Lower debut for CMMT

KUALA LUMPUR: Shares of CapitaMalls Malaysia Trust (CMMT), the largest “ pure-play” shopping mall real estate investment trust (REIT) in Malaysia, closed lower yesterday on its trading debut on Bursa Malaysia’s main market at 98 sen, 2 sen lower than its institutional price of RM1 but at par with its retail price.

The stock opened at 98.5 sen, its high for the day, and had a low of 97.5 sen before closing the day with 11.987 million shares changing hands.

CMMT’s initial public offering comprised 786.5 million units, of which 67.5 million were for retail investors and the rest for institutional investors.


Lim Beng Chee and Sharon Lim at the press conference after the listing.

CapitaMall Asia Ltd chief executive officer Lim Beng Chee said he was happy with the opening price as retail investors managed to gain a premium of 0.5 sen.

“Despite the small premium, the most important thing is that the market recognised the value and assets class hidden,” he told reporters yesterday after the listing ceremony.

Lim said CapitaMalls Asia planned to set up a RM1bil fund within a year to build and prepare a pipeline of assets for the Malaysian property trust. “We are looking for maybe another three or four malls to add to our existing assets here in Malaysia,” he said.

CMMT is managed by CapitaMalls Malaysia REIT Management Sdn Bhd, a joint venture between CapitaMalls Asia, which is one of Asia’s largest shopping malls developers, and Malaysian Industrial Development Finance Bhd.

Its portfolio in Malaysia comprises three assets, namely Gurney Plaza in Penang, an interest in Sungei Wang Plaza in Kuala Lumpur and The Mines in Selangor.

CapitaMalls Asia is part of CapitaLand Ltd, South-East Asia’s biggest developer, which owns shopping malls in China, India and Singapore.

Meanwhile, CMMT – which is also the country’s second biggest property trust – expects to distribute its yield of 7.3% for the forecast period of 2010 and 7.6% for forecast year 2011 to retail investors based on the unit price of 98 sen.

CapitaMalls Malaysia REIT Management chief executive officer Sharon Lim said the yield distribution was really attractive compared with some other investment yields in the market.

“This is much more attractive than Malaysian bonds, which offer about 4% yield, as well as fixed deposit rates of about 3%,” she told reporters yesterday.

OSK Research Sdn Bhd in its latest report stated that the dividend yield of 7.5% was “well below” the average 8.5% of other Malaysian REITs.

It said CMMT was likely to offer very limited upside to its unit holders, at least in the medium term.

Having said that, it added that the “premium” might be justified given that the trust would be the second largest in Malaysia, and with the largest free float of 58.3%.

Given its defensive nature and longer-term organic growth catalyst it potentially offered, CMMT was likely to appeal to certain classes of investors only, especially those with a defensive investment strategy, it said.

By The Star