Boustead Plans RM500m Islamic Plantation REIT
Reported in the Business Time(12/9/06) , that another Islamic REIT is lining up.
However, this time, it is an Islamic plantation REIT known as Al-Hadharah Boustead REIT, worth # RM500 million This REIT is initiated by Boustead Holdings Bhd, together with Boustead Properties Bhd.
Salient features of this proposed Syariah-compliant REIT are:
- a fund size of up to 490 million units, at RM1 per unit, to be constituted by a deed between the manager and trustee of the scheme;
- comprises nine oil palm estates and two palm oil mills with an aggregate market value of RM517.7 million and total land areas of 17,474.9ha. Eight of the plantation estates are located in Peninsular Malaysia, and one in Sarawak;
- ggregate price for the plantation assets was arrived at on a “willing seller willing buyer” basis, after taking into consideration a discount of about 3.42 per cent to the market value of the plantation assets as appraised by independent valuers;
As usual, Boustead’s reasons to initiate this REIT are:
·        to realise the fair value of the plantation assets while retaining their productive use through the proposed Ijarah arrangements;
·        Boustead is expected to gain about RM184.9 million from the disposals if the exercise is completed by December 31;
·        allow the company and its subsidiaries to participate in the local REIT sector by participating in the equity interest of the manager of the Al-Hadharah Boustead REIT;
·        The REIT scheme will also provide the group with a stable income distribution and long-term growth in the net asset value of the units in the scheme and
·        Proceeds from the disposals will be used to repay borrowings and for working capital;
·        The Ijarah tenancy arrangements for each of the estates and mills will be for three years and automatically renewable four times, up to 12 years and an additional 15 years. REIT will be entitled to receive an agreed fixed rental for the first tenancy term of three years from the completion date of the disposals.
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September 11, 2006
Posted in: Activity-Based Costing
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