IGB may spin off assets into 3 REITs

IGB Corp Bhd is mulling over spinning off its assets into three separate real estate investment trusts (REITs) comprising its retail, hotel and commercial components, its top executive said.

Group managing director Robert Tan Chung Meng said that should this plan take off, this could "potentially be the biggest REIT in Malaysia".

Currently, the planned REIT by the Sunway City Bhd at an estimated RM3 billion to RM4 billion is said to be the largest in Malaysia.

Should IGB's plans take off, it could also create history by being the first group to spin off three REITs.
Tan said that it was considering a REIT proposal given that the tax regime has become more favourable.

"Before, we were not too keen to do a REIT. Recently, they changed the tax rules ... now we are seriously contemplating it. We want to unlock the value," he told reporters at a press conference after KrisAssets Holdings Bhd's AGM.

"We prefer to be more focused," Tan said, adding that it could spin off three separate REITs for retail, hotel and commercial/ office space instead of putting several different components into a single REIT instrument.

"If we spin off all three, it's going to be huge," he said.

Tan said that timing of the REIT would depend on market conditions as Malaysia's REIT sector is still considered to be in its infancy.

IGB also owns several hotel properties, including the Cititel hotel chain, Micasa All Suites, The Gardens Hotel, The Boulevard Hotel and the Pangkor Island Beach Resort.

By Business Times

Sunway woos REIT cornerstone investors

KUALA LUMPUR: Malaysia's Sunway City may place out about a fifth of its planned initial public offering (IPO) of a real estate investment trust (REIT) to cornerstone investors who have greater holding power for the shares, sources with direct knowledge of the deal said.

The country's sixth biggest property company by market value is in talks with seven local funds in the hopes of getting some of them to become cornerstone investors in the IPO which is expected to raise around $500 million, the sources said.

The Sunway REIT, with a fund size of 2.78 billion units, is set to become Malaysia's largest when it is listed in the third quarter of this year.

Sunway's planned REIT offering has received positive response from investors so far due to its size, steady income source and good growth prospects, a source said.

“This is something significant that investors would not want to miss. The interest is definitely there, the question is pricing,” said the source.

The Sunway REIT will feature some 1.65 billion units for public subscription, of which 1.5 billion are for institutional and selected investors, the company said earlier this month.

“They are talking to seven funds, which consist of insurance funds, unit trust funds, governmentlinked investment companies, and a few pension funds,” said a second source.

Sunway is looking to place out about one fifth of the offering to cornerstone investors, one of the sources said.

Cornerstone investors normally commit to buy shares before a public listing and promise to hold them until a later date.

Sunway City declined to comment.

The issue price of the Sunway REIT will be determined in a bookbuilding process.

Earlier this month, Sunway City said it would receive RM2.7bil ringgit in cash and about 1.0 billion units in the REIT for the eight properties it will inject into the unit.

The properties, comprise of shopping malls, office towers, and hotels, have a combined market value of about RM3.7bil.

Sunway City Group, controlled by businessman Tan Sri Jeffery Cheah, will own about 38% of Sunway REIT after the listing, which the company said might be completed in mid-July.

By Reuters