KUALA LUMPUR (July 24): AME Elite Consortium Bhd (KL:AME) is selling four industrial properties in Johor to its 49.62%-owned unit AME Real Estate Investment Trust (KL:AMEREIT) for a total of RM119.5 million, to realign its property investments into a REIT.
This is AME REIT’s second acquisition from AME Elite within 10 months. The trust bought three industrial properties in Iskandar Malaysia from AME Elite for RM69.3 million in October last year.
In the latest filing to Bursa Malaysia, the industrial property developer announced that its subsidiary Pentagon Land Sdn Bhd and its 80%-owned subsidiary Ipark Development Sdn Bhd had inked separate sale and purchase agreements with AME REIT for the industrial properties disposal.
The four properties — two located in i-TechValley in Iskandar Puteri and two in i-Park@Senai Airport City — have a combined agreed lettable area of 391,872 sq ft.
AME REIT, in its filing, said that it will finance the transaction via financing facilities, while the expected expenses from the acquisition of RM2.41 million will be paid out from the internal funds.
“Divesting properties to AME REIT enables us to optimise our capital allocation towards further expansion of our industrial parks, while our tenants benefit from the expertise of a dedicated industrial REIT team in managing their long-term needs,” AME Elite executive director and group chief executive officer Dylan Tan Teck Eng said in a statement.
The proceeds from AME Elite’s divestment will partially fund the ongoing development of its i-TechValley project, while the balance will be allocated towards future industrial property development and investment projects, including land acquisitions and joint ventures.
AME Elite is expected to secure a pro forma gain of RM22.9 million from the sale, while AME REIT’s pro forma total asset value will increase by 16.7% to RM828.8 million from RM710.2 million as at end-March 2024.
The transaction, which is scheduled to be completed by the third quarter of 2025, is expected to contribute positively to both AME REIT and AME Elite’s earnings in the financial year ending March 31, 2025 (FY2025).
The acquisitions are subject to approvals from non-interested unitholders of AME REIT and non-interested shareholders of AME Elite at their respective extraordinary general meetings, as well as relevant regulatory bodies.
Shares of AME Elite gained one sen or 0.59% to RM1.70 on Wednesday, valuing the group at RM1.09 billion. AME REIT settled up two sen or 1.48% to RM1.37, giving the REIT a market capitalisation of RM720.02 million
