KUALA LUMPUR (Aug 17): AME Real Estate Investment Trust (REIT), which is en route to list on Bursa Malaysia's Main Market on Sept 20, plans to acquire industrial properties from third-party vendors in the central and northern regions of Peninsular Malaysia.

It said the mandate to acquire assets beyond Johor provides AME REIT the flexibility and opportunity to expand the reach of its property trust to generate stable cash flows and potential long-term income and capital growth.

On top of that, the group said that it will be leveraging the future property development projects of its sponsor AME Elite Consortium Bhd, which has existing projects in Johor while also seeking to develop industrial parks in central and northern Peninsular Malaysia.

The Islamic REIT already has an initial portfolio of 34 industrial properties and dormitories in Johor, which it said is currently valued at RM557 million.

“Key economic zones in Malaysia such as Selangor, Johor and Penang have attracted substantial local and foreign direct investments on the industrial front,” said Simon Lee Sai Boon, chairman and executive director of I REIT Managers Sdn Bhd, which is the management company of AME REIT.

“In fact, our sponsor recognises the vast potential and also intends to replicate their managed industrial parks concept in the same locations,” Lee said during the REIT’s initial public offering (IPO) prospectus launch at EQ Hotel Kuala Lumpur on Wednesday (Aug 17).

Lee further said that AME REIT will have an ample debt headroom of up to RM240.8 million to pursue potential acquisitions upon listing, based on the prescribed limit of 50% of total REIT asset value.

“Upon listing, AME REIT will have total indebtedness of approximately 8.1% 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.

Lee said that AME REIT intends to distribute 100% of its distributable income from its listing date to financial year ending March 31, 2023 (FY23).

Thereafter, the REIT aims to distribute at least 90% of its distributable income to unitholders on a quarterly basis or such other intervals as the management company may determine at its absolute discretion.

“On a pro forma basis, AME REIT’s distributable income increased from RM19.8 million in FY20 to RM24.2 million in FY21 and RM29.1 million in FY22. For FY23, AME REIT is forecasted to continue growing to reach distributable income of RM34 million,” Lee said.

It has to be noted that the forecast for FY23 is based on a full financial year’s results with the listing date assumed at April 1.

The IPO exercise entails an offering of 254.8 million units, representing 49% of the total 520 million units in AME REIT. Based on the retail price of RM1.15 per unit, the market capitalisation of AME REIT upon listing will be about RM598 million.

The 254.8 million units comprise a retail offering of up to 174.8 million units and an institutional offering of at least 80 million units.

On retail offering, up to 156.6 million units are offered to the shareholders of AME Elite on the basis of one unit for every five ordinary shares held in AME Elite on Aug 15. A total of 10.4 million units will be made available to the Malaysian public and 7.8 million units to eligible directors and employees of AME Elite and its subsidiaries.

The applications for the retail offering open on Wednesday until Aug 24.

Meanwhile, the institutional offering will be made available to Malaysian institutional investors and selected investors, including Bumiputera investors approved by the Ministry of International Trade and Industry (Miti).

AME REIT said 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, as well as the joint bookrunner together with RHB Investment Bank Bhd. RHB Trustees Bhd is the trustee of AME REIT.

According to AME REIT’s press statement, it said its unaudited pro forma statement of comprehensive income showed that the pro forma net property income (NPI) of its portfolio had grown steadily from RM24.1 million in FY20 to RM26.1 million in FY21 and RM31.9 million in FY22.

For FY23, AME REIT is forecasted to achieve a revenue of RM41 million, with an NPI of RM37.6 million.

On Wednesday’s noon break, AME Elite units were four sen or 2.45% higher at RM1.67, valuing the group at RM1.06 billion.