I Reit Managers, the manager of AME Real Estate Investment Trust (AME Reit), is offering up to 254.8 million units in AME Reit shares for sale to investors, in an initial public offer (IPO) that values the Reit at close to RM600 million (S$185.4 million).
The listing - the second industrial Reit to be listed on Bursa Malaysia's main market after Axis Reit in 2005 - will see most of its investment units offered to existing shareholders of AME Elite Consortium - the parent company of AME Reit that's also listed on Malaysia's stock exchange.
The IPO, scheduled for Sep 20, entails an offering of 254.8 million units, representing 49 per cent of total 520 million units in AME Reit.
This comprises a retail offering of up to 174.8 million units at RM1.15 per unit. This includes 156.6 million units offered to the shareholders of AME Elite on the basis of 1 unit for every 5 ordinary shares held in AME Elite as of Aug 15 this year; 10.4 million units made available to the Malaysian public; and 7.8 million units to eligible directors and employees of AME Elite and its subsidiaries.
The institutional offering - consisting of at least 79.99 million units to be made available to Malaysian institutional investors and selected investors - has been approved by the Ministry of International Trade and Industry.
Based on the retail price of RM1.15 per unit, the market capitalisation of AME Reit upon listing will be RM598 million. The applications for the retail offering is already open and will close on Aug 24.
Speaking at the IPO prospectus launch on Wednesday (Aug 17), I Reit Managers' chief executive officer and executive director Chan Wai Leo noted that AME Reit has an initial portfolio of 34 industrial and industrial-related properties in Iskandar Malaysia valued at RM557 million.
"These industrial properties and workers' dormitories are fully tenanted and will be able to provide visible and stable cash flows," he said.
He added that the Reit's net property income (NPI) had grown steadily over the last 2 years. For the financial year ended March 31, 2021, it was up 8.7 per cent to RM26.1 million. For the latest FY ended Mar 31, 2022, the NPI surged 22 per cent to RM31.9 million.
"For the FY ending Mar 31, 2023, we expect to achieve revenue of RM41 million, with a NPI of RM37.6 million and a distributable income of RM34 million," said Chan.
With the IPO, I Reit Managers chairman and executive director Simon Lee said this will offer more flexibility for AME Reit to expand its asset size by acquiring other assets from third-party vendors.
"In the next 5 years, we are looking at growing the asset size to RM1 billion through acquiring assets from AME Elite Consortium or from others. We are also looking at expanding our current asset portfolio from Johor to Selangor and Penang," he told The Business Times.
Lee noted that the prospects for industrial and industrial-related properties remain positive, with resilient demand supported by growth in the electrical and electronics sectors, as well as logistics and e-commerce.
On future expansion, Chan said AME Reit has ample debt headroom of up to RM240.8 million to pursue potential acquisitions, based on the prescribed limit of 50 per cent of total asset value.
"AME REIT's pro forma statement of financial position would have total indebtedness of RM46.5 million, representing 8.1 per cent of its estimated total asset value of RM574.5 million," he said.