MAH SING GROUP BHD is looking at joining the growing ranks of Malaysian property developers who want to set up real estate investment trusts (REITs) to generate recurring income.
The property development group is aiming to launch its first shopping mall - Star Avenue Mall at D’sara, Sungai Buloh - in September.
The four-storey Star Avenue Mall has a net lettable area (NLA) of 277,086 square feet and will serve neighbourhoods including Subang Bestari, Bukit Rahman Putra and Kota Damansara, as well as a nearby HELP University campus.
Other upcoming Mah Sing projects which have a mall component include Icon City Mall in Petaling Jaya with an NLA of 565,099 sq ft, Kota Kinabalu Convention City (KKCC) Mall with an NLA of 168,412 sq ft, and Southbay City Mall in Penang.
Group managing director Tan Sri Leong Hoy Kum tells StarBizWeek that he will look at a mall REIT.
“This is in the future. About 40% of our remaining gross development value (GDV) is commercial. Out of this 40%, there will be some components we can REIT later,” says Leong.
“Regarding mall operations, we have our own team. But for bigger-sized malls, we would prefer joint ventures, as we can tap the expertise of others,” he says.
The group is also developing serviced apartments and three hotels at KKCC, where its developments will take up to five years.
Other companies looking at setting up REITs include MCT Bhd and WCT Holdings Bhd.
Integrated builder MCT has announced that it hopes to monetise its assets for a REIT in a few years.
MCT, which operates a 243-room hotel in Subang Jaya, will be introducing three more hotels in the Klang Valley.
Chief executive officer Datuk Seri Tong Seech Wi says MCT will have investment properties worth RM3.61bil in GDV by 2020, positioning the group to potentially unlock value by “REIT-ing” the assets at a later stage.
Tong was also quoted by a local financial daily as saying that companies that are solely property developers are “to me, not healthy because it doesn’t give you sustainability”.
Meanwhile, WCT Holdings is exploring the option of REIT-ing its three shopping mall investment properties worth more than RM2bil, according to a recent TA Securities research report.
The report noted that WCT’s property division is supported by stable recurring income from its Bandar Bukit Tinggi shopping mall, Paradigm Mall Petaling Jaya (70% stake) and KLIA2 Gateway Mall (70%).
The research unit expects the earnings from Paradigm Mall and KLIA2 Gateway Mall (which are relatively new) to improve due to rental revision as the malls mature.
“We believe it is just a matter of time for WCT to unlock the value of its investment properties,” said TA Securities research.
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