KUALA LUMPUR: The Johor-Singapore Special Economic Zone (JS-SEZ) is bound to be a supportive tailwind for industrial demand in Johor that will benefit AME Real Estate Investment Trust (Reit), said RHB Research.
The firm said that it remains positive on AME Reit's prospects supported by the JS-SEZ as well as its resilient portfolio fundamentals, strong tenant retention and embedded rental mark-to-market opportunities.
"With portfolio occupancy at 100 per cent, near-term income visibility remains strong, while the gap between recent achieved rents of RM2.50 per sq ft and existing passing rents of RM1.80–1.90/sq ft provides further rental mark-to-market opportunities as leases progressively expire," it said in a note.
On inorganic growth, the firm targets RM100 million in annual acquisitions, supported by its established industrial ecosystem and third-party opportunities.
"While AME Reit's borrowings remain at a fully floating rate, we estimate a 25 basis point rate hike would have a manageable 1.7 per cent impact on its earnings in FY28."
AME Reit's core earnings of RM23.2 million for the first half of financial year 2027 (FY27) accounted for 47 per cent of RHB Research's full-year forecasts and 50 per cent of consensus'.
The firm maintained its "Buy" call on the stock with a lower target price of RM1.92, following an adjustment to its risk-free rate assumption to 4.0 per cent to reflect the recent rise in Malaysian government securities yields.
© New Straits Times Press (M) Bhd