Amanahraya REIT is among the first REIT to invest in a diverse portfolio of commercial properties. Listed on 26 February 2007, it had an initial portfolio of 8 properties worth RM 341.8 million. Since then, it has enlarged its size of its portfolio to 15 properties worth RM 986.4 million as at 31 December 2016.
In this article, I’ll list down 10 things you need to know about Amanahraya REIT before you invest.
#1: Stock Symbol
Ticker Symbol: KLSE: ARREIT / KLSE: 5127
Market Capitalization: RM 518.8 Million (10 January 2018)
Share Price: RM 0.905 (10 January 2018)
Syariah Compliant: No
#2: The Business
Amanahraya Reit derives income from a diverse portfolio consisting of:
- Office Building
This includes Dana 13 at Dana 1 Commercial Centre Petaling Jaya, Contraves in Cyberjaya, Toshiba TEC Malaysia in Shah Alam, Block A & B South City Plaza in Seri Kembangan and Wisma Comcorp in Shah Alam. Combined, the 5 properties are worth RM 233.5 million, accounting for 23.7% of the value of its portfolio as at 31 December 2016. This segment has brought in RM 1.38 million in net rental per month in 2016.
This includes Holiday Villa Alor Setar and Holiday Villa Langkawi. The 2 properties are worth RM 116.9 million, accounting for 11.9% of the value of its portfolio as at 31 December 2016. This segment has contributed RM 475.5 thousand in net rental per month in 2016.
This includes SEGI College Subang Jaya, SEGI University College Kota Damansara, and HELP University in Jalan Semantan, Kuala Lumpur. The 3 properties are worth RM 312.5 million, accounting for 31.7% of the value of its portfolio as at 31 December 2016. Combined, this segment has made RM 1.98 million in net rental per month in 2016.
This includes Deluge Factory, AIC Factory, Silver Bird Factory and Gurun Automotive Factory. The 4 factories are valued at RM 177.0 million, making up for 17.9% of the value of its portfolio as at 31 December 2016. Combined, this segment has contributed RM 381.9 thousand in net rental per month in 2016.
Amanahraya REIT owns the Selayang Mall which is valued at RM 146.5 million, accounting for 14.9% of the value of its portfolio as at 31 December 2016. The Selayang Mall has made RM 847.0 thousand in net rental per month in 2016.
#3: The Financials
Amanahraya REIT has reported a marginal decline in revenue and realized income over the last 5 years. Revenue has dropped from RM 66.9 million in 2012 to RM 57.6 million in 2016. Realized income has dropped from RM 43.4 million in 2012 to RM 35.3 million in 2016.
This is because Amanahraya REIT has reported non-payment from the Silver Bird Factory since 2014 and has disposed Wisma Amanahraya in 2016. Losses of income from the two properties have offset additional income contributed from Wisma Comcorp, which was acquired in 2014.
Distributions per unit (DPU) has dropped from 7.45 sen in 2012 to 5.90 sen in 2016.
Source: Annual Reports of Amanahraya REIT
Source: Annual Reports of Amanahraya REIT
#4: Major Acquisitions
Amanahraya REIT has announced the following acquisition and disposal of properties in 2017:
- Vista Tower
On 7 September 2017, Amanahraya REIT has entered into a conditional sales & purchase agreement with Intermark Sdn Bhd to acquire Vista Tower for RM 455 million. It is a 63-storey office tower located at Jalan Tun Razak, Kuala Lumpur. Presently, it enjoys 66.3% in occupancy rate with key tenants such as UOB Group, PETRONAS Refinery & Petrochemical Corporation and BNP Paribas Malaysia. Its gross annual rental in 2016 was RM 30.2 million.
- Silver Bird Factory
On 14 December 2017, Amanahraya REIT has entered into a sales & purchase agreement with Nippon Express (Malaysia) Sdn Bhd to dispose of its Silver Bird Factory for RM 105 million. The proceeds of this disposal would be used to partly settle its existing loans from Affin Bank Bhd. The balance would be used as working capital or to finance its future property acquisitions.
#5: Entry of New Major Shareholder
Kenedix Asia, one of the largest real estate management firms in Japan, has invested RM 86.0 million to buy units of Amanahraya REIT and another RM 5.0 million to buy 49% shareholdings of Amanahraya-REIT Managers, the manager of Amanahraya REIT.
Kenedix Asia, who bought shares via KDA Capital Malaysia Sdn Bhd, has emerged as the second largest unitholder of Amanahraya REIT with 15% in unitholdings presently. Meanwhile, Amanahraya-REIT Managers has been renamed to Amanahraya-Kenedix REIT Manager Sdn Bhd and it remains as the manager of Amanahraya REIT.
#6: Lease Profile
Amanahraya REIT expects to derive long-term income from 7 properties as their next rent reviews are in the next decade. They are:
|No.||Property||Net Rent Review|
|1||Wisma Comcorp, Shah Alam||2029|
|2||SEGI College Subang Jaya||2021|
|3||Holiday Villa Langkawi||2026|
|4||Contraves in Putrajaya||2022|
|5||Toshiba TEC Shah Alam||2022|
|6||Deluge Factory in Nusajaya||2025|
|7||HELP University in Jalan Semantan||2039|
The remaining properties would have their next rent review progressively in financial years 2018 and 2019.
As I write, Amanahraya REIT is trading at RM 0.905 a unit.
As at 30 September 2017, Amanahraya REIT has reported having RM 1.18 in net asset value a unit. Thus, its current P/NAV works out to be 0.77.
Amanahraya REIT adopts a distribution policy to declare and pays out at least 90% of its distributable income on a quarterly basis. For the last 12 months, Amanahraya REIT has paid out 5.59 sen in DPU.
If Amanahraya REIT is able to maintain its DPU at 5.59 sen for the next 12 months, its gross dividend yield is expected to be 6.18%. For individual investors, it is prudent to deduct 10% withholding tax from 5.59 sen when calculating your net dividend yield, as such, I would expect net dividend yield to be 5.56%.
#8: Debt Profile
As at 30 September 2017, Amanahraya REIT has recorded RM 315.2 million in total borrowings. It works out to be 30.4% of Amanahraya REIT’s total asset value of RM 1.04 billion, thus, is in line with its intention to maintain below 50% in debt-to-total assets.
#9: Investor Relations
For further enquiries or to request for additional investment information on Amanahraya REIT’s Investors Relation matters, you may contact:
Designation: Chief Executive Officer
#10: Major Shareholders
As at 30 June 2017, the substantial shareholders of Amanahraya REIT are:
– Amanah Raya Bhd for Kumpulan Wang Bersama: 47.31%
– KDA Capital Malaysia Sdn Bhd: 15.00%
– Perbadanan Kemajuan Negeri Selangor: 5.65%