Al-Salam REIT targets almost RM1bn acquisitions in next 3 years

PETALING JAYA (July 14): Al-Salam Real Estate Investment Trust (REIT) aims to add almost RM1 billion worth of commercial and industrial properties to its portfolio of properties over the next three years, reported The Edge Malaysia weekly.

The acquisitions will come from its parent Johor Corp as well as external and third parties, said Datuk Kammaruzzaman Abu Kassim, the chairman of Damansara REIT Managers Sdn Bhd which managers Al-Salam REIT.

It would not be difficult for the fund to grow its portfolio – to the tune of around RMM300 million a year – as JCorp has several assets, but the managers are discerning when it comes to the yields and capital values of these properties, added Kamaruzzaman, who is also president and CEO of JCorp.

Al-Salam REIT’s portfolio would be doubled from its current RM928 million if it meets its goals.

The fund’s unit base will also likely be enlarged as its purchases will probably be funded by a combination of debt and unit placements.

Damansara REIT Managers CEO Wan Azman Ismail said the reason why they are growing the fund’s portfolio size is to make it more attractive to fund managers and sophisticated investors.

Currently, the REIT is in the midst of acquiring RM270 million worth of properties this year, namely a Mydin hypermarket in Gong Badak, Kuala Terengganu (RM155 million) and 22 restaurants across Malaysia (RM115 million).

A potential addition to its stable of properties is the 37-storey Menara JLand, but the tenancy and yield of the office tower must meet the REIT’s standards before it can be injected into the fund, said Kamaruzzaman.

The fund is also venturing into real estate development following a new ruling introduced on March 15 allowing REITs to develop properties or acquire vacant land to be developed worth up to 15% of its total asset size.

Its current projects include Muar Furniture Park which will be completed by 2020, the Pengerang Industrial Park and Menara Johor Land in Johor.

It is also enhancing its four-storey Komtar JBCC mall in Johor Baru which is valued at RM465 million and is close to the Customs, Immmigration and Quarantine (CIQ) complex.