Buy, target price RM1.16

MAYBANK Investment Research is keeping its “Buy” call on AmanahRaya Real Estate Investment Trust (ARREIT) (5127) for its strong, resilient organic earnings growth and attractive 9.4 per cent 2011 yield.

ARREIT aims to grow assets to RM1.5bil

AmanahRaya Real Estate Investment Trust (ARREIT) is targeting to grow its total assets to RM1.5bil in the next two years from RM748mil currently by injecting new properties into its portfolio and improving the value of its existing assets.

ARREIT manager AmanahRaya-REIT Managers Sdn Bhd chief operating officer Abas A. Jalil said ARRM was now evaluating the possibility of injecting more properties into its REIT.

“We are looking at acquiring office buildings, warehouses and hotels in the Klang Valley, Penang, Johor Baru and Kota Kinabalu.

“These buildings have a similar asset class. They have reputable tenants, a long-term lease and generate a stable income stream,” he told StarBiz after ARREIT unitholders’ meeting yesterday.

Abas said ARREIT unitholders had passed the resolution for the acquisition of Selayang Mall (in Selayang) and Dana 13 in Ara Damansara for RM227mil. The acquisition, to be completed by early next month, would boost its total asset value to RM1.002bil.

He said ARREIT was buying the properties at a good value.

“The Selayang Mall’s value is RM132mil but we are purchasing it at RM128mil while Dana 13, which is valued at RM107.8mil, is being bought at RM99mil.”

“We have carefully evaluated the assets. For Selayang Mall, the tenancy mix comprises good brands while Dana 13 is the corporate headquarters for Symphony House Bhd. They moved into the premises in late 2009 and they are under a guaranteed lease for 10 years,” he said.

Abas said plans were in place to better manage its existing assets. “We are talking to all our lessees for the future enhancement of their asset values,” he said.

He added that the acquisition of the two properties would allow ARREIT to provide better returns to unitholders.

“We are looking at 7.29 sen for this year after the acquisition of the two properties,” he said. ARREIT returned 7.15 sen to each unitholder in 2009.

AmanahRaya REIT eyes 2 properties

AmanahRaya REIT has proposed to acquire two properties valued at a total of RM227 million from Amanah Raya Bhd, as trustee for Kumpulan Wang Bersama.

The properties concerned are the six-storey Selayang Mall at Gombak for RM128 million and a 13-storey stratified office building which forms part of the Dana 1 Commercial Centre known as Dana 13 for RM99 million.

In conjunction with this, AmanahRaya REIT proposed to undertake a proposed placement of such number of new units to raise proceeds of RM119 million at an issue price to be determined later.

It also proposed to undertake an increase in the existing approved fund size of 431,553,191 units, by such number of placement units to be issued under the proposed placement.

“The proceeds arising from the proposed placement of RM119 million will be utilised to part-fund the proposed acquisitions and defray the estimated expenses relating to the proposals,” AmanahRaya REIT said in a statement today.

According to the company, the proposed acquisitions are in line with its investment objective, which is to provide the unitholders with stable distribution income by acquiring yield accretive assets and good quality properties with strong recurring rental income.

“The acquisition will increase AmanahRaya REIT’s total asset value from RM752.53 million to about RM1,007.49 million,” it said.

It added that the acquisitions are expected to be implemented and completed between the first and second quarter of 2010. — BERNAMA