21 August 2008

CapitaLand To List RM2b REIT.

Another interesting piece of news in the papers today.

South East Asia's largest property player, CapitaLand, which if I'm not mistaken, is majority owned by Temasek Singapore, has applied to list its RM2bil REIT on the Bursa. The timing of the listing application is somehow quite tricky - the market conditions are kinda on a slump, but yet property prices are at its peaks.

Looking at their portfolio of properties, not sure which ones will go into this REIT and which ones go into the Quill Capita Trust, they've indeed got a very solid and strong bunch of properties. Just take the 3 shopping centres - Gurney Plaza, Mines and Sg Wang Plaza, these three itself are highly rated properties in Malaysia, with pretty good yields and returns.

I think that this clearly shows that the markets are still bullish on the property industry - a RM2bil REIT would no doubt be the largest. Do note that sometime ago Sunway also announced their plans for a RM2bil REIT. Competition? I believe this type of competitive challenges is good for the industry.

Read more below.

KUALA LUMPUR: Singapore-based CapitaLand Ltd has submitted its application to list its RM2bil real estate investment trust (REIT) on Bursa Malaysia.

However, the timing of the listing would depend on market conditions, said chief investment officer Kee Teck Koon.

“We have just submitted the application and expect to obtain the approval by the fourth quarter of this year,” he told reporters after the topping-up ceremony of Tower D in Lot J, KL Sentral, yesterday.

Tower D is being developed by Quill Realty Sdn Bhd, which is 60% owned by Quill and 40% owned by Malaysia Commercial Development Fund (MCDF). MCDF is managed by MCDF Management Pte Ltd, an indirect wholly-owned subsidiary of CapitaLand, with Aseambankers Malaysia Bhd as principal adviser.

Kee said the company hoped to list the REIT before year-end but it would hinge on the performance of the local capital market.

On the possibility of listing its REIT in other countries due to the lacklustre Malaysian market, Kee said the company was very clear on wanting to list it in Malaysia.

Assets to be injected into the trust will include Gurney Plaza in Penang, Mines Shopping Fair in Seri Kembangan, and Sungai Wang Plaza in Kuala Lumpur.

Kee said the company was always on the lookout for high-value commercial properties in Kuala Lumpur but there was currently nothing concrete.

Quill Capita Trust chief executive officer Chan Say Yeong said the demand for commercial properties was encouraging due to the limited supply of commercial assets in Kuala Lumpur.

“Generally the demand comes from oil and gas, telecommunications and multinational companies as well as the service sector.

“The rental growth rates in the Kuala Lumpur City Centre and KL Sentral areas were between 15% and 20% for the past few years,” he added.

Quill Group of Companies executive director Datuk Michael Ong said Tower D - a 29-storey office tower with a six-storey podium - would be ready for occupancy in March. Of its total net lettable space of 355,323 sq ft, 65% has been taken up by tenants so far.

Ong said the average monthly rental in KL Sentral was between RM6 and RM7 per sq ft while the latest property transaction price in KL Sentral was RM1,000 per sq ft.


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