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Tuesday, June 1, 2010

SunCity and GIC sign agreement on REIT purchase

PETALING JAYA: Sunway City Bhd (SunCity) has entered into a conditional cornerstone agreement with the Government of Singapore Investment Corp Pte Ltd (GIC) whereby GIC has agreed to subscribe about 5% stake (134 million units) of SunCity’s Real Estate Investment Trust (REIT).

SunCity told Bursa Malaysia yesterday that the group, Sunway REIT Management Sdn Bhd, and Credit Suisse (Singapore) Ltd had last Thursday entered into a conditional cornerstone agreement with the GIC where it would acquire the units to be listed at the lower of the institutional price and 98 sen per unit.

It added that SunCity had also entered into an underwriting agreement with Sunway REIT Management (the manager), OSK Trustees Bhd (on behalf of Sunway REIT), RHB Investment Bank (the coordinator) and RHB Investment Bank, CIMB Investment Bank Bhd and Maybank Investment Bank Bhd (as joint underwriters), to severally but not jointly underwrite the offering of 134 million units, subject to clawback and reallocation, to the Malaysian public.

An analyst said the deal showed that GIC was still confident with the assets of SunCity as currently, it had about 21% stake in that group.

Another analyst said that despite GIC showing confidence towards the REIT and other investors would follow suit, SunCity needed to offer a much better yield.

“Generally, the market’s yield for REIT in Malaysia is about 8.5% and GIC has to offer no less than that or higher in order to attract more investors,” he said.

Earlier reports stated that SunCity might place out about a fifth of its planned initial public offering of the REIT to cornerstone investors who had greater holding power for the shares.

The Sunway REIT, with a fund size of 2.78 billion units, is set to become Malaysia’s largest when it is listed in the third quarter this year.

The issue price of the Sunway REIT will be determined in a book-building process. The properties, comprising shopping malls, office towers and hotels, have a combined market value of about RM3.7bil.

By The Star

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