KUALA LUMPUR: Logistics asset-focused Atrium Real Estate Investment Trust (REIT) is targeting to double its total asset value to RM1 billion in two years’ time and will focus on undertaking land acquisitions for greenfield projects as well as asset enhancement initiatives (AEI) going forward.

Chan Kum Chong, the chief executive officer of the REIT’s manager, Atrium REIT Managers Sdn Bhd, told reporters here yesterday that the REIT is now exploring suitable land in, among others, Shah Alam and Klang, for future greenfield projects to cater for rising demand.

“It won’t be easy for us to rely on just acquisitions [to grow], which means we have to do a bit of greenfield [projects] in the near future. In order for us to qualify for greenfield [projects], we have to grow into a sizeable REIT of maybe RM1 billion.

“We are giving ourselves two more years. We are already at the halfway mark now,” he said when met after the REIT’s extraordinary general meeting (EGM).

The Securities Commission Malaysia’s guidelines for listed REITs limit aggregate investment in property development and real estate under construction to 15% of a REIT’s total asset value, and a fixed borrowing limit of 50% of total assets. As such, a RM1 billion asset value gives the trust RM150 million to work on greenfield projects.

“If we are talking about 20 acres (8.09ha), most land costs up to RM140 million to RM150 million. To buy [smaller] pieces of land [measuring] around four to five acres is not economically viable as logistic companies require [a space of] 10 acres or above,” Chan said.

Chan, who is a trained quantity surveyor, also said it is easier for the REIT to acquire land, then build facilities in accordance with clients’ demand, instead of scouting for potential tenants together with purchases.

“We have existing tenants who want to grow; it is only logical that we acquire land and build it according to their needs. They plan ahead and we know what their target ranges are, and how big they want the sizes of their warehouse to be.

“As [the] population grows, the need for consumer goods to be transported from one place to another will also grow. In fact, we have a lot of inquiries on the need for future spaces ... there is demand for logistic warehouses,” he said.

As for AEIs, the REIT is looking at possibly upgrading its existing properties in Shah Alam into double-storey warehouses.

“For enhancements (AEIs), we have to first do relocation. That is why we will need to go into greenfield [projects] to find another piece of land to temporarily relocate [the tenants], although some actually are [also looking] for additional warehousing [capacity].

“As for capital expenditure, we [might] still have to raise funds through what we are doing now — either [a] placement or rights issue. However, we can’t do it (AEI) now as we do not have [the] land bank yet, so we are looking at maybe year 2021,” Chan said.

RM180m Penang land buys a ‘timely’ deal

As at end-2018, the trust’s total assets stood at RM278 million. Together with its RM180 million Penang land deals announced last November — expected to be completed by end-2019 — its total assets will increase to RM458 million. The deal met with unanimous approval from shareholders at the EGM yesterday.

“The exercise is probably one of the first we did in many years. We have been lying low for 10 to 12 years ... the timing is right for us and we are quite confident [of] the two acquisitions. [It was] quite fortunate that we managed to win this bid as we were bidding among many larger REITs,” said Chan.

Chan said Penang is foreign-friendly when it comes to investment, and the newly opened industrial areas in Batu Kawan and Juru, together with the proposed undersea tunnel, offer future opportunities for the REIT to explore the northern region. Relocation of industrial players involved in the ongoing global trade tensions to Malaysia may also be another prospect worth noting, he added.

Atrium REIT finished one sen or 0.85% lower at RM1.16 per unit yesterday, bringing it a market capitalisation of RM169.55 million. The REIT has climbed near 15% in the past one year.