SunCity delays launch of REIT to next year

KUALA LUMPUR: Sunway City Bhd (SunCity) will delay the launch of its real estate investment trust (REIT) to next year on current weak market sentiment, says HwangDBS Vickers Research.

“We expect the REIT to be delayed again but it should be at a better value,” it said in a report yesterday.

The research house said the listing was likely to be in Malaysia (instead of Singapore) as all SunCity’s RM3bil assets were based in Malaysia and the recent positive policy changes to improve Malaysian REITs’ competitiveness vis-à-vis regional peers.

“SunCity would likely maintain a 33% stake in SunCity-REIT while we expect GIC (Government Invest Corp of Singapore) to take up a sizeable stake as well,” it said.

Assuming SunCity-REIT is launched next year at 7.7% yield, HwangDBS Vickers expected a one-off gain on disposal of RM29mil.

“Although our expected yield of 7.7% is at a premium to the sector, we believe it is justifiable given SunCity-REIT’s size and its potential RM3bil pipeline,” it said.

HwangDBS Vickers said SunCity-REIT had the potential to double its asset size to RM5.5bil, almost on par with some of the mid-sized Singapore REITs.

“We have applied a 7% yield to value Sunway Pyramid (a SunCity asset), based on Country Heights’ sale of Mines Shopping Fair (a retail mall inSeri Kembangan) to CapitaLand in August 2007.”

By The Star (by Edy Sarif)