UEM Land plans property trusts

UEM Land Sdn Bhd, the development unit of Malaysia's third biggest construction company, plans to start real estate investment trusts (REITs) and new projects as it prepares for a listing this year.

State-controlled UEM Land, whose Nusajaya commercial and residential project is Malaysia's largest, may also invest overseas from 2010 to emulate CapitaLand Ltd, Southeast Asia's largest property company, managing director Wan Abdullah Wan Ibrahim said yesterday.

"We aspire to be something of that size and that diversified," Wan Abdullah said in an interview in Kuala Lumpur, referring to Singapore-based CapitaLand.

"We even have initiatives like REITs on the table. We cannot rely on just Nusajaya to be our bread and butter."

UEM Land, controlled by UEM World Bhd, is due to start trading on Bursa Malaysia by September in a revamp to attract investors to the group's real estate unit. The firm wants to cut its reliance on Nusajaya, a 9,712ha government-backed development that provides almost all its income.

Malaysia's ruling coalition, in power since independence in 1957, suffered its worst election result in March. Some analysts raised concerns that the weakened government may slow state-backed projects.

"Investors still fear for some reason that projects may not be deployed as strongly as they would have been," said Vincent Khoo, head of research at Aseambankers Malaysia Bhd. "There's enough uncertainty on this project."

Shares of UEM World have dropped 19 per cent since the plan to list UEM Land was announced on February 15, and are down 16 per cent this year. The company has a market value of RM4.6 billion.

Under the UEM reorganisation, investors in UEM World will receive 125 UEM Land shares and RM125.8 in cash for every 100 UEM World shares held.

Wan Abdullah said UEM Land plans to sign an agreement next month to buy a 41ha plot in Selangor, for about RM110 million. The company is also considering buying land in Kuala Lumpur and Penang, he said.

Any overseas investments by UEM Land will be made in 2010 "at the earliest", Wan Abdullah said. Even with other investments in Malaysia, Nusajaya will provide about 80 per cent of the company's profit, he said.

"For the next two years, we have to focus on the delivery on Nusajaya," he said. "But that does not mean that we totally hide ourselves from global opportunities."

By Bloomberg