Append below are the recent development of REIT in Malaysia which is aptly described by AMP Capital Investors Ltd which is Australia’ 2 nd biggest asset manager

“ Malaysia’s fast-growing market for real estate investment trusts (REITs) is expected to double in size within the next few years once investors become more familiar with REITs and the people managing such assets are more professional, says Australia’s secondbiggest asset manager, AMP Capital Investors Ltd. Asian REITs will also continue to perform well because of benign interest rates outlook, strong economic growth of China and sustainable economic recovery in Japan. “ (Source: New Straits Times, 07/04/2006)

Extracted below are many listed companies jumping into the bands wagon of establishing REIT :

(A) AmFIRST REIT:

(Source: The Edge Daily, 12/7/2006)

AmInvestment Group Bhd has received the Securities Commission’s (SC) approval to list its real estate investment trust (REIT) - AmFIRST REIT. The AmFIRST REIT with an initial fund size of 490 million units, would be listed on the Main Board. The listing of AmFIRST REIT must be completed within six months from the date of the SC’s letter.

(Source: NST, 13/5/2006)

AMMB Holdings Bhd will raise gross proceeds of RM217.25 million from the IPO of AmFirst Real Estate Investment Trust. AmInvestment Group Bhd (AIGB), as the sponsor for AmFirst REIT and Am ARA REIT Managers Sdn Bhd (Am ARA) as the proposed management company of AmFirst REIT, has sought a listing for the trust that has 490 million units.

AMMB has proposed a restricted offer for sale of up to 85 million AmFirst REIT units at an offer price of RM1 per unit to the shareholders of AMMB on a renounceable basis. Out of the offer price, 85 sen per unit is payable in cash by the shareholders while the remaining 15 sen per unit will be paid by AMMB. This will raise gross proceeds of RM72.25 million. AMMB, through AmMerchant Bank Bhd as the lead arranger for AmFirst REIT, will place out the remaining 145 million units to institutional investors to raise gross proceeds of RM145 million.

The proposal will also involve the proposed sale of Menara AmBank to AmFirst REIT for RM230 million. This will give AMMB an estimated gain of RM26.79 million. The sale is to be satisfied by AmFirst REIT through the issuance of 230 million AmFirst REIT units. The AmFirst REIT will include the RM199 million AmBank Group Leadership Centre and the RM57 million Menara Merais.

(Source: The Edge Daily, 28/3/2006)

AMMB Holdings Bhd’s wholly owned subsidiary AmBank (M) Bhd has proposed to dispose of its entire interest in Menara AmBank to AMARA Real Estate Investment Trust (AMARA REIT) for RM230 million. AMARA REIT is a new REIT to be established under the AmFIRST Property Trust’s (AmFPT) proposed restructuring and rebranding exercise following a joint-venture agreement between AmInvestment Group Bhd and ARA Asset Management (Malaysia) Ltd on Feb 16, 2006.

AmFPT, which will be delisted, proposed to sell its existing properties, Bangunan AmBank Group and AmBank Group Leadership Centre, to AMARA REIT for RM199 million to be satisfied by the issue of 199 million new units at RM1 each. It also proposed the novation of the acquisition of Menara Merais to AMARA REIT. AmFPT had in December 2005 announced the proposed acquisition of Menara Merais for RM57 million cash.

(Source: The Edge Daily, 16/2/2006)

AmInvestment Group Bhd (AIGB) has entered into a conditional agreement with ARA Asset Management (Malaysia) Ltd (ARA) on Feb 16 to establish a joint venture (JV) company to undertake the management of new real estate investment trusts (REIT) to be listed on Bursa Malaysia.

AIGB would hold a 70% stake in the JV to be named AmARA Holdings Sdn Bhd, while Ara will hold the remaining 30%. The JV company would have an initial capitalisation of RM1 million comprising one million ordinary shares of RM1 each. ARA is a wholly owned subsidiary of ARA Asset Management Ltd, which has managed REITs in Singapore and Hong Kong.

AIGB said where opportunities arise, the JV may form other subsidiaries to undertake the management of REITs in markets abroad. It added that the JV represents the group’s efforts to enhance its involvement and contribution to the REIT market in Malaysia and the region.

(B) Starhill REIT

(Source: NST, 28/6/2006)

Starhill REIT To Buy Ritz-Carlton

Starhill Real Estate Investment Trust (REIT), controlled by YTL Corp Bhd, said it is buying the Ritz-Carlton complex in Kuala Lumpur that will include the hotel and apartments, a transaction that would double its market value. The trust expects its market value to increase to RM2 billion with the acquisition. Starhill REIT is buying the Ritz-Carlton asset from YTL, which has a pipeline of RM10 billion worth of property.

© Axis –REIT

(Source: NST, 27/05/2006)

AXIS Real Estate Investment Trust (Axis-REIT) is buying Cycle & Carriage Bintang Bhd’s headquarters and service centre, located in Petaling Jaya, for RM32.5 million cash. With the initial five properties at the time of listing, Axis-REIT’s portfolio has grown to include nine assets worth RM400 million, from RM296 million, in slightly less than 10 months. The company is working to achieve its own target of a RM500 million portfolio by the end of the year.

(Source: NST, 25/1/2006)

Axis Reit Managers Bhd, the manager of Axis Real Estate Investment Trust, is going to make a better payout to unitholders than initially targeted, and it also plans to buy more properties.

Axis REIT Managers Bhd declared a distribution per unit (DPU) of 4.7 sen for the financial year ended Dec 31, 2005, which is 25% higher than the 3.76 sen forecast in its initial public offering (IPO) prospectus last June.

Axis Real Estate Investment Trust (REIT) plans to acquire more properties in the Klang Valley this year to boost its portfolio. The trust already owns seven commercial buildings in the Klang Valley, namely Axis Business Park, Menara Axis, Crystal Plaza, Infinite Centre, Axis Plaza and its latest purchases Kompleks Kemajuan and Kayangan Depot.

Besides acquisition, the management plans to spend RM1.6mil to enhance the value of Kompleks Kemajuan and RM500,000 on Kayangan Depot this year to gain better leverage on rental rates. The investment will be funded via bank borrowings.

(D) Sungei Wang REIT

(Source: The Star, 17/5/2006)

SC Approved The Listing Of Sungei Wang REIT

Landmarks Bhd has obtained Securities Commission approval to list the proposed Sungei Wang REIT on the Bursa Malaysia main board. The REIT comprises 56.93% of the total net lettable area in Sungei Wang Plaza Shopping Centre together with 1,310 car parking bays, and 29.93 acres of beach-fronting leasehold land and The Andaman hotel in Langkawi.

240.6 million units of the approved offer for sale of 515 million Sungei Wang REIT units will be distributed free to Landmarks shareholders on the basis of one Sungei Wang REIT unit for every two Landmarks shares held, representing a return of capital pursuant to a capital reduction of the share capital of Landmarks by cancelling 50 sen of the par value of every RM1 Landmarks share.

(E) KPJ Healthcare Bhd –REIT

(Source: NST, 05/06/2006)

KPJ Healthcare Bhd, which sets up and lists a Syariah-compliant REIT fund, has proposed to increase the fund size by two-thirds to meet strong demand from investors. It will ask for a bigger trust size after the Securities Commission approved its initial 205-milunit fund size. It also plans to boost the Al-’Aqar KPJ REIT fund, to be listed on the main board of Bursa Malaysia by seeking shareholders’ approvals to sell 6 of its hospital buildings to the REIT for RM461.25 mil

KPJ Healthcare Bhd is selling its entire interest in its properties to a real estate investment trust that will be established, KPJ Healthcare REIT, for RM343.25 million. The properties are Ampang Puteri Specialist Hospital, Damansara Specialist Hospital, Johor Specialist Hospital and Seremban Specialist Hospital.

The sale would be satisfied by RM227.25 million cash and the issuance of 116 million new units of the REIT at an indicative issue price of RM1 per unit. The REIT would raise cash from an initial public offering where its units would be listed on the main board of Bursa Malaysia, as well as from Islamic loans. The proposed disposals will result in a cash inflow for the KPJ group of RM203.451 million, of which RM203 million will be used to reduce its existing bank borrowings.

KPJ Healthcare would end up holding 48.95 per cent of the REIT after the disposal. KPJ Healthcare expects the proposed disposals to be completed by the second quarter of 2006. It said the proposed disposal will allow the group to unlock the value of the properties and realise its investment in the properties.

KPJ Healthcare REIT is a real estate investment trust with a proposed fund size of 237 million units.

(F) Tower REIT

The Tower Real Estate Investment Trust (Tower REIT) was successfully listed on Bursa Malaysia increasing the country’s REIT market by 25%. Tower REIT now comprises two assets, the HP Tower at Damansara Heights and Menara HLA at Jalan Kia Peng, near KLCC. The properties are valued at RM363 million.

(Source: NST, 13/4/2006)

GLM REIT Management Sdn Bhd chief executive officer Tan Ming Huat said it is close to wrapping up talks to buy an office building in Kuala Lumpur for between RM50 million and RM100 million. It is also in talks with several other building owners. GLM REIT is the manager of the fund. The company is a wholly-owned subsidiary of GuocoLand (Malaysia) Bhd and a member of Hong Leong Group.
Tower REIT expects to grow its property portfolio to RM750 million within the next two to three years, before growing it further to RM1.5 billion in the next four to six years.

(Source: NST, 23/3/2006)

Tower real estate investment trust (REIT) has an ambitious plan to quadruple its asset size in five years before venturing overseas, and is preparing itself for a future partner to grow further. The REIT is managed by GLM REIT Management Sdn Bhd, a wholly-owned subsidiary of GuocoLand (Malaysia) Bhd and a member of Hong Leong Group.

GLM REIT chief executive officer Tan Ming Huat said “Tower” was chosen instead of a name which would associate the fund to the parent group because it is preparing for the entry of a partner at a later stage. The future partner will complement in terms of networking and funding, adding that the current name provides a good platform to forge alliances with other investment houses.

Tower REIT will still focus on quality properties in Kuala Lumpur, Damansara Heights and Petaling Jaya in the next few years and will branch off outside Malaysia after three or four years. Its immediate acquisition strategy is to buy RM350 million to RM400 million worth of assets over the next two to three years.

Tower REIT expects to make RM11.5mln in net profit for the year ending December 31 2006, on revenue of RM21.8mln. Net profit is expected to reach RM16.5mln in 2007 and this translates into a dividend yield of 6.42 per cent this year and 6.51 per cent next year, based on the initial public offering price of RM1.07 per unit. Tower REIT is paying back all net profits for these two years as dividend.

The company is selling 201.87 million units in the REIT at RM1.07 per unit, of which 9.3 million units are available for public subscription, 190.07 million will be placed out, while 2.5 million are for directors and staff. The IPO will close on March 29 and the listing date is April 12.

(Source: NST, 14/3/2006)

GLM Reit Management Sdn Bhd, a wholly-owned subsidiary of GuocoLand (Malaysia) Bhd, will float a real estate investment trust (REIT) on Bursa Malaysia’s main board in April. It is the country’s fourth REIT to be listed, after Axis-REIT, Starhill-REIT and UOA-REIT.

The fund, known as the Tower-REIT, comprises two commercial buildings, Menara HLA and HP Towers, acquired at a total cost of RM351 million. Menara HLA is located in Jalan Kia Peng, near KLCC, and has a net lettable area of 400,000 sq ft. HP Towers, with a lettable area of 350,000 sq ft, is in Damansara Heights. Both properties are over 80 per cent occupied.

Pending approvals from the authorities, Tower-REIT will probably sell 237 million shares in an initial public offering that will raise around RM245 million.

(G) Boustead Holdings Bhd-REIT

(Source: NST, 31/3/2006)

Diversified group Boustead Holdings Bhd may consider selling its properties to a property trust to raise funds, managing director Tan Sri Lodin Wok Kamaruddin said. Boustead owns choice properties like shopping mall The Curve, two Royale Bintang hotels, Wisma Boustead, Menara Boustead and Menara Affin that can be put under the REIT programme. Boustead is still studying various possibilities.

(H) Amanah Raya Bhd - REIT

(Source: NST, 31/1/2006)

Amanah Raya Bhd (ARB), which has been buying up properties over the past few months, has confirmed talks that it is building a portfolio for real estate investment trust (REIT).
Its managing director Datuk Ahmad Rodzi Pawanteh said that the company, pending approval from the authorities, is looking at launching the REIT in May this year. Ahmad Rodzi declined to divulge how many properties ARB has acquired thus far. Property market sources said that ARB currently owns 17 properties, of which more than two-thirds will probably be slated for REIT.

These include ARB’s new headquarters, Wisma Amanah Raya at Jalan Ampang, which it acquired last year for some RM60 million, Selayang Mall from Seal Bhd for RM120 million and the hotels its bought from Advance Synergy Bhd for RM105 million namely Holiday Villa Cherating, Holiday Villa Alor Star and Holiday Villa Langkawi. Another property which ARB is expected to slate for REIT is the Prime College Building in Subang Jaya.

If this goes through, ARB will be the fourth entity to undertake REIT, after AXIS REIT, UOA REIT and Starhill REIT. The company also has plans to introduce Islamic REIT this year. This will make the company the first in Malaysia to introduce a Syariah-based property investment trust scheme.

(I) SC To Announce First Islamic REIT

(Source: The Star, 11/5/2006)

The Securities Commission (SC) will announce the country’s first Islamic real estate investment trust (REIT) “very soon,” said chairman Datuk Zarinah Anwar. The SC had received two Islamic REIT applications since the guidelines were released last November.

If you found this post useful, keep updated with future posts by subscribing to FMAccounting (for free) through RSS or email.

Related Entries

• TA To List REIT
• July’07 Malaysian Reits Update
• AmInvestment Launched Property Fund To Invest In Properties & REIT
• Government Owned Amanah Raya Plans REIT Listing
• Champion REIT (Hong Kong)