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Thursday, November 19, 2009

YTL to streamline REITs here, S'pore

YTL Corp Bhd plans to streamline RM8 billion worth of hotels and retail malls it controls in Asia-Pacific into two specialised real estate investment trusts (REITs) in Singapore and Malaysia.

Starhill REIT, listed on Bursa Malaysia, will ultimately own only the hotels under the YTL group, while the Singapore-listed Starhill Global REIT will focus on retail malls when the revamp is completed in six months.

The move makes it easier for analysts to rate the stocks and investors will be clearer about the property trusts' intention when they expand globally.

YTL Corp managing director Tan Sri Francis Yeoh made it clear during a media briefing in Kuala Lumpur yesterday that the two REITs are set to grow internationally with an Asia-centric strategy. Among others, Starhill REIT may buy more brands in the hotel and hospitality sector.

"This is the time to buy more brands because the world has not fully recovered yet. There are still low hanging fruits to be plucked," Yeoh said.
As part of the revamp, Starhill REIT will sell the two shopping malls in its portfolio - Starhill Gallery and Lot 10, both located in downtown Kuala Lumpur - to Starhill Global REIT for RM1.03 billion.

This will leave it with JW Marriot Hotel Kuala Lumpur and part of The Residences at The Ritz-Carlton serviced apartments, also in Kuala Lumpur, worth a combined RM400 million.

Subsequently, Starhill REIT will use the proceeds from selling the malls to buy other Malaysian hotels under the YTL group, which will boost the asset size to RM1.6 billion. It can also take on more debt for this since its current debt-to-assets ratio is only 13 per cent.

These assets are the remaining 54 apartments in The Residences, luxury hotel The Ritz-Carlton Kuala Lumpur, Pangkor Laut Resort in Perak, Tanjung Jara Resort in Terengganu, Cameron Highlands Resort, The Majestic Malacca, and the three Vistana Hotels in Kuala Lumpur, Penang and Kuantan.

Potential assets to be sold into Starhill REIT in future include The Chedi Phuket, SPA Village Resort Tembok Bali and the Muse Hotel in Saint Tropez, France, which is under construction.

Yeoh pledged that the dividend yield of Starhill REIT will stay at least 7 per cent after the group's asset restructuring. There is also a plan for the REIT to pay out dividends every quarter as part of a bigger plan that allows YTL Corp to get steadier returns from its subsidiaries.

YTL currently owns 65.2 per cent of the REIT in Malaysia and 28.9 per cent of the one in Singapore. Starhill Global REIT's assets include retail malls in Singapore's famous Orchard Road and Tokyo's Roppongi area, and it is set to buy another mall in Perth, Australia, to bring the portfolio to S$2.5 billion (RM6 billion).

By Business Times (by Chong Pooi Koon)

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