IGB eyes hospitality, office REITs

KUALA LUMPUR: IGB Corp Bhd (IGB), which will have RM800 million cash following the listing of IGB Real Estate Investment Trust (REIT), is looking at spinning off two more REITs in the next five years.

Group managing director Robert Tan Chung Meng said that the group would ultimately like to have a hospitality and office REIT, but the exact timing for the product could not be determined now.

"It could be anything between two and five years," Tan said.

The timing, he said, now is suited for a retail REIT and hence it is establishing a IGB REIT, which will have two of Malaysia's most prized mall assets - The Mid Valley Megamall and The Gardens Mall.

IGB's preference is also to have separate REITs for different business and not to place it all under the same REIT.

IGB, a property developer, also operates hotels and manages office buildings to obtain recurring income.

The listing of the IGB REIT is expected to be in September 2012.

Some 3.4 billion units will be issued under the exercise for the two malls which have been a valued at RM4.6 billion.

Currently, both assets come under KrisAssets Holdings Bhd, in which IGB has a 75 per cent stake. KrisAssets will sell the shopping complexes to the IGB REIT.

IGB's stake in the soon-to-be-listed trust will be 51 per cent. The dilution of the stake would provide IGB with an estimated RM800 million in cash, following the listing exercise.

Tan, who was speaking to reporters following IGB and KrisAssets annual general meeting yesterday, said that RM800 million will be used for future expansion both locally and abroad.

The board has no intention to maintain the listing of KrisAssets.

Meanwhile, Tan said IGB continues to look for properties in the country and abroad for merger and acquisition purposes, and take advantage of the opportunity in the uncertain global economy which could offer assets at a bargain.

By Business Times