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Friday, July 9, 2010

Sunway REIT attracts huge foreign funds

KUALA LUMPUR: Sunway Real Estate Investment Trust (REIT), the largest property trust in Asia excluding Japan since 2007, has attracted a significant amount of funds from foreign institutional investors.

Tan Sri Jeffrey Cheah (right) looking at Sunway REIT’s share price after the listing ceremony. With him is Datuk Jeffrey Ng.

Sunway REIT’s initial public offering (IPO) on Bursa Malaysia Main Market yesterday raised RM1.49bil.

Sunway REIT Management Sdn Bhd chief executive officer Datuk Jeffrey Ng said the property trust was 45% subscribed by foreign institutional investors.

“This (foreign stake) clearly reflects their confidence in the performance of the trust,” he said after the listing ceremony.

Sunway REIT posted a one sen discount over its offer price of 90 sen upon listing. The price opened at 89 sen and hit a high of 89.5 sen in early morning trade before closing at 88.5 sen with 72 million units changing hands.

Ng said the property trust was well subscribed by investors despite market volatility and current global economic conditions.

Upon listing, Sunway REIT had assets worth RM3.5bil and a free float of RM1.6bil.

On Sunway REIT’s yield, Ng said it was about 7.5, which was within the mean range of most REITs, and had the potential to improve over time.

Sunway Group chairman and founder Tan Sri Jeffrey Cheah said with the listing, he hoped to see more companies with deeper awareness and investments in the local REIT market.

“Hopefully, we can continue to gain positive momentum and support from investors and regulators,” he said.

Cheah said with Sunway REIT, investors could now look forward to owning properties in high-growth locations.

“We aim to provide unitholders with exposure to a diversified portfolio of authorised investments which can provide stable cash distribution and a potential for sustainable growth in terms of net asset value per unit.”

He added that Sunway REIT aimed to double its asset size in five to seven years.

The eight properties injected into the REIT are Sunway Pyramid Shopping Mall, Sunway Carnival Shopping Mall, SunCity Ipoh Hypermarket, Sunway Resort Hotel and Spa, Pyramid Tower Hotel, Sunway Hotel Seberang Jaya, Menara Sunway and Sunway Tower.

An OSK Research report said with its exposure to the retail, hospitality and office sub-sectors, Sunway REIT was a defensive trust that could offer unitholders long-term growth.

An analyst with another brokerage said Sunway REIT had a huge asset base and the trust could easily be leveraged up.

He said the trust had the capacity to get support from financial institutions to expand quickly by buying “ready” properties without reaching its internal gearing or statutory limit.

By The Star

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