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Tuesday, May 25, 2010

IGB may spin off assets into 3 REITs

IGB Corp Bhd is mulling over spinning off its assets into three separate real estate investment trusts (REITs) comprising its retail, hotel and commercial components, its top executive said.

Group managing director Robert Tan Chung Meng said that should this plan take off, this could "potentially be the biggest REIT in Malaysia".

Currently, the planned REIT by the Sunway City Bhd at an estimated RM3 billion to RM4 billion is said to be the largest in Malaysia.

Should IGB's plans take off, it could also create history by being the first group to spin off three REITs.
Tan said that it was considering a REIT proposal given that the tax regime has become more favourable.

"Before, we were not too keen to do a REIT. Recently, they changed the tax rules ... now we are seriously contemplating it. We want to unlock the value," he told reporters at a press conference after KrisAssets Holdings Bhd's AGM.

"We prefer to be more focused," Tan said, adding that it could spin off three separate REITs for retail, hotel and commercial/ office space instead of putting several different components into a single REIT instrument.

"If we spin off all three, it's going to be huge," he said.

Tan said that timing of the REIT would depend on market conditions as Malaysia's REIT sector is still considered to be in its infancy.

IGB also owns several hotel properties, including the Cititel hotel chain, Micasa All Suites, The Gardens Hotel, The Boulevard Hotel and the Pangkor Island Beach Resort.

By Business Times

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