AMFIRST Real Estate Investment Trust (REIT) plans to place out more stocks this year to bring its gearing down and to raise money for future buys.

Its gearing is now around 48 per cent, which is near the 50 per cent limit for a REIT set by the Securities Commission.

"Our acquisition strategy has been funded by borrowing because it is convenient, fast and we have the capacity to do so," AmMerchant Bank Bhd's executive director Pushpa Rajadurai, who is also an alternate director of the REIT's manager, said in an interview with Business Times.

"With a strong yield of 8.2 per cent, as we buy more buildings, we will issue more units to increase the investor base and hopefully improve the unit performance," she said.

The money raised may also be used to refinance existing buildings, she added.

Pushpa said it is already working on the placement plan, but she was not ready to talk about the placement size yet.

"Acquisition is very competitive and you need to get the money ready. Over the long term, we want to keep the gearing at 30-35 per cent level," she said, although the ratio is bound to fluctuate as and when the fund buys an asset or places out more units.

With the backing of Malaysia's fifth largest bank and an experienced property manager in ARA Asset Management Group, which is an affiliate of Hong Kong's property giant Cheung Kong group, AmFirst boasts a strong pipeline of assets.

ARA Management's director Michael Lim said AmFirst may tap into the ARA Asia Dragon Fund, a US$1 billion (RM3.15 billion) private equity fund set up to invest in Asia assets, for growth in the medium term.

"We can use it as an incubator fund to prepare assets for the REIT, similar to what Quill Capita Trust has done.

"The Asia Dragon Fund can buy more rundown buildings, enhance them and sell into the property trust. Every fund will have an exit timeline and AmFirst will be its preferred REIT," Lim said.

The Asia Dragon Fund has allocated US$200 million (RM630 million) for investment in Malaysia and ARA has a dedicated team for the country.

The team is evaluating a retail mall outside Kuala Lumpur, he said.

Other prospects for AmFirst still include buying from the AmBank Group itself, which has many buildings housing its operations as well as a wide network of branches.