PETALING JAYA: AME Real Estate Investment Trust
(AME-REIT) is poised to be a beneficiary of its sponsor, AME Elite Consortium, injecting more worker dormitories into the REIT.
This is also in line with sustained demand that is anticipated for worker dormitories in the country from various industries, which require manpower.
RHB Research said AME-REIT was the only REIT that had worker dormitories in its property portfolio.
“Although the three worker dormitories only account for 22% of asset value, income from this segment is likely to be lumpy whenever a new dormitory is injected,” it said in its initiation note on AME-REIT.
“Worker dormitories form a sub-segment of AME-REIT that should see robust demand in the coming years, given the increasing emphasis on environmental, social and governance matters,” it added.
RHB Research initiated coverage on the counter with a “buy” rating and dividend discounted model-based target price of RM1.38 with a 6% forecast for financial year 2023 (FY23) yields.
It said the outlook for the REIT was bright since AME-REIT had a high debt headroom, a clear pipeline of new developments from its sponsor, and favourable supply-demand dynamics in the industrial properties space.
There is also a positive outlook stemming from its organic and inorganic growth potential since it was targeting RM100mil in new acquisitions every year.
“The industrial segment is in a bright spot compared to the other sub-segments.
“The commercial retail and office space has been experiencing severe supply gluts over the past few years,” it said.
However, RHB Research said the incoming supply of industrial units fell by about 14% per year on average from 2016 to 2019, which supports the stable and resilient rental reversions for existing industrial REITs.
“The risk of oversupply in the industrial segment seems minimal, as most of the announced developments are made on a built-to-suit basis – thereby securing the properties’ long-term tenancies,” RHB Research said.
