Lower CNI for AmanahRaya REIT includes income from Vista Tower
KUALA LUMPUR: Core net income of AmanahRaya Real Estate Investment Trust (AmanahRaya REIT) for its financial year 2017 (FY17) came in below expectations of MIDF Amanah Investment Bank Bhd (MIDF Research) as it declared a distribution per unit (DPU) of 1.32sen for 4QFY17, bringing total DPU to 5.50 sen for FY17.
To note, AmanahRaya REIT’s FY17 core net income of RM31.8 million missed MIDF Research’s forecasts as it only made up 93 per cent of its full year estimates. The research firm noted that comparison to consensus estimate was not available.
“The REIT’s FY17 topline improved by 5.3 per cent year on year (y-o-y) to RM60.4 million, driven by income contribution from newly acquired assets,” it said in a report yesterday, adding that new assets were the Deluge Factory in Johor, Toshiba TEC in Bandar Glenmarie, and Contraves Building in Cyberjaya.
“However, core net income for FY17 fell by 10 per cent y-o-y to RM31.8 million, mainly due to higher property and non-property expenses.”
AmanahRaya REIT’s property expenses jumped by 76 per cent to RM7.2 million from RM4.1 million a year before due to higher major repair cost for the HELP University asset.
Income after tax was higher by 83 per cent due to the jump in fair value of its assets amounting to RM42.6 million, it said.
“We have included the contribution from Vista Tower at The Intermark into our earnings assumption and raised our FY18F core net income estimates by 6.2 per cent to RM41 million to account for the earnings contribution from Vista Tower,” it added.
The acquisition was completed in January. Back in September 2017, AmanahRaya REIT had announced to buy the 63-storey Grade A office tower for a purchase price of RM455 million. The iconic building is strategically located at Jalan Tun Razak.
“Due to the adjustment in our earnings estimates from the addition of Vista Tower, we increase our target price from to RM1.12 per share,” MIDF Research said. “We maintain our buy recommendation on AmanahRaya REIT for its diversified assets base.”