AME Real Estate Investment Trust (AME REIT), which is en route to list on Bursa Malaysia's Main Market on Sept 20, is looking to buy yield-enhancing assets from third parties in Peninsular Malaysia's central and northern areas.
It aims to expand its portfolio outside of Johor to generate stable cash flows and potential long-term income and capital growth, said Simon Lee Sai Boon, chairman and executive director of I REIT Managers Sdn Bhd, the management company of AME REIT.
AME REIT plans to also use its sponsor, AME Elite Consortium Bhd (AME Elite), and its upcoming real estate development projects as a ready source for high-quality tenanted industrial properties, workers' dormitories, and warehouses that are suitable for acquisition.
AME Elite has existing projects in Johor and is also seeking to develop industrial parks in central and northern Peninsular Malaysia.
The Islamic REIT now has an initial portfolio of 34 industrial properties and dormitories in Johor, valued at around RM557 million.
As of June 15 and July 15, 2022, respectively, these industrial properties and dorms are fully leased, resulting in visible and consistent cash flows.
The key economic zones in Malaysia, such as Selangor in the central region, Johor in the southern region, and Penang in the northern region, are attractive to both domestic and foreign direct investments, Lee said.
According to him, the market for industrial and industrially linked properties is still strong and is being supported by expansion in the electrical and electronics, logistics, and e-commerce sectors.
"We are optimistic about AME REIT's future outlook. The mandate to acquire third-party properties beyond Johor provides AME REIT with 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 the central and northern region in the peninsula," he said at the launch of AME REIT's prospectus today in conjunction with its initial public offering (IPO) on the Main Market of Bursa Malaysia.
According to Lee, AME REIT will have RM240.8 million in debt headroom after listing, based on the mandated cap of 50 per cent of the total REIT asset value, to explore possible acquisitions.
"Upon listing, AME REIT will have total indebtedness of roughly 8.1 per cent or RM46.5 million of its estimated total asset value of RM574.5 million, as per our pro forma statement of financial position," he said.
The market capitalisation of AME REIT at the time of its listing will be about RM598 million based on the retail price of RM1.15 per unit.
