Hong Kong-listed hotel and property group Far East Consortium International Ltd may set up a real estate investment trust (REIT) comprising several Malaysian assets worth some RM800 million, sources say.
The trust vehicle may be listed either on Bursa Malaysia or the Singapore Stock Exchange.
If this plan takes off, it would be Far East's second planned REIT as it is also spinning off seven hotels for a listing in Hong Kong and raising HK$4 billion (RM1.64 billion) from this exercise.
One source told Business Times that the properties would include Far East's hotels here and possibly even one property owned by Malaysia Land Properties Sdn Bhd (Mayland).
Far East and Mayland have a common shareholder in Tan Sri David Chiu Tat-cheong. Chiu is the deputy chairman of Far East.
Far East may sell Malaysian properties such as the four-star Dorsett Regency in Bukit Bintang, Kuala Lumpur, the five-star Sheraton Subang and the Grand Dorsett Labuan Hotel (previously known as Sheraton Labuan).
The recently-completed Maytower Hotel Serviced Apartments and soon-to-be-ready RM100 million hotel in Johor Baru will also be part of the trust.
"All the hotels would add up to a value of about RM500 million," the source said.
Apart from Far East's own properties, Mayland may pump in the Hartamas Shopping Centre into the REIT, adding another RM300 million to the size of the property trust.
Business Times was unable to contact representatives from the companies.
Meanwhile, it is believed that Far East prefers to list the REIT in Singapore as the REIT market there is more mature and Singapore offers better perks for the listing.
Compared with Singapore, the Malaysian market is said to offer less incentives for the listing of REITs.
For example, the withholding tax for foreign investment is 10 per cent. In Malaysia, the tax is 20 per cent.
"They (Far East) are still considering where to list," the source said, adding that its decision could be swayed by rulings which could make it more favourable to list in Malaysia.
By New Straits Times (by Vasantha Ganesan)
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