Malaysian REIT Amanah Harta Tanah Suspended

Taken from the Star on 13 March 2009, just shows that property investors have to really scrutinise the quality of assets held by a REIT (Real Estate Investment Trust) ...

PETALING JAYA: Trading in Amanah Harta Tanah PNB 2 (AHP2) units on Bursa Malaysia has been suspended since yesterday until the completion of the winding-up of the property trust and eventual de-listing from the exchange.

Unitholders, in a meeting last month, approved the extraordinary resolutions to terminate the property trust due to poor performance of AHP2 since listing in 1997 at an offer price of RM1.28 per unit.

The termination was proposed in January by unitholder Lo Kok Kee, who represented a group of unitholders of no less than 50 members.

Lo, in his letter of proposal, said the property portfolio depreciated a cumulative RM13.8mil since listing, leading to the trust’s depreciation in value of 17% after 11 years.

“If we were to add the 1% annual fee paid to management, it would amount to cumulative capital loss of 28% to unitholders,” he said.

In the past 10 years, AHP2 units had been trading at a discount to their net asset value (NAV).

In addition, gross distribution yield for the past four years was between 5.1% and 6.3%, which was lower than the average income distribution yield of listed real estate investment trusts of 6.1% to 8.4% over the last five years.

As of end December, about 70% of AHP2 were in real estate and related assets and the balance in non-real estate and deposits.

Its portfolio includes five properties – Bangunan Tunku Abdul Rahman, a five-storey office in Jalan Medan Tuanku, a seven-storey commercial building in Jalan Masjid India as well as Bangunan Mayban Trust Ipoh and Penang, with a combined market value of RM65.2mil based on valuation done in January.

In line with the winding up of the trust, these properties would be disposed of via an open tender and the proceeds would be distributed to unitholders.

Phillip Capital Management chief investment officer Ang Kok Heng said the present downturn might not be “timely” to sell assets, as “they may not realise the book value”.

However, depending on the gap between unit price and NAV, it could be better off for the unit holders to have the assets sold at a discount to book value.

“If the gap between price and NAV is 50%, and the properties are sold at 20% discount, unitholders are still better off. With cash in hand, they can have other alternatives to generate returns,” Ang added.

Pelaburan Hartanah Nasional Bhd, which was the manager of the AHP2, would still maintain the properties until the disposal is completed.

A trustee would be appointed by unitholders to manage the disposal procedures.