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Wednesday, June 16, 2010

Sunway REIT sets RM7.4b target

With about 1.6 billion units up for subscription by retail and institutional investors, the REIT is also set to be the most liquid of REITs available in the market.

Malaysia's biggest property trust, the Sunway real estate investment trust (REIT), has set a target to double its size to RM7.4 billion in the next five to seven years.

It will focus its investments on shopping malls, hotels and offices.

"Sunway REIT is very much a township REIT, with the best assets of Bandar Sunway. So, if you believe that in 10 to 15 years we will continue to grow, then you would invest in us," Sunway REIT Management Sdn Bhd chief executive officer Datuk Jeffery Ng said.

The Sunway REIT is made up of eight of Sunway City Bhd's (SunCity) properties in the retail and hospitality space, located in Penang, Perak, Selangor and Kuala Lumpur, valued at RM3.7 billion.
This includes the popular Sunway Pyramid Shopping Mall and its newest purchase, Sunway Tower, an office building in central Kuala Lumpur.

It has an approved fund size of 2.78 billion units.

With about 1.6 billion units up for subscription by retail and institutional investors, the REIT is also set to be the most liquid of REITs currently available in the market.

About 8 per cent of the initial public offer units will be offered to retail investors, while the rest will be offered to Malaysian and foreign institutional investors.

About 35-38 per cent of total approved fund size will be held by SunCity.

"Investors are not looking for the lowest tax scheme, rather they are looking for growth and liquidity. Generally, Malaysian REITS have been illiquid, so the Sunway REIT will interest a lot of investors," RHB Investment Bank Bhd managing director Chay Wei Liong told reporters after the launch of the REIT's prospectus in Petaling Jaya, Selangor, yesterday.

Malaysia imposes a withholding tax of 10 per cent on individual investors for income made from REITs. Singapore, a popular destination for REIT listings, does not have such a tax.

On whether the recent announcement by CapitaMalls Asia to list its REIT on Bursa Malaysia would dampen interest in Sunway REIT, Chay said there was enough money to go around.

Ng did not discount the possibility of secondary listing in Singapore, saying the board will have to decide on that.

On possible plans to inject SunCity's overseas properties into the REIT, Ng said it will focus on Malaysia for the short and medium term.

"In the long term, should and when the opportunity arise we will consider it, and work hand in hand with our sponsor. It would be something that our board of directors would decide on," Ng said.

By Business Times

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