ATRIUM REIT - Small but Beautiful

 

Company : ATRIUM REIT

Business :

Industrial real estate investment trust (REIT). One of the few industrial REITs in Malaysia apart from Axis REIT. The characteristic of REIT is distribution of 90% of their rental income. Rental income is depending on the tenant quality and tenancy term. Rental income will not change so much except for rental revision, new acquisition of property or lost of tenants.   

 

Side Note:

The size and variety of Malaysia REIT (M-REIT) is far lack behind than Singapore REIT (S-REIT). M-REITs are still focusing on malls, office and some industrial whereas S-REIT have malls, offices, healthcare, industrial, warehouse, utilities and data centres. SGX is a hub for many international REIT companies go for listings.

5 years revenue:

An increasing trend of revenue due to more assets added to its portfolio.

 

Portfolio breakdown of the properties are as follow:

They have added another property Shah Alam 4 which is currently under renovation.

 

Tenant quality & occupancy:

Current occupancy is 100%. Most of the tenants seem stable and for mid to long term business.

 

Location and quality of property:

Locations of the properties seems good and well connected to major highways.

 

Supply and Demand of the Properties

The demand for industrial property seems good due to the growth of eCommerce.

 

Gearing

Currently gearing ratio is 42%.

Latest property at a glance:

Property Name	Customer	Property Use	Customer	Expiry
Shah Alam 1	Ninja Logistic	Factory & office	Logistic	1 Jun 2027
Shah Alam 2	Samsung SDS	Warehouse & office	MNC	31 Mar 2024
Shah Alam 3	Agility Logistic	Warehouse & office	Logistic	24 July 2021
Shah Alam 4	Upgrade	Upgrade	Nil	Nil
Bayan Lepas 1	Lumileds	Factory & office	Industrial	21 Oct 2035
Bayan Lepas 2	Lumileds	Factory & office		6 Oct 2034
Puchong	Lazada	Warehouse & office	E commerce	30 Sept 2023
USJ	Rohlig Malaysia (A) Rohlig Malaysoa (B) Skynet Worldwide (C)	Warehouse & office	Industrial Industial Logistic	31 Aug 2023 16 Feb 2024 31 Jul 2022

 

Risk of litigation:

 

Prospect:

There are few points that I like Atrium REIT.

• Industrial REIT is less affected by COVID compared to malls.
• Strategy locations of the properties.
• 100% occupancy and long expiry. USJ tenancy for Skynet is very small.
• Tenants are pretty good quality.
• 6% dividen yield
• Potential of extra rental income if Shah Alam 4 is rented out.

 

My view on share price:

Price has risen substantially from Feb 2021 to all time high of RM1.55. This is probably due to increase of income distribution since Q4 2020. The support level is RM1.42 and coming ex-date for Q2 income distribution is 11 Aug 2021. Typically share appreciation for REIT is very slow unless there is new property aquisition.

 

 

Forecast earning & PE.

Current PE is 13.20 at price RM1.46 (2 Aug 2021). Forecast EPS is 11.11 cent for whole year 2021. Hence price is still the same at RM1.46   

Q1	Q2	Q3	Q4	Total
3.19	2.64	2.64	2.64	11.11

 

Forecast dividen for whole year is 9.7 cent which is more than 6% yield. Higher than bank FD and EPF. As REIT is for stable dividen, the strategy is to park some funds here while waiting for other good opportunities arise.

At time of writing, I own ATRIUM REIT share.