Is Atrium Real Estate Investment Trust Worth Investing In?

Atrium Real Estate Investment Trust is the first listed industrial asset focused REIT in Malaysia. It was listed on 2 April 2007 with an initial portfolio of 4 properties worth RM 154.8 million. 10 years after its IPO listing, Atrium REIT has a portfolio of 5 properties valued at RM 258.3 million. In this article, I’ll share 9 quick facts about Atrium REIT before you invest.

#1: Stock Symbol

Ticker Symbol: KLSE: ATRIUM / KLSE: 5130
Market Capitalization: RM 136.4 Million (21 December 2017)

Share Price: RM 1.12 (21 December 2017)

Industry: Reit

Syariah Compliant: Nope

#2: The Business

In 2016, Atrium REIT derives income from the following properties:

  1. Atrium Shah Alam 1
    Atrium Shah Alam 1 is a single-storey warehouse with a 4-storey office building with a total net lettable area of 311,736 sq. ft. located in Seksyen 22, Shah Alam. In 2016, it is valued at RM 80.0 million, accounting for 33.9% of the value of its portfolio. The property is fully leased to Marelli Asia Pacific Sdn Bhd for a term of 6 years which expires on 31 May 2021.  
  2. Atrium Shah Alam 2
    Atrium Shah Alam 2 is a single-storey warehouse with a 2-storey office building with a total net lettable area of 259,933 sq. ft. located in Seksyen 22, Shah Alam. In 2016, it is valued at RM 72.0 million, accounting for 30.5% of the value of its portfolio. The property has reported 71.2% in occupancy rate in 2016 as it was undergoing asset enhancement initiatives during the period.  It is currently leased to a key tenant namely, Samsung SDS Global SCL Malaysia Sdn Bhd for a term of 3 years which expires on 31 March 2019.

  3. Atrium Puchong
    Atrium Puchong is a single-storey warehouse and a 4-storey office building with a total net lettable area of 203,994 sq. ft. located in Puchong. In 2016, it is valued at RM 50.0 million, accounting for 21.2% of the value of its portfolio. The property is fully leased to Biforst Logistics Sdn Bhd for a term of 3 years which expires on 31 July 2019.

  4. Atrium USJ
    Atrium USJ was acquired on 22 December 2011. It has 3 main blocks located in Taman Perindustrian UEP, Subang Jaya.

    Block A consists of a single-storey warehouse with annexed 2-storey office building. It is leased to SAF-Holland (Malaysia) Sdn Bhd for a term of 3 years which expires on 31 August 2017.

    Block B consists a single-storey warehouse and it is leased to Century Total Logistics Sdn Bhd for a term of 2 years which expires on 31 December 2017.

    Block C consists of a single-storey warehouse with annexed 2-storey office building. It is leased to Skynet Worldwide (M) Sdn Bhd for a term of 3 years which expires on 31 July 2017.

#3: The Financials

From 2012 to 2014, Atrium REIT had 5 properties in its portfolio. It has reported stable sales, net property income and realized earnings during the 3-year period.

On 30 April 2015, Atrium REIT has disposed Atrium Rawang to Chip Loong Shark’s Fin Seafood Sdn Bhd for RM 13.5 million. Atrium REIT has reported RM 4.26 million in disposal gain from Atrium Rawang and thus, lifting its realized income to RM 11.1 million. Upon this disposal, Atrium REIT has reported lower sales, net property income, and realized earnings in 2016.

Source: Annual Reports of Atrium REIT

Source: Annual Reports of Atrium REIT

#4: Major Acquisitions

On 16 March 2017, Atrium REIT has completed its acquisition of Atrium Shah Alam 3 for RM 23.0 million. Atrium Shah Alam 3 is a 2-storey office with annexed 2 adjoining single-storey factories located in Section 26, Shah Alam. Upon this acquisition, Atrium REIT has lifted its number of properties to 5 in its portfolio. As I write, Atrium REIT has secured a new tenancy for Atrium Shah Alam 3 for a term of 2 years. Atrium REIT is undergoing some upgrading works to meet the requirements of its new tenant. The target date for handing over the vacant possession of Atrium Shah Alam 3 is by Q1 2018.

#5: Lease Profile

The lease profile of each property was mentioned in detail in Point #2.

#6: Valuation

As I write, Atrium REIT is trading at RM 1.12 a unit.

As at 30 September 2017, Atrium REIT has reported having RM 1.39 in net asset value a unit. Thus, its current P/NAV works out to be 0.81.

Atrium REIT adopts a distribution policy to declare and pays out at least 90% of its distributable income on a quarterly basis. Over the last 3 quarters, Atrium REIT has paid out 1.85 sen in DPU.

If Atrium REIT is able to maintain its DPU at 1.85 sen for the next 4 quarters, it would pay out 7.40 sen in DPU. As such, its gross dividend yield is expected to be 6.61%. For individual investors, it is prudent to deduct 10% withholding tax from 7.40 sen when calculating your net dividend yield, as such, I would expect net dividend yield to be 5.95%.

#7: Debt Profile

As at 30 September 2017, Atrium REIT has recorded RM 88.8 million in total borrowings. It works out to be 33.1% of Atrium REIT’s total asset value of RM 268.2 million, thus, is in line with its intention to maintain below 50% in debt-to-total assets.

#8: Investor Relations

For further enquiries or to request for additional investment information on Atrium REIT’s Investors Relation matters, you may contact:

Mark Lee

Designation: Chief Financial Officer

Email: marklee@atriumreit.com.my

Website: http://www.atriumreit.com.my/contactus.html


#9: Major Shareholders

As at 31 December 2016, the substantial shareholders of Atrium REIT are:

– Chan Kam Tuck: 24.86%

– Glory Blitz Industries Sdn Bhd: 17.24%

– Soh Kam Eng: 4.77%

– Sparkle Skyline Sdn Bhd: 2.68%

– Stephen Edward Blackburn: 1.65%

Interested to learn more about how to get started investing in Asia? Follow our FREE “Beginner’s Guide To Investing in Asia” Video Course today.

Ian Tai

Ian Tai is the founder of Bursaking.com.my, a platform that empowers retail investors to build wealth through ownership of fundamentally solid stocks. It is an essential tool that sifts out stocks that grow profits consistently from a database of over 900+ stocks listed mainly in Malaysia. As a Malaysian with close family ties in Singapore, Ian publishes a series of newsletters on how anyone can invest profitability in both countries.

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