Hektar REIT
to raise RM176m
from REIT listing

By Adeline Paul Raj

bt@nstp.com.my

THE Hektar Group expects to raise about RM176 million from the listing of its real estate investment trust on the main board of Bursa Malaysia before the end of the year.

Known as the Hektar REIT, it comprises Subang Parade and Mahkota Parade shopping malls in Selangor and Malacca respectively and is the country's first focused retail specialist.

The REIT will be managed by Hektar Asset Management Sdn Bhd (HAM), which is part of Hektar Group.

Chairman Datuk Jaafar Abdul Hamid said the group's long-term plan is to buy more properties that can potentially be injected into the REIT. Hektar, he said, intends to unlock hidden value in mature malls.

But for now, Hektar will focus on developing more retail space on the land adjacent to its two existing shopping malls.

The group has 1.2ha of land next to Subang Parade, which is currently a nursery, and 0.8ha next to Mahkota Parade, which is now a carpark.

The group also owns 34ha of land in Nusajaya, Johor. About 20.2ha is being set aside for a lifestyle centre, known as Hilltop, for which the group is currently trying to sort out financing.

"We see Hektar REIT as a foundation for creating a retail management franchise in Malaysia," Jaafar said yesterday at theunderwriting ceremony for the retail portion of the REIT, with Aseambankers Malaysia Bhd and AmMerchant Bank Bhd.

Proceeds from the listing will go towards working capital, paying off borrowings and funding new properties, Jaafar said.

He said the REIT's yield will be competitive. "Ours is pure retail play. Retail REITs always command a premium," he said on the REIT's prospects.

Hektar REIT's prospectus will be launched on November 15.

The listing exercise involves an offering of 159.5 million new units, of which 10 million will be for the public and six million for eligible directors and employees at an indicative price of RM1.05 each.

Another 143.5 million units will be offered to institutional investors via a book building exercise.

The eventual size of Hektar REIT upon listing will be 320 million units. The Hektar Group will own a 50.16 per cent stake in the REIT, post-listing.

The REIT has a combined property value of RM523 million with a net lettable area of about one million sq ft.