Posted on | April 11, 2007
By BUSINESS TIMES
AMANAHRAYA Bhd, the country’s public trustee and institutional investor, is expected to grow its common fund value by 30 per cent to RM8 billion by year-end.
“We aim to grow the common fund to RM8 billion by year-end from RM6 billion in December 2006,” AmanahRaya-JMF Asset Management Sdn Bhd managing director Datuk Mohamed Azahari Kamil said.
“As long as the common fund keeps growing, we can buy more properties, groom and inject them into the REIT,” he told Business Times.
AmanahRaya-JMF Asset Management Sdn Bhd, a 70 per cent subsidiary of AmanahRaya Bhd, manages its parent company’s common fund.
The common fund is subscribed by institutions, foundations, state government agencies and high net-worth individuals that is structured into a trust deposit.
Currently, there are 11 properties parked under the common fund being groomed to meet the standards of Real Estate Investment Trust (REIT).
Azahari plans to buy a few more hotels in Europe.
“We’ll be in Paris, London and Geneva next week to look at the various hotels on offer,” he said in an interview held in Kuala Lumpur yesterday.
The overseas investment is expected to take up 30 per cent of AmanahRaya REIT fund size. “The quality of the properties we want to acquire is very crucial. We want to ensure that the yields are maintainable. While we allocate €50 million (RM232 million) for the purchase, we’ll only choose hotels that offer about 7 per cent yield per year,” he said.
Macquarie Group and Faisal Private Bank is helping AmanahRaya-JMF look for these foreign properties. “Asset acquisitions in the international arena could be as early as this year,” he said.
A Malaysian brand, the Holiday Villa Group, is expected to manage the hotels bought by AmanahRaya.
The newly-listed AmanahRaya REIT is currently holding eight properties — five office complexes, two hotels and a factory building — worth RM341.8 million. The occupancy rates for these assets are between 80 and 90 per cent, and most of the tenants are listed firms. They are currently generating an average yield of about 7.5 to 8.0 per cent.
The REIT’s profit forecast of its distributable income for the year ending December 31 2007 is RM10.48 million, which translates to a possible yield of 7.95 per cent for retail unitholders and 7.57 per cent for institutional holders.
Standard & Poor’s (S&P) has given AmanahRaya REIT a “BBB-” rating with stable outlook.
As the AmanahRaya REIT’s 49.7 per cent gearing is already quite close to the statutory limit of 50 per cent, it may issue more units into the market as and when it needs to buy more properties.
Azahari, however, said the REIT’s gearing level can be pared down to between 35 and 40 per cent with an asset injection worth about RM350 million.
“We’ll be submitting our asset injection proposal of five properties to the Securities Commission next month. Upon approval, we hope to execute this plan by the third quarter of the year,” Azahari said.
AmanahRaya-JMF has also lined up a second asset injection of the remaining properties parked under the common fund.
“That’ll be another RM350 million. When the two asset injections are executed, the total fund size of the REIT will expand to RM1 billion,” he said.
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