Growth trajectory seen for AME-REIT on possible acquisitions

PETALING JAYA: AME Real Estate Investment Trust (AME-REIT) may be on a more rapid growth trajectory, according to RHB Research.

It is likely that the REIT would be driven by more acquisitions moving forward given its low gearing ratio presently.

AME-REIT’s recent acquisitions had seen its gearing ratio increasing to 11.4% from 6.3% in the most recent quarter, said the research house.

“We estimate that the REIT has a debt headroom of RM240mil, assuming a gearing target of 35%, in line with the average for REITs under our coverage. While waiting for more assets to be completed and leased out from the sponsor, we think AME-REIT will grow more rapidly through third-party acquisitions,” it added.

RHB Research also noted the trust’s significant debt headroom feeling positive on its outlook moving forward, due to its organic and inorganic growth opportunities since the trust also had a sponsor.

It maintained its “buy” call and a RM1.38 a unit target price with a circa 6% financial year 2024 (FY24) forecast yield.

Meanwhile, Hong Leong Investment Bank Research (HLIB Research) said the trust’s recent fourth quarter FY23’s results announcement had a core net profit which exceeded the research house’s expectations.“The recently completed acquisitions of Indahpura’s plot 15 and SAC’s plot 43 as well as the imminent addition of Indahpura’s plot 16 in the second quarter are set to lift AME-REIT’s earnings in FY24. Also, we expect positive rental reversion for its leases due for renewal in FY24,” HLIB Research said.

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