.
Two of the industrial properties commenced leases on October 5, 2022 with their respective lessees, namely HID Global Sdn Bhd (Plot 15 Indahpura) and SGS (Malaysia) Sdn Bhd (Plot 43 SAC). The third industrial property to be leased to HQPack Sdn Bhd on Plot 16 Indahpura is currently under construction, with the Certificate of Completion and Compliance expected to be issued by the third quarter of 2023.
I REIT Managers Sdn Bhd CEO and ED Chan Wai Leo (picture) the maiden acquisitions post-listing marks a commendable start for AME REIT’s growth journey.
“Enhancing our proforma total asset value to more than RM640 million within a few months of our flotation exercise denotes our desire to expand the fund. AME REIT will still have a large financing headroom to pursue potential acquisitions in the central and northern regions of Peninsular Malaysia in addition to Johor in the near future,” he said.
Upon completion of the proposed acquisitions, Chan said, AME REIT retains a premium portfolio of 37 properties containing freehold industrial properties and worker dormitories with steady tenancies.
Assuming the proposed acquisitions are fully financed via Islamic financing facilities, AME REIT’s gearing ratio is estimated to increase from 0.06 times as at Sept 30, 2022 to 0.16 times. AME REIT is permitted to increase its gearing to 0.5 times of total asset value for future acquisitions.
The freehold properties are strategically located in the same vicinity as AME REIT’s existing portfolio properties in the Iskandar Malaysia region in Johor, and benefit from easy access to the major highways including Tuas Second Link and North-South Expressway, and Senai Airport.
The proposed acquisitions are subject to approvals from unitholders of AME REIT at the forthcoming EGM and the relevant authorities.
Barring unforeseen circumstances, the acquisitions of Plot 15 Indahpura and Plot 43 SAC are expected to be completed in the first quarter of 2023, while the acquisition of Plot 16 Indahpura is expected to be completed in the fourth quarter of 2023.
As such, the proposed acquisitions are not expected to have material effect on AME REIT’s earnings and distributable income for the financial year ending March 31, 2023.
Consequently, the proposed acquisitions are expected to contribute positively to AME REIT’s future earnings and distributable income.
“We are determined to provide our unitholders with regular, stable, and growing income distribution. These three industrial properties will be yield accretive and provide reliable recurring income to AME REIT over the long term,” Chan concluded. — TMR