Thanks bro for the clarity. Sentral reit do look attractive too, with price hoovering around 0.86c. My bet looking at market sentiment & FMCO, price will slide further around 0.60c i guess (which am willing to wait).
It is the cheapest REITS in malaysia to real physical value (cost approach). Cheapest Dividend to Price value. Say Dividend ratio is fair valued to industry average 4% yield. (Average 3.5 sens / 4%) = 87.5 sens (based on industry average)
Following the disposal, the REIT will incur net loss on disposal of RM4.93 million.
It is noted that Menara AmFIRST was first acquired by the REIT in 2006 for an initial cost of RM57.1 million. As at end-March, its audited net book value stood at RM64.6 million.
“The manager opines that considering the age and limited scope for growth of the asset, it is opportune to dispose of this asset to repay existing borrowings to optimize the trust’s gearing level,” the REIT said.
It added that the proceeds will be used to pare down its existing borrowings.
The proposed disposal is expected to be completed by 3Q22, it said.
It's an old building, only 60% occupied. Probably only earning enough to cover the loan repayments. Better for them to clean up their balance sheets. Take a small haircut now, NAV will still be way above current market price.
With the dividend payout of 1.93 sen last May and estimate to have another 1 sen this December; at current price of $0.38, we will have slightly more than 7% of net dividend for this year. Also good potential for long term holding with NTA stood at $1.17 which is >3 times the current share price.
The price has been on downtrend since early 2012, with sign of stabilizing in 2018; but continue to downtrend for couple of year, then on sideways since. At current price, I think the downside is limited. I have been buying since early 2018 and averaging down with current average cost at ~$0.48 excluding dividend and ~$0.415 considering dividend, mean loss of ~11.5% at current price of $0.36. Malaysia interest rate increase is quite moderate in my opinion. With gearing ratio at 49.5% or slightly more than $820M, the interest impact is not that significant and still tolerable. The occupancy rate on some of the property are worrying though, hope the management will work harder to improve the performance.
The performance of AMFIRST REITS is truly disappointing. The NAV per unit is around RM1.17 and yet the last traded price is RM0.345 . The average annual return based on total return per unit since its listing date on 21 December 2006 is practically zero. I have interest in this counter and would like to bring out some options that are floating around that might provide some relief to the minority shareholders.
1) The major shareholder or anybody could privatize AMFIRST REITS by buying out the other shareholders at say half the NAV per unit of RM1.17 which comes to RM0.585 . Taking a REITS private has been done before. Take the case of AHP REITS of which I have interest indirectly. It was taken private at RM1.00 per unit when the last traded was around RM0.80 +- .
2) Sell some more buildings with low occupancy even at a discount to their market prices. This will help to reduce borrowings which will be useful in an increasing interest rates regime. There is no point keeping so many building buildings. It is possible Malaysia could have a recession looking at the worldwide economy currently and if that happens , one might find difficulty in selling.
3)There was talk of having a PP (private placement). Generally this is not in the interest of minority shareholders. Moreover the amount raised will be minimum at current unit price and does not make a dent in the borrowings. Let us assume the placement price is at a 10% discount and the placement quantity is 20%. This means that the amount raised will be 0.9 x 0.345 x 0.20 x 686 = RM42.6006 millions. This amount does not make a dent in the total borrowings of around RM800 millions. The minority shareholders get a rotten deal since the NAV will be reduced quite a lot and the earnings per unit could be diluted. One possible solution is for the parties taking up the PP to push up the unit price of the REITS before the PP is announced.
It is true the parties taking up the PP would prefer a lower price. That is why I always feel a PP is a rotten deal for minority shareholders since they suffered so much and yet to received salt rubbed on their wounds. My point is this . The price is so low ( I think this reits P/NAV is the lowest among the reits) and as such the PP would not bring in much money. Since a PP is a private deal , why don't the management make a deal with the parties taking up the PP to push up the price by a certain percentage before the PP is announced. This will help to bring in more money and appease the minority shareholders. Anything is possible if the management care for the minority shareholders. If not consider other options . After all the majority shareholders have deep pockets.
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