AME Elite Consortium Bhd plans to undertake an Initial Public Offering (IPO) of its upcoming Real Estate Investment Trust (AME REIT) with RM557.0 million worth of industrial and industrial-related real estate, currently held by its subsidiaries.
The initial investment portfolio will comprise a total of 34 industrial buildings and workers’ dormitories located in or near AME’s managed industrial parks, namely i-Park@Senai Airport City, i-Park@Indahpura, and i-Park@SiLC. The identified real estates have ongoing tenancy agreements with AME’s domestic and foreign clients, with a tenancy period of between 2 to 12 years.
As consideration for the transfer, AME is proposing to issue 520.0 million undivided interest in AME REIT (Units), and a cash consideration of RM37.0 million. The cash consideration will be funded from Islamic financing.
Of the total issuance of 520.0 million units, 254.8 million units will be offered via IPO. The Offer Issuance will consist of up to 130.0 million Units to AME shareholders, 10.4 million Units to the Malaysian public, and 7.8 million Units to eligible employees and directors of AME and subsidiaries. Meanwhile, at least 106.6 million units will be offered to Bumiputera investors approved by the Ministry of International Trade and Industry (MITI), as well as institutional investors and selected investors.
Upon the completion of the Proposed Offering which is expected in the second quarter of 2022, AME will be the controlling Unitholders of AME REIT holding at least 51.0% of total issued Units.
Based on an illustrative offer price of RM1.00 per Unit, AME is estimated to potentially raise proceeds of RM254.8 million from the IPO. Of the illustrative proceeds of RM254.8 million, RM90.0 million will be used to repay borrowings, RM4.3 million for expenses relating to establishing the REIT, and the balance RM160.5 million for future industrial property development and investment projects including land acquisitions and joint ventures.
The final IPO offer price will be determined after considering various factors, including the financial history of identified real estates, pro forma net asset value per Unit upon listing, future prospects and a forecast distribution yield of AME REIT, as well as book building with institutional investors.
Hong Leong Investment Bank Bhd is the Principal Adviser, Bookrunner and Managing Underwriter, for the Proposed REIT Establishment and Listing.
“The proposed REIT, comprising existing high-quality tenancy for industrial buildings and dormitory units with recurring income, will unlock the significant value of our investment properties. Additionally, the funds raised will aid the future growth of the Group, as we eye promising opportunities ahead in line with the country’s progress under the National Recovery Plan.”
“We are optimistic of the immediate outlook, backed by increasing interest in our i-Parks. During the border closures, we attended to an increasing number of enquiries virtually. Now with the proposed reopening of international borders on 1 January 2022, we are optimistic of seeing a more rapid pace of sales conversion. The boost in foreign investors setting up in i-Park will continue to support the already strong interest from domestic investors.”
“The anticipated sales uptrend from future sales conversion will complement the existing unbilled sales of approximately RM68.0 million for i-Parks as at 30 September 2021. Furthermore, after recently securing our single-largest construction contract, our construction and engineering order book is now boosted to about RM450 million,” says Kelvin Lee Chai, Group Managing Director of AME Elite Consortium Bhd.:
The Group’s net profit for 1H22 was maintained at RM17.0 million, mainly driven by higher profit contribution from the construction and engineering segments, as well as increased income from the property investment and management services segment, comprising the Group’s leasing properties and i-Stay workers’ dormitories. The increased contribution from these segments offset the lower income from the property development segment in 1H22.
Meanwhile, group revenue for 1H22 declined slightly to RM163.1 million from RM175.6 million a year ago, due to restrictions on business activities as well as limited manpower capacity during the Full Movement Control Order (FMCO).
Of total 1H22 revenue, the property development segment contributed RM65.4 million compared to RM64.9 million in the previous year. Additionally, the property investment and management services segment saw revenue grow 21.2% to RM21.2 million from RM17.5 million previously, mainly from additional units of the factory being leased and higher income generated from workers’ dormitories.
However, revenue from the construction and engineering services segments declined 18.0% to RM76.5 million in 1H22 versus RM93.2 million in 1H21 due to slower work progress for ongoing projects during the FMCO.
