CapitaMalls Asia has RM2b to invest in Malaysia

SINGAPORE'S CapitaMalls Asia Ltd (CMA) is looking at investing up to RM2 billion to build and buy malls in Malaysia.

Once the asset starts to generate income, it may then be sold to the CapitaMalls Malaysia Trust (CMMT). CMMT, Malaysia's second largest property trust was listed on Bursa Malaysia yesterday.

CapitaMalls chief executive officer Lim Beng Chee, said that all the money raised from the initial public offering will be reinvested into the Malaysian market.

"We have close to RM800 million from the listing. We have intention to continue investing in Malaysia as we see opportunities in Malaysia.

"So, while CMMT can go on to acquire income producing assets which is yield accretive, there could be projects that are not accretive from day one and need to add value.

"We will be setting up a fund to undertake some development assets to build a pipeline for CMMT to grow over time," Lim said at a press conference following the listing of CMMT.

The development fund, to be ready within a year, will have RM1 billion and can be geared up to RM2 billion.

While the preference is for the fund to build retail properties, Lim said that it may also collaborate with its parent CapitalLand Ltd for funding to build an integrated development which includes a retail component. It can also purchase assets and enhance them.

Similarly, the fund can buy integrated properties provided that at least 65 per cent of the gross floor area, asset value or rental income is the retail portion. If the retail portion is less than 65 per cent, it could opt to do a joint venture with CapitaLand Ltd.

Also, if necessary, the retail portion of an integrated property can be split from the remaining component and offered to CMMT.

Meanwhile, Sharon Lim, chief executive officer of CapitaMalls Malaysia Reit Management said that it has allocated RM40 million and RM60 million for capital expenditure and asset enhancement for 2010 and 2011 respectively.

The CMMT, now has a portfolio of three malls - Gurney Plaza in Penang, Sungei Wang Plaza in Kuala Lumpur and The Mines in Selangor. Together these properties with some 1.88 million sq ft in net lettable area is valued at RM2.13 billion.

CMMT's initial public offering raised RM785.2 million from local and foreign institutional investors. The price for institutional and cornerstone investors was fixed at RM1 per unit and at 98 sen for retail investors.

Retail investors are expected to get a distribution yield of 7.3 per cent in 2010 and 7.6 per cent in 2011.

Yesterday, CMMT's units closed at 98 sen, a 2 sen discount from its reference price of RM1. A total of 11.98 million units were traded.

By Business Times