Sunway expected to launch RM2b REIT
---Biz Time 26 Oct

MALAYSIAN conglomerate Sunway Group is expected to launch potentially one of the biggest real estate investment trusts (REITs) in Malaysia in the third quarter of next year, say sources.
Business Times understands that the size of the REIT will be in excess of RM2.2 billion and be built up in two or three stages.

"There will be pipeline projects and the total size of the fund will include more than 12 assets within Sunway City Bhd (SunCity)," said a source familiar with the plan.
REITs are trust funds which hold and invest in rental properties. Their main income is from rentals and they are required to distribute most of the profits as dividends to its stakeholders.
The REIT will give the main board-listed SunCity the opportunity to expand its market capitalisation.

SunCity is well stocked with commercial, retail, residential, hotel, college, hypermarket and shopping centre properties, which are revenue-earning and ready for a REIT.

They include Menara Sunway, Sunway College (comprising land and buildings occupied by Sunway College and Monash University), Sunway Pyramid Shopping Mall 1 and Carnival Mall, Sunway Resort Hotel (Main Tower), Pyramid Tower Hotel, Sunway Villa, Sunway Medical Centre and a shopping centre in Ipoh as well as in Penang, which are still under construction.

The pride of SunCity is the multi-billion-ringgit township of Bandar Sunway, comprising over 7,000 residential, commercial and light industrial units, and the RM880 million Kiara Hills residential project in Mont Kiara.

The source said SunCity is currently evaluating all the properties to determine which asset will be included in the first REIT.

The source added that the company is also talking with merchant bankers for advice on the REIT.

According to the latest Securities Commission guidelines on REITs, the initial minimum size of a REIT is RM100 million and the minimum size of subsequent launches is RM25 million.

Permitted investment for REITs include real estate, single companies whose sole principal asset comprises real estate, real estate- related assets, liquid assets and asset-backed securities.

"SunCity is a perfect candidate for a REIT. As long as the rental properties are well managed and consistent and the rental market is stable, the company's shareholders can expect a consistent dividend income," said the source.