PENANG: Amanah Raya Bhd (ARB) has set an ambitious target this year of tripling the size of its listed property trust AmanahRaya REIT to RM2 billion, from RM641 million as at December 2007.
The REIT’s manager, AmanahRaya-JMF Asset Management Sdn Bhd, said it planned to acquire assets from local listed companies and was in talks with several parties for possible acquisitions.
“By the end of 2008, we hope to reach RM1.5 billion to RM2 billion. We have, in the pipeline, two to three properties that we are currently negotiating on,” Amanah Raya-JMF managing director Datuk Mohamed Azahari Mohamed Kamil told The Edge Financial Daily.
Amanah Raya-JMF last year failed to achieve its own REIT size target of RM1 billion, which Azahari attributed to documentation processing issues of identified assets.
The injection of the assets would take place by the first quarter of 2008, he said, adding that AmanahRaya REIT now had eight properties.
Azahari said AmanahRaya-JMF had structured agreements with the property owners in such a way that enabled the REIT to generete yields of 8.5% against the market average of 7.5%.
He said the higher yield was also in line with the bigger risk that came with the acquisition of specialised properties such as factories.
“In order to reduce the risk, the (rental) rates have to be higher, and we ask for a three-year deposit to protect the unit holders. So, if the tenant forfeits, even if I sell the property at forced sale value, I would be able to recover the principal to pay back the unit holders,” he said.
He said the deal also benefited the leasee, as the deposit would be re-injected into the REIT. “Their balance sheet is cash in ARB, with a yield of 8.5% for the next 10 years instead of 5% if they put it in a bank,” Azahari said.
On overseas acquisitions, he said AmanahRaya-JMF was targeting to acquire assets in Thailand, Indonesia and Singapore to be injected into its REIT in Singapore, ahead of its planned listing in the first quarter this year.
“The initial size of the (Singapore) REIT is about US$250 million or S$350 million,” Azahari said. The new REIT would be targetting net annual yields of between 8% and 10%.
AmanahRaya-JMF and Indonesia’s fourth largest listed property management group PT Gapura Prima had, on Oct 26, agreed to establish a regional REIT and list it in Singapore.
“Once that takes place, our strategy will move forward in geographical diversity, not just focusing on Indonesia and Malaysia. At this point in time, we have identified Thailand as a potential for further expansion, and we are also looking at Singapore for properties.
“We are looking at the valuation of the properties and if the valuations are right, there is a possibility that we will acquire these assets. The areas we are looking at are hospitality and service apartments, so there is no conflict of interest, as the Malaysian REIT has no service apartments,” Azahari said.