AME Elite Consortium Bhd Sells Four Industrial Properties to AME REIT for RM119.5 Million
AME Elite Consortium Bhd (KL) is strategically realigning its property investments by selling four industrial properties in Johor to its 49.62%-owned unit AME Real Estate Investment Trust (KL) for a total of RM119.5 million. This marks AME REITโs second acquisition from AME Elite within a span of 10 months. Previously, AME REIT purchased three industrial properties in Iskandar Malaysia from AME Elite for RM69.3 million in October last year.
Details of the Transaction
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, comprising 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 has indicated that it will finance the transaction via financing facilities, while the expected expenses from the acquisition amounting to RM2.41 million will be covered through internal funds.
Strategic Benefits
AME Elite executive director and group chief executive officer Dylan Tan Teck Eng commented on the strategic nature of the divestment: โDivesting 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.โ
The proceeds from AME Eliteโs divestment will partially fund the ongoing development of its i-TechValley project. The remaining funds 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.
Financial Impact
This transaction is projected to have a positive impact on both AME REIT and AME Eliteโs earnings in the financial year ending March 31, 2025 (FY2025). AME REITโs pro forma total asset value will increase by 16.7% to RM828.8 million from RM710.2 million as of the end of March 2024.
The acquisitions are contingent upon approvals from non-interested unitholders of AME REIT and non-interested shareholders of AME Elite at their respective extraordinary general meetings, in addition to necessary approvals from relevant regulatory bodies. The transaction is slated for completion by the third quarter of 2025.
Market Response
Following the announcement, 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.
This strategic move by AME Elite not only enhances its financial flexibility but also solidifies its commitment to sustainable growth through strategic divestments and reinvestments in high-potential projects. The successful execution of this transaction will further bolster the group’s market presence and financial stability in the coming years.
