Malaysia REIT yields expected to fall

The yields of Malaysian Real Estate Investment Trusts (REITS) are expected to come down next year in view of the surplus in office buildings with the completion of new projects.

The yield, which is also known as return on investment in properties, is derived by dividing rental with property value.

President of the Association of Valuers, Property Managers, Estate Agents and Property Consultants in the Private Sector, Malaysia, Choy Yue Kwong, said while the surplus in office buildings is expected if more developers receive the nod to build, there are very few premium-grade ‘A’ buildings.

“Investment-grade buildings with premium values are the ones foreigners are looking for,” Choy said in an interview.

Choy said while there are enough of good properties in Kuala Lumpur, not many of them are for sale.

“Some of them are owned by banks and most of them do not have the incentives to sell,” he said.

He said the owners, some of them big corporates like Boustead Holdings Bhd and its major shareholder, Armed Forces Fund Board, own a lot of properties but may not be motivated to sell them as they are in the business of investing in properties and collecting rentals to pay dividend to members.

However, Choy said, there are rare instances when corporates or REITs will sell.

In March this year, Pelaburan Hartanah Nasional Bhd, manager of Amanah Harta Tanah PNB (AHP) sold three parcels of land in Pahang, Perlis and Kedah, together with shopoffice units erected on the parcels, to Permodalan Nasional Bhd for RM2.01 million.

The proceeds from the disposal were used to part-finance the cost of upgrading and refurbishment of Plaza VADS in Taman Tun Dr Ismail, Kuala Lumpur, another property owned by AHP, a REIT.

Choy said that while investment-grade properties are most sought-after, there is no need to buy expensive properties, or Grade A buildings, to get a reasonable yield of seven per cent.

“For instance, you can buy a property in Cyberjaya and still get a reasonable yield.

“It is also important that buildings are rebranded to upmarket category,” he said.

He said one of the well-known office and commercial buildings in KL which has been extensively re-branded to upmarket brand is the Intermark, which is located at the junction of Jalan Tun Razak and Jalan Ampang.

It sets new standards in design and quality by integrating green technology and a lifestyle environment for work and leisure.

The project, which consists of Grade A office towers, an international hotel and retail podium, was a refurbishment of several buildings — City Square, Empire Tower, Plaza Ampang and Crown Princess Hotel.

Choy said market rate of office space for premium Grade A office buildings in Kuala Lumpur is expected to be stable next year with market rate of between RM5 and RM7 per sq ft. — Bernama

Results Announcement

• 10 Nov 10 : Sunway (20-May-10 to 30-Sep-10) – DPU 1.51sen
  
• 3 Nov 10 : AmFirst (1H11) – DPU 4.81sen
  
• 3 Nov 10 : Hektar (Q310) – DPU 2.5sen
  

Average Yield = 7.193%

Last Updated : 30-Nov-10

Note : Hektar : Yield Table Uses Full Year DPU 10.3 sen to Compute Yield as Hektar Pays DPU = 2.4 sen for Q1,Q2,Q3 and the Balance in Q4

Withholding tax

• Resident Individual = 10%
  
• Non Resident Individual = 10%
  
• Resident Institutional Investors = 10%
  
• Non-Resident Institutional Investors = 10%
  
• Resident Companies = 0% ; Subject to Corporate Tax at Prevailing Rate
• Non-Resident Companies = 25% for Year of Assessment 2009

Sunway REIT records pre-tax profit for Q1

Sunway Real Estate Investment Trust (REIT) recorded a pre-tax profit of RM310.64mil for the first quarter ended Sept 30, 2010, on the back of RM72.45mil revenue.

In a filing to Bursa Malaysia, Sunway REIT Management Sdn Bhd, the manager of Sunway REIT said the retail properties of Sunway REIT continued to enjoy increased visitors during the period under review and occupancy remained strong with Sunway Pyramid at 99%, Sunway Carnival at 93% and Suncity Ipoh Hypermarket at 100%.

It also expects the properties to continue to perform well especially Sunway Pyramid supported by positive economic fundamentals and the thriving Sunway Integrated Resort.

It said this was also reflected in the rental reversions achieved whereby Sunway Pyramid renewed 278 tenancies with net lettable area of approximately 924,000 sq ft representing 87% of the total net lettable area due for renewal in financial year ending June 30, 2011 with total rent increase of 15.8% for the three year-term.

The current renewal also saw the entrance of new retailers/food and beverage concept such as Daiso from Japan, Coach and T-Bowl Concept Restaurant. – Bernama