AME-REIT debuts on Main Market at RM1.14

Three potential properties lined up for acquisition

“Multinational corporations make up more than 90% of our current total net lettable area of leased industrial properties.”

Simon Lee Sai Boon

KUALA LUMPUR: AME Real Estate Investment Trust (AME-REIT) made its debut on the Main Market of Bursa Malaysia yesterday, opening at RM1.14 per share - that was one sen over its initial public offering (IPO) price of RM1.13 per share.

At the listing ceremony, the REIT’S chairman and executive director, Simon Lee Sai Boon, said the management of AME-REIT has identified three industrial portfolios for potential acquisition.

“These properties, namely, Plot 43 in i-park @ Senai Airport City and Plots 15 and 16 in i-park @ Indahpura, are being developed by AME Elite for leasing. The expected lease term of each property is a fixed tenure of 10 years,” he said.

There were no proceeds raised by the company as the IPO did not involve any issuance of new units.

AME-REIT has an initial portfolio of 34 industrial properties and dormitories which are 100% leased as of June 15, 2022 and July 15, 2022, respectively.

“Multinational corporations make up more than 90% of our current total net lettable area of leased industrial properties.

“We hope that the potential acquisition of the three identified properties will be added to our portfolio 12 months from our listing exercise,” said Lee.

For the first five years from its listing yesterday, AME-REIT will hold the right of first refusal, by its sponsor, AME Elite Consortium Bhd, with its subsidiary Ipark Development Sdn Bhd, to acquire industrial properties and dormitories with leasing or tenancy agreements.

AME-REIT will also have the first right to relevant assets which may be targetted for acquisition in the future by AME Elite and its subsidiaries, while being subjected to other criteria.

The industrial property market is quite robust at the moment.

“If you look at the three industrial states, even in the first half of the year, the government has announced more than Rm100bil worth of foreign direct investment,” AMEREIT chief executive officer and executive director Chan Wai Leo said, referring to Penang, the Klang Valley and Johor.

He noted that rising interest rates do not completely halt acquisitions but only make them slightly more difficult.

“While we may be buying properties at a tight spread due to higher interest rates, we will look for assets that have the potential to be revamped. With the input of some capital expenditure, those assets can generate returns,” said Chan.

In fact, the hikes in interest rates affect property vendors as well, in terms of their cash flow to sustain their operations.

“So this presents an opportunity for the REIT to look into more sale and leaseback acquisitions because this will help asset owners free up more of their capital that will be otherwise tied up in the properties.

“This is the synergistic relationship that we are looking for in this scenario,” he said.

AME-REIT’S IPO exercise entailed an offering of 254.8 million units, representing 49% of the total 520 million units in AME-REIT.