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Friday, January 18, 2008

‘We will be biggest REIT in the country’

Sunway City Bhd yesterday took a step closer to listing its much-awaited real estate investment trust (REIT) by appointing investment bankers for the exercise. Here are excerpts of StarBiz’s interview with its property investment managing director Ngeow Voon Yean.

StarBiz: The idea of listing SunCity's REIT has been bandied around for nearly two years. Why did it take so long to materialise?

Ngeow: I can give you a major reason. That time we were in the midst of expanding Sunway Pyramid, which is one of our biggest assets. We had planned for the shopping mall to undergo expansion more than two years ago.

So, if technically, if we had done the exercise then, we would also in a limbo there. One part is completed, but the second part is actually under development. Basically that's the only reason. And also some of the existing shopping mall space has been reconfigured and renovation work is still on.

Q: Do you have the list of all the properties that will be injected into the REIT?

Ngeow: We can only indicate that there will be at least five or six assets that we will inject into the REIT. We have hotels, shopping malls and commercial (properties). Although I can't disclose the figure, definitely we will be the biggest REIT in Malaysia.

Q: When exactly is the due date for listing?

Ngeow: We are looking at within this year. It can't be the first or second quarter because the submission and verification will take time. Likely (to be) in the second half this year.

Q: What are you going to do with the money (from the REIT)?

Ngeow: Continue with our development. Look at SunCity. Looking at our track record now, for investment properties, we have identified the development sites where we can build shopping malls and offices. With the available funds, if the right opportunity comes in, we will certainly continue with some of these investments. If we do that, later on (these investments) can be a pipeline for the REIT.

Q: Will new assets be from a third party or are you looking at your own steady stream of assets customised to be injected to the REIT?

Ngeow: That (the former) is also another option. If there is an opportunity and it is suitable, yes, we will work with a third party. But we will still be prudent. Basically, all this will depend on the suitable yield, as we will be very conscious about that now.

Q: Which area will be your focus in REIT?

Ngeow: The portfolio that we have encompasses three segments: retail, hotel and commercial. Commercial means offices and any other building that we have for rental.

Q: Is the name Sunway REIT official?

Ngeow: We have not confirmed the name. It could be Sunway REIT, could be Sunway City REIT.

Q: What kind of benefits do you see in being the largest REIT?

Ngeow: Size matters in REITs because being big in asset size would attract foreign institutional interest.

Q: When you talk about assets, how many more are there for future development?

Ngeow: There are quite a few in the pipeline.

Q: Will you be going overseas to acquire other equities?

Ngeow: At the moment, we are just appointing the investment bankers. We cannot disclose details now but (going) overseas is under consideration.

Q: Will you list the REIT overseas or locally?

Ngeow: The decision has not been made yet. It all depends on the advice from the investment bankers that we appointed. There are two (favouring) foreign and two (for) local, we have not really decided.

Q: What are the benefits of being listed offshore?

Ngeow: Of course, it's the yield. The valuation of the assets is better if we list the REIT in Singapore.

Between Singapore and Malaysia, there is a 100 basis points difference in terms of the yield. . We will leave it to our investment bankers to advise on our options.

Sunway Pyramid Mall is one of the assets to be injected into SunCity's REIT

By The Star - Starbiz

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