PETALING JAYA: IOI Properties Group Bhd
’s (IOIPG) proposed real estate investment trust (REIT) listing by end-2026 is expected to strengthen its balance sheet and unlock asset value, although analysts are mixed on the extent of upside, with earnings impact seen as largely neutral.
The group has announced plans to establish IOIPG-REIT, with listing targeted for completion by the fourth quarter of 2026, involving the injection of a diversified portfolio of retail, hospitality and office assets valued at RM7.58bil.
In a note to clients yesterday, Hong Leong Investment Bank (HLIB) Research said the listing represented an important milestone for the group, before adding: “This indicates its active strategy in crystallising the value of its mature assets and recycling the capital to more attractive opportunities.”
The assets earmarked for injection include IOI City Mall and six hotels such as W Kuala Lumpur and Le Méridien Putrajaya, as well as office assets like IOI City Towers and Puchong Financial Corporate Centre.
IOI City Mall alone accounts for about 67% of the portfolio’s total value at RM5.1bil, underscoring its role as the anchor asset.
The transaction will be satisfied through a mix of cash and REIT units, with IOIPG expected to receive RM2.65bil in cash and 5.5 billion REIT units.
The group plans to offer up to 40% of the REIT to investors, while retaining a 60% stake post-listing.
HLIB Research estimates that IOIPG’s net gearing is expected to decline significantly to 68.8% from 89.6% as at Dec 31, 2025, supported by proceeds from both the REIT exercise and recent land disposals.
Similarly, MBSB Research viewed the move positively, as it noted: “We see the listing of IOIPG-REIT to be positive to IOIPG as it unlocks the value of the group’s investment properties and improves its balance sheet.”
This is especially so with part of the proceeds earmarked for debt repayment and development activities.
Despite these benefits, the earnings impact is expected to be modest, with HLIB Research estimating a broadly neutral earnings impact post-REIT listing, as dilution from a reduced stake in the injected assets is offset by interest savings and lower depreciation.
MBSB Research similarly highlighted that reduced income from the lower stake could amount to about RM66mil, reflecting the trade-off between deleveraging and recurring income contribution.Beyond balance sheet improvements, the REIT platform is expected to provide IOIPG with greater flexibility in capital allocation.
HLIB Research noted that mature, income-generating assets are likely to be acquired by the REIT, while assets requiring redevelopment would be acquired instead under IOIPG, enabling more efficient deployment of capital.
The exercise may also pave the way for further asset monetisation, with the research unit underlining that the REIT could be “the tip of the iceberg of the value it can monetise,” particularly with a sizeable portfolio of Singapore assets identified as a potential next catalyst.
On valuations, however, views are more cautious.
While HLIB Research maintained a positive stance, MBSB Research kept a “neutral” call, saying positives were largely priced in, despite revising its target price higher following the announcement.
Overall, the proposed REIT listing is seen as a strategic move to unlock value and strengthen IOIPG’s financial position, though its near-term impact on earnings and share price may remain measured as the market awaits further clarity on pricing and execution.
