In March, AME REIT completed the acquisition of two properties, Plot 43 @ SAC and Plot 15 @ Indahpura, from its sponsor for a total cash consideration of RM42.75 million.
The third acquisition, which is Plot 16 @ Indahpura, is expected to be completed in quarter four financial year 2024. The asset is worth about RM26.5 million, stated RHB Research in the recent Small Cap ASEAN Research Report.
These three properties have a combined gross floor area of 256,857 sq ft, with leases secured for 10 years. Note that Plot 16 @ Indahpura is still under construction, and will come with a brief rent-free period once it is completed. The REIT will only acquire the asset once the rental kicks in.
Following the acquisitions, the REIT’s gearing ratio has increased to 11.4%. RHB estimates that the REIT has a debt headroom of RM240 million, assuming a gearing target of 35%, in line with the average for REITs under our coverage.
“While waiting for more assets to be completed and leased out from the sponsor, we think AME REIT will grow more rapidly via third-party acquisitions,” said RHB.
AME REIT’s quarter four financial year 2023 results were in line with expectations, reporting flattish quarter-on-quarter growth with the REIT’s occupancy rate at 100%.
RHB has incorporated income contributions from the REIT’s acquisition of three new industrial properties into their financial year 2024 forecasts. They are positive on the REIT’s outlook due its organic and inorganic growth opportunities, particularly from the pipeline of new developments from its sponsor, supported by significant debt headroom.
Risk identified by RHB are such as the unexpected slowdown of economic growth, increased competition, and loss of key tenants.
