IGB REIT may buy properties in the US and Europe

IGB Real Estate Investment Trust (IGB REIT) may consider inorganic expansion opportunities such as acquisitions in the United States or Europe in view of the dire financial situation there.

"In Europe or the United States you can get some properties at way below replacement costs. That is an area we can pursue for potential acquisitions.

"But what we prefer is to construct the mall ourselves and manage it before injecting it into the REIT," IGB REIT Management Sdn Bhd
managing director Robert Tan said at the launch of the IGB REIT prospectus here yesterday.

IGB REIT Management is the company that will manage IGB REIT.

IGB REIT is a unit of IGB Corp Bhd and Tan is also group managing director of IGB Corp.

Based on the retail price of RM1.25 per unit, IGB REIT will provide a distribution yield of 5.1% on an annualised basis for the six-month forecast period ending Dec 31.

"We have to ensure that The Gardens and the Mid Valley Megamall are well-managed. Hopefully these investments will continue to see year-on-year growth and thereafter we will look at acquisitions," Tan said.

A total of 670 million units of IGB REIT will be offered. Upon listing, IGB REIT will become the largest retail REIT in Malaysia with an asset value of RM4.6bil.

The listing will see the REIT being offered to institutional shareholders (13.8%), eligible IGB shareholders (3.5%), eligible directors and employees (1.4%) while the Malaysian public will have the smallest share allocation of 1%.

The opening date for the institutional offering will be on Aug 28 and the closing date on Sept 6.

Balloting for the retail portion will be conducted on Sept 7 and IGB REIT will be listed on Sept 21.

The Mid Valley Megamall has an appraised value of RM3.44bil with net lettable area of 1.72 million sq ft and an occupancy rate of 99.8%, It has 6,092 car park bays.

The Gardens has an appraised value of RM1.16bil with net lettable area of 817,053 sq ft and an occupancy rate of 99.7%. It has 4,128 car park bays.

IGB REIT to grow retail assets

IGB Real Estate Investment Trust (REIT), a unit of property developer IGB Corporation Bhd and en route to a listing on Bursa Malaysia's Main Market, will focus actively on growing its two retail assets as its main strategy in the next few years besides considering potential acquisitions overseas.

IGB Corp's 75 per cent subsidiary KrisAssets Holdings Bhd, which owns the two retail assets under the IGB REIT — Mid Valley Megamall and The Gardens Mall — has formed IGB REIT Management Sdn Bhd to manage and set the strategic direction of the trust.

"Both the assets have a long way to go as it takes time for the properties to mature.

"After listing, we have to make sure these properties are well managed and investors see a year-to-year growth of about 5-8 per cent of our revenue given the increasing competition," IGB REIT Management Sdn Bhd Managing Director Robert C M Tan told reporters at the trust's prospectus launch.

However, if any potential opportunities arise for acquisition locally or overseas, the manager would look into it under the REIT, he said.

"At the moment, the Europe and United States markets have good deals and we can look at some properties there for acquisition, preferably completed or mostly conpleted properties," he said adding that it would prefer to construct and manage the properties.

He also said the recent acquisition of Southkey Megamall Sdn Bhd would take about three to five years from now to develop.

IGB REIT is set to be Malaysia's largest retail REIT by asset value with the listing slated on Sept 21.

The trust, which offers 670 million units at an initial retail price of RM1.25 per unit, is expected to raise RM837.5 million from the initial public offering with a forecast 5.1 per cent yield annualised.

"The offer price is a fair deal looking at other REITs' performance, and we are very conservative when it comes to pricing," Tan said.

He said the listing would provide an avenue for investors to invest in one of the largest REITs in Malaysia with a total net lettable area of approximately 2.5 million sq ft (232,258 sq m).

Upon listing, IGB REIT is expected to achieve a market capitalisation of RM4.25 billion.

IGB Corp is optimistic of its retail property market given the continuous earnings growth against the backdrop of uncertainties in the global economy and competition, he added. — Bernama