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Monday, March 16, 2009

TA may delay REIT launch

TA ENTERPRISE Bhd (TAE), which aims to list its property unit by April, may delay launching a real estate investment trust (REIT) due to unfavourable market conditions, company sources said.

Business Times had in 2007 quoted TAE group managing director and chief executive officer Datin Alicia Tiah as saying that the stockbroker and property developer was aiming to launch a property REIT by this year, with three Malaysian and foreign assets worth over RM1 billion.

But plans have changed in the last one year that the company is now eyeing a hospitality REIT, after buying Coast Whistler Hotel in Vancouver, Canada, now worth C$65 million (RM191 million) and The Westin Melbourne, a five-star hotel in Australia, for RM390 million last year, a source said.

TAE also owns the five-star Radisson Plaza Hotel in Sydney, Australia, currently worth A$120 million (RM286 million).
These brings to total three hotel assets it has to do a hospitality REIT. Its other prime properties are Menara TA in Kuala Lumpur, valued at RM230 million, and Teresan Centre, a triple A commercial building in Vancouver, worth C$180 million (RM529 million).

But a source said TAE is being cautious on its plan as some Malaysian REITs have been sold down and are trading below their net asset values as the property market and rental yields soften.

"There's negative sentiments and I don't think the market place can take too many things now. TAE will, however, continue to work on the plan and play it by ear. It will launch rightfully, to enhance shareholders' value," the source added.

The challenges facing REITs nowadays are the inability to raise capital due to tighter credits and lack of investor confidence.

When contacted by Business Times, Tiah said the company is still looking at launching a REIT.

"We have yet to decide whether it will be a property or hospitality REIT. However, the outcome will depend on opportunity and the market condition," she said in an email reply.

Tiah said the company is now focused on buying more properties in Malaysia and overseas, particularly undervalued or distressed assets in the hospitality industry.

"There are many prime properties held by hedge funds which are currently available and going cheap, following a massive redemption by them," she added.

By Business Times (by Sharen Kaur)

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