Thursday September 2, 2010 MYT 1:55:00 PM
ARReit expects to grow assets to RM1.8bil next year

KUALA LUMPUR: Malaysia's fourth largest Real Estate Investment Trust (REIT), Amanah Raya Real Estate Investment Trust (ARREIT), expects its assets to grow 40% to RM1.8bil next year from RM1bil currently.

Amanah Raya Bhd(ARB)group managing director Datuk Ahamd Rodzi Pawanteh said this year it would increase the total asset value to RM1.3bil, with the injection of three properties owned by the Selangor State Development Corporation (PKNS).

"This will be our fourth injection and the final acquisition for this year since our inception with RM340mil in 2007," he told reporters at the signing ceremony of REIT agreements between Amanah Raya Bhd and PKNS here today.

Ahmad Rodzi said the total acquisition price for the properties, Menara PKNS, Kompleks PKNS and SACC Mall, was RM270mil, to be satisfied via a combination of consideration units to PKNS and cash.

Upon completion of the Sales and Purchase Agreement (SPA) and Share Agreement, PKNS is expected to own approximately 30% of ARREIT, while ARB's ownership will be approximately 33%, he explained.

He said that in respect of the Malaysian REITS market share, ARREIT expects to be the third largest in terms of REIT's property value after the completion of the exercise. "We are going to be number three, behind Sunway REIT and Capital Mall REIT," said Ahmad Rodzi.

ARREIT was the first government-linked company REIT listed on Bursa Malaysia in February 2007.

Asked if ARREIT was looking at venturing into the overseas market, he said, it would only be possible when it had a sufficient REIT's asset base.

In conjunction with the property acquisition, both parties also entered into separate lease agreements for each of the three properties, whereby PKNS would lease the properties from ARREIT for a period of 12 years.

This will ensure 100% occupancy of the properties and provide immediate rental income to ARREIT, upon completion of the acquisition exercise.

Meanwhile, PKNS General Manager Othman Omar, said the organisation was very excited over the exercise. "We believe is a win-win transaction for all parties, underpinned by mutually beneficial commercial objectives," he added.

PKNS, he said, would be able to unlock the market value of the three properties to be injected into ARREIT. "At the same time, it will also gain additional exposure to ARREIT's existing portfolio of 15 property assets, via our future ownership of approximately 30% of ARREIT," Othman said.

He also highlighted that PKNS would earn recurrent income from its investment in ARREIT, which it viewed as a high-quality Bursa Malaysia-listed real estate investment trust, with strong growth potential. - BERNAMA

Why Petdag shoot up so much today ?

selayang mall occupanycy wise is good but a bit lower end mall, usually for nearby resident go for shopping. outskirt area and the Parkson is the anchor tenant. dana 13  hmmm frankly dunno where it's situated even thought i use to go d'sara quite often. but really like it cause GLC. 

Wrong thread. Wrong thread.

Anyone know this SACC Mall in Shah Alam? Arreit's new property. And I've no idea how it is.

link for ARREIT proposal report is here. http://announcements.bursamalaysia.com/EDM...Sept%202010.pdf

based on simple calculation,
the 1st-3rd year yield for these acquisitions are 7.25%, 4th-6th =7.75%, 7-9th = 8.25%, 10-12th year = 8.75%

PKNS' shareholdings due to rise to 19.84% from 2.68%. After Kumpulan Wang Bersama disposes their holdings later this year, to rise to nearly 30%.

Gearing: to rise to 41.41% after acquisition from 36.32% (post-selayang mall acquisition).
NAV: to fall to 0.9518
Asset Value: 1.27bil.

EPU: will probably drop to range of 6-7% if payout remains at last year's level. but realisticly should be diluted to about 7.5% post acquisition

What's the point of increasing the asset size if it only brings further dilution to the shareholders? I guess only the ARREIT management untung from this

Having said that, the best thing about ARREIT is that the tenancies are mostly steady.

the reits structure is such that .. in order to grow you'd need to borrow, or draw cash from issuance of shares. plus since arreit's divvy policy is 95% of profits, then that means they have very little cash on hand to finance property acquisitions.. axreit used to have a high gearing (not sure whether its high now or not) because they had a period where they were just snapping up properties here and there.

The Board of Directors of AmanahRaya-REIT Managers Sdn Bhd, the management company of ARREIT, wishes to announce that ARB, acting as the trustee for KWB, notified that it had on 2 September 2010 entered into a conditional share sale agreement with PKNS to dispose of the Units from KWB to PKNS for a total consideration of RM66,132,212.25 or RM0.95 per unit .

The sale and purchase of the Units shall take effect upon completion of the proposed acquisition by ARREIT, of 3 parcels of leasehold land located in the District of Petaling, Selangor Darul Ehsan together with the buildings erected thereon for a total purchase consideration of RM270,000,000 subject to the terms and conditions of the sale and purchase agreement entered into between CIMB Trustee Berhad, acting as the trustee for ARREIT and PKNS on 2 September 2010.

The Transaction Arranger for the proposed disposal of the Units by KWB to PKNS is Astramina Advisory Sdn Bhd.

This announcement is dated 2 September 2010
ARREIT current price is around RM0.88 rite? need to buy the share tomorrow morning!

the reits structure is such that .. in order to grow you'd need to borrow, or draw cash from issuance of shares. plus since arreit's divvy policy is 95% of profits, then that means they have very little cash on hand to finance property acquisitions.. axreit used to have a high gearing (not sure whether its high now or not) because they had a period where they were just snapping up properties here and there.

The Board of Directors of AmanahRaya-REIT Managers Sdn Bhd, the management company of ARREIT, wishes to announce that ARB, acting as the trustee for KWB, notified that it had on 2 September 2010 entered into a conditional share sale agreement with PKNS to dispose of the Units from KWB to PKNS for a total consideration of RM66,132,212.25 or RM0.95 per unit .

This announcement is dated 2 September 2010
ARREIT current price is around RM0.88 rite? need to buy the share tomorrow morning!

The Board of Directors of AmanahRaya-REIT Managers Sdn Bhd, the management company of ARREIT, wishes to announce that ARB, acting as the trustee for KWB, notified that it had on 2 September 2010 entered into a conditional share sale agreement with PKNS to dispose of the Units from KWB to PKNS for a total consideration of RM66,132,212.25 or RM0.95 per unit .

This announcement is dated 2 September 2010
ARREIT current price is around RM0.88 rite? need to buy the share tomorrow morning!

I just think after input of new assets, the yield actually drops. So for retail shareholders, shouldn't the share price be dropping instead of upping? 

If new acquisition is done purely on borrowing, the yield actually can go up. As borrowing cost is around 4-6%, while rental yield is >7%, so you earn more through levarege, while there is no new shares issued.

But if the acquisition is done on new shares issuing at existing price, then yes, there is dilution of yield occurs, if the yield of new properties is lesser than what its yield currently.

So they did it with mixture of borrowing and new shares issued, so it may cancel out each another.

But for sure, NAV will be diluted in the process.

umm.. from my understanding. its a conditional sale and purchase agreement, so its buyer willing seller willing. shouldn't have any impact on the share because it's an agreed interparty transfer between 2 significant shareholder.

i also feel the price should fall to reflect the yield, ppl probably wouldn't jump the gun to buy reits when it's yielding below market average.. unless it's got a lot of funds attentions