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Wednesday June 16, 2010

Sunway REIT IPO launched

By DANNY YAP
danny@thestar.com.my


Analyst says listing may attract more foreign investors

PETALING JAYA: Sunway City Bhd (SunCity) and Sunway REIT Management Sdn Bhd have launched the initial public offering (IPO) of 1.65 billion units in Sunway Real Estate Investment Trust (Sunway REIT).

Sunway REIT, which has an approved fund size of 2.78 billion units, will become Malaysia’s largest listed REIT when it lists on the Main Market of Bursa Malaysia in July. Sunway REIT Management is the manager for Sunway REIT.

Eight properties, with an appraised value of RM3.7bil, would be injected into the REIT. They are Sunway Pyramid Shopping Mall, Sunway Carnival Shopping Mall, SunCity Ipoh Hypermarket, Sunway Resort Hotel and Spa, Pyramid Tower Hotel, Sunway Hotel Seberang Jaya and office properties.

Sunway REIT Management chief executive officer Datuk Jeffrey Ng said the company was committed to actively providing value-added services to the properties.

“Four of the assets are in Bandar Sunway, which has over the years proven its growth potential as a landmark tourist destination,” he said.

He said there was a planned enhancement of several existing assets, and leasing of recently completed space, adding that the assets being injected into the REIT were assets in locations that had proven track records for growth.

Sunway REIT’s IPO comprises an institutional and selected investors portion of 1.52 billion units and a retail portion of 134 million units.

The final retail price per offer unit would be the lower of 97 sen, or 97% of the institutional offer price, to be determined by way of bookbuilding.

Four cornerstone investors – the Employees Provident Fund, Permodalan Nasional Bhd, Government of Singapore Investment Corp and Great Eastern Life Assurance (M) Bhd – have secured 376 million units, or about 22.7% of the offer units.

An analyst with a local brokerage said the listing of Sunway REIT next month would be a milestone for Malaysian REITs (M-REITs) not only because of its large fund size, but also because it had attracted several cornerstone investors.

Minister in the Prime Minister’s Department Tan Sri Nor Mohamed Yakcop (left) and Sunway Group founder and chairman Tan Sri Dr Jeffrey Cheah at the launch of Sunway REIT’s prospectus yesterday.

“Sunway REIT will be on the radar of the ‘big boys’ and this can only be good for the smaller REITs as well,” he said.

The analyst also said Sunway REIT could bolster the equity market and make it more attractive to foreign institutional players.

According to the analyst, Sunway REIT’s dividend yield was about 6.7% (based on forecast dividend per unit or DPU of 6.7 sen), which was below the average 8.5% for other REITs. He said the REIT’s IPO was at a premium to other M-REITs.

“But taking account of the size of the trust and its potential, we believe Sunway REIT has its merits,” he said.

A REIT adviser said that while Sunway REIT had its “attractiveness”, there could be some investors who preferred to invest in pure-play REITs that were focused on specific asset classes such as retail, office space and warehouse.

“Sunway REIT is a fairly unique trust because it’s a mixed REIT that has retail and hospitality elements,” he said.

The REIT adviser said if the different asset classes were integrated in a synergistic manner and managed well, Sunway REIT might actually offer a favourable return to investors over the longer term. “This is left to be seen,” he said.


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