Sunway Real Estate Investment Trust -REIT
Sunway City Bhd (SunCity) and Sunway REIT Management Sdn Bhd will be offering initial public offering (IPO) of 1.65 billion units in Sunway Real Estate Investment Trust (Sunway REIT).
This offer is available for subscription by retail and institutional investors and will become Malaysia’s largest listed REIT (approved fund size of 2.78 billion units) when it lists on the Main Market of Bursa Malaysia in July.
It also set to be the most liquid of REITs available in the market.
Sunway Pyramid Shopping Mall, Sunway Carnival Shopping Mall, SunCity Ipoh Hypermarket, Sunway Resort Hotel and Spa, Pyramid Tower Hotel, Sunway Hotel Seberang Jaya and office properties which with an appraised value of RM3.7bil, would be injected into this REIT.
Bandar Sunway township has an impressive growth potential as a main landmark for tourist destination in Selangor. Located at a high population traffic flow given crowd drawers like Sunway Pyramid Shopping Mall or one of the largest malls in Klang Valley, colleges/universities, entertainment (e.g. Sunway Lagoon) and business centers, as well as, high accessibility via five major highways. Other prime assets are located in KL city center and growing population areas like Ipoh and Seberang Jaya, Penang.
Sunway Pyramid Shopping Mall enjoy 93%-99% occupancy rate in past three years. Even during recent economic downturns, most of its asset performance have held steady.
Four of the assets are in Bandar Sunway, which has over the years proven its growth potential as a landmark tourist destination
Sunway REIT’s IPO comprises an institutional and selected investors portion of 1.52 billion units and a retail portion of 134 million units.
About 8 per cent of the initial public offer units will be offered to retail investors, while the rest will be offered to Malaysian and foreign institutional investors.
Sunway City Group, controlled by Malaysian businessman Tan Sri Jeffery Cheah, will own about 35-38 per cent of Sunway REIT after the listing.
Listing date is expected on 8 July 2010.
This REIT have attracted four ‘big boys’ investors – the Employees Provident Fund, Permodalan Nasional Bhd, Government of Singapore Investment Corp and Great Eastern Life Assurance (M) Bhd – have secured 376 million units, or about 22.7% of the offer units! These cornerstone investors are known for their long-term holdings and instill confidence for other investors.
The final retail price per offer unit would be the lower of 97 sen, or 97% of the institutional offer price, to be determined by way of bookbuilding.
Unlike ‘pure play’ REITs, Sunway REIT is a fairly unique trust because it’s a mixed REIT that has retail and hospitality elements. It has multiple exposures to three property segments in different regions, providing diversified income. Notably, majority or 87% of FY09’s revenue is derived from Bandar Sunway.
According to the analyst, Sunway REIT’s dividend yield was about 6.7% (based on forecast dividend per unit or DPU of 6.7 sen), which was below the average 8.5% for other REITs. He said the REIT’s IPO was at a premium to other M-REITs.
The retail offer period is from 15th –22nd June 2010.
Read on How to Make Money in REIT-Real Estate Investment Trust?
Sunway REIT IPO well covered
Institutional book said to be 1.2 times oversubscribed
KUALA LUMPUR: The institutional segment of the initial public offering (IPO) of Malaysia’s largest real estate investment trust, Sunway REIT, had been “fully covered” at above 90 sen a unit, two sources with direct knowledge of the deal said.
The roughly US$500mil IPO, Malaysia’s largest so far this year, comes amid a faltering market for new offerings as investors fret about further financial troubles in Europe and its impact on the global economic recovery.
The IPO also comes ahead of a host of offerings by Petroliam Nasional Bhd and MISC Bhd, scheduled for the second half of this year.
“The book is fully covered. It’s oversubscribed by about 1.2 times now,” said one of the sources, who asked not to be named because he is not authorised to speak to the media.
“All the local funds are in and we’re still getting international orders. It’s quite an achievement, given the current market conditions,” the source said.
But Sunway REIT may have to price its IPO at the lower end of its indicated range because of deteriorating market conditions, said the sources.
The company last week set the indicative price range for the sale of 1.6 billion units of the REIT at between 90 sen and 98 sen per unit.
This means the IPO could raise RM1.44bil to RM1.57bil.
The global market for IPOs, which had shown signs of a resurgence early in the year, faces a spate of delays and downsizings, underscoring difficulties for mega deals such as Agricultural Bank of China’s IPO.
Sunway said earlier this month it had secured four cornerstone investors who would take 14% of the IPO.
Sunway REIT will have a market capitalisation of RM2.4bil to RM2.6bil when it is listed on July 8.
The IPO, comprising an institutional tranche of 1.5 billion units, more than 90% of the total, and a retail portion of 134 million units, is expected to be priced on Friday.
The REIT will house eight properties, comprising shopping malls, office towers, and hotels with a combined market value of about RM3.7bil.
Credit Suisse and RHB Investment Bank are the joint global coordinators of the deal. The banks, along with CIMB, HSBC, JPMorgan and the investment banking arm of Maybank are joint bookrunners
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Sunway REIT IPO priced at 90 sen per unit
KUALA LUMPUR, June 25 — The initial public offering of Malaysia’s largest real estate investment trust (REIT) has been priced at 90 sen a unit, at the lower end of an indicated range, according to a bookbuilding source.
The IPO of Sunway REIT will raise about RM1.47 billion in Southeast Asia’s biggest initial public offering so far this year.
The proceeds will be used to pay Sunway City for the eight properties injected into the REIT.
The company last week set the indicative price range for the sale of 1.6 billion units of the REIT at between 90 sen and 98 sen per unit.
The IPO comprised an institutional tranche of 1.5 billion units, more than 90 per cent of the total, and a retail portion of 134 million units.
Credit Suisse and RHB Investment Bank are the joint global co-ordinators of the deal. The banks, along with CIMB, HSBC, JPMorgan and the investment banking arm of Malaysia’s largest lender Maybank are joint bookrunners.
Sunway REIT will have a market capitalisation of RM2.4 billion to RM2.6 billion when it is listed on July 8.
The REIT will house eight properties, comprising shopping malls, office towers, and hotels with a combined market value of about RM3.7 billion.
Sunway REIT was not immediately available for comment. — Reuters
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Sunway REIT IPO well received
PETALING JAYA: Sunway Real Estate Investment Trust (Sunway REIT) initial public offering of 1.52bil units was well received and the order book was fully covered despite a cautious sentiment and volatility in the equity markets.
In a statement yesterday, Sunway REIT Management Bhd (the manager) said the deal, which was signed yesterday, was set to raise RM1.49bil, mainly from key domestic as well as international institutional and high networth investors.
It said the institutional offering was priced at 90sen per offer unit and the retail offering was priced at 88sen per offer unit.
The implied market capitalisation of Sunway REIT upon listing, based on the institutional price and 2.68bil issued units, would be approximately RM2.41bil, positioning Sunway REIT as the largest Bursa Malaysia-listed REIT.
It added that upon listing, Sunway REIT property portfolio would include eight of Sunway City Bhd’s existing prime properties situated in Penang, Perak, Selangor and Kuala Lumpur.
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Sunway REIT attracts huge foreign funds
By DANNY YAP and ANDREW LEE
KUALA LUMPUR: Sunway Real Estate Investment Trust (REIT), the largest property trust in Asia excluding Japan since 2007, has attracted a significant amount of funds from foreign institutional investors.
Sunway REIT’s initial public offering (IPO) on Bursa Malaysia Main Market yesterday raised RM1.49bil.
Sunway REIT Management Sdn Bhd chief executive officer Datuk Jeffrey Ng said the property trust was 45% subscribed by foreign institutional investors.
“This (foreign stake) clearly reflects their confidence in the performance of the trust,” he said after the listing ceremony.
Sunway REIT posted a one sen discount over its offer price of 90 sen upon listing. The price opened at 89 sen and hit a high of 89.5 sen in early morning trade before closing at 88.5 sen with 72 million units changing hands.
Ng said the property trust was well subscribed by investors despite market volatility and current global economic conditions.
Upon listing, Sunway REIT had assets worth RM3.5bil and a free float of RM1.6bil.
On Sunway REIT’s yield, Ng said it was about 7.5, which was within the mean range of most REITs, and had the potential to improve over time.
Sunway Group chairman and founder Tan Sri Jeffrey Cheah said with the listing, he hoped to see more companies with deeper awareness and investments in the local REIT market.
“Hopefully, we can continue to gain positive momentum and support from investors and regulators,” he said.
Cheah said with Sunway REIT, investors could now look forward to owning properties in high-growth locations.
“We aim to provide unitholders with exposure to a diversified portfolio of authorised investments which can provide stable cash distribution and a potential for sustainable growth in terms of net asset value per unit.”
He added that Sunway REIT aimed to double its asset size in five to seven years.
The eight properties injected into the REIT are Sunway Pyramid Shopping Mall, Sunway Carnival Shopping Mall, SunCity Ipoh Hypermarket, Sunway Resort Hotel and Spa, Pyramid Tower Hotel, Sunway Hotel Seberang Jaya, Menara Sunway and Sunway Tower.
An OSK Research report said with its exposure to the retail, hospitality and office sub-sectors, Sunway REIT was a defensive trust that could offer unitholders long-term growth.
An analyst with another brokerage said Sunway REIT had a huge asset base and the trust could easily be leveraged up.
He said the trust had the capacity to get support from financial institutions to expand quickly by buying “ready” properties without reaching its internal gearing or statutory limit.
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Sunway City to acquire Mega Capacity
KUALA LUMPUR: Sunway City Bhd yesterday entered into a share-sale agreement with Sunway Pyramid Sdn Bhd (SPSB) for the proposed acquisition of Mega Capacity for RM2.8mil.
In a filing to Bursa Malaysia, the company said it also entered into an agreement with Reco Pyramid (M) Sdn Bhd (RPSB) to acquire 48% equity in Sunway Pyramid and an agreement with Reco Resort Hotel (M) Sdn Bhd (RRHSB) to acquire 9.6 million ordinary shares of RM1 each in Sunway Resort Hotel Sdn Bhd for RM12.144mil, subject to post-closing working capital adjustment. “RPSB and RRHSB have expressed their interest to dispose of their respective 48% stake in SPSB and Sunway Resort upon completion of the disposal of Sunway Pyramid and disposal of hotels which were owned by SPSB and SRH respectively to Sunway REIT,” it said.
Sunway City will continue to engage in the hotel business through its subsidiaries as SRH is the master lessee of the hotels and Sunway International Hotels & Resorts Sdn Bhd is the operator of the hotels as well as being engaged in the management of Sunway Pyramid shopping mall.
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Size not the only factor for success of REITs
By Danny Yap
Analysts say other factors count too, such as management and asset quality
KUALA LUMPUR: The two major real estate investment trusts (REITs) listed on Bursa Malaysia this month – Sunway Real Estate Investment Trust (SunREIT) and CapitaMalls Malaysia Trust (CMMT), may have boosted the profile of Malaysian REITs (MREITs) and capture the attention of local and foreign investors, but size does not necessarily guarantee a better performance going forward, analysts said.
ECM Libra Capital Sdn Bhd research head Bernard Ching said while the REITs listed this year signified the maturing of MREITs and had managed to attract greater foreign investor participation, the performance of a trust would be dependent more on the REIT managers’ capabilities and the quality of the underlying assets injected into the REIT.
Ching said in Malaysia especially, “mega” REIT managers generally have a tough time looking for quality assets large enough to be injected into the trust, despite having greater liquidity, compared to niche and smaller REIT players. “But the larger REITs would be more on the radar of foreign fund managers because of their sheer size and visibility,” he said.
Ching said that while Malaysian investors have grown in awareness over the years in terms of investor knowledge and interest in REITs investment, the numbers were still relatively small. This despite MREITs giving two to three times better returns, compared with fixed deposit rates. “Many of the MREITs are currently giving 7% to 8% in income distribution yield,” he noted. A foreign REIT expert based in Singapore concurred with Ching that size was not the only factor to better performance for REITs. He said despite larger REITs listed on the stock exchange, MREITs were still at the infancy stage but that they were going in the right direction.
“There are still many outstanding issues that have impeded MREITs’ growth, ranging from regulatory restrictions to the lack of tax incentives for REITs players, and commercial properties in prime locations that are difficult to be placed in a trust because they don’t have strata titles and a lack of quality REIT experts and advisors to these trusts,” he said. The foreign REIT expert said there was still a lack of conviction and confidence among Malaysian investors and even some foreign investors to invest in MREITs. On the SunREIT and CMMT listing, he said the reception from local investors to the REITs were generally lukewarm, considering that both were reputable and had a good pipline of properties ready to be injected into the trusts.
“It’s still too early to tell how they will perform but they just about have it all … the management expertise, size, and liquity to perform well, However, is there a market demand locally for these REITs?” he said.
SunREIT closed at 91 sen yesterday, which was a one sen premium over its offer price of 90 sen when it was listed on July 8.
CMMT settled at RM1.01, up one sen from its reference price of RM1 when it was listed on July 16.
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Sunway to launch RM1.1bil project in Singapore
KUALA LUMPUR: Sunway Holdings Bhd will launch its third property project with a gross development value (GDV) of RM1.1bil in Singapore next week, said managing director Yau Kok Seng.
Yau said the 1.92ha project, called Vacanza @ East, would be located at Jalan Senang, District 14, a freehold land strategically sited near Pan Island Expressway.
“We expect good response for the project,” he said after signing a joint-venture (JV) agreement with the Dasa Group of Sri Lanka here yesterday.
He said profit margin in Singapore was usually 12%.
The project will comprise eight blocks of 12-storey buildings, which will have 500 units.
Sunway will also launch another project with a GDV of S$370mil in the second half of 2011 in Singapore. It will comprise 17 blocks of five-storey residential development.
The JV agreement signed yesterday was between Sunway unit SunwayMas Sdn Bhd and Dasa Group for a RM250mil mixed development project in Bambalapitiya, Colombo.
A JV company will be formed in Sri Lanka, with SunwayMas having a 65% stake and remainder taken up by Dasa Group.
SunwayMas would fund its investment in the JV company through bank borrowings and internal funds.
Yau said it hoped to launch the Sri Lanka project, which is expected to generate 20% profit margin, by the second quarter of 2011.
He said the development entailed a 34-storey building comprising 70 commercial and 180 residential units on prime freehold land and mixed-use zone.
It will be completed in 2014 and enjoy five years tax holiday then onwards.
“The project, sitting on a 0.461ha, is located a mere 5km from the Central Business District of Colombo. It has the potential to generate total saleable area of at least 380,000 sq ft,” he said.
Yau said residential properties in the Sri Lanka project would be priced from US$200 per sq ft while commercial units from US$350 per sq ft.
With the latest foray, Sunway’s land bank amounts to 174ha, with a potential gross development value of RM2.6bil over the next three years
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SunCity mulls over new projects for REIT
By ANGIE NG
It’s considering nurturing office and retail assets to inject into Sunway REIT
PETALING JAYA: Sunway City Bhd (SunCity) is mulling over office and retail projects to be nurtured into yield-accretive assets which can later be injected into the Sunway real estate investment trust (REIT).
The listing of Sunway REIT on July 8 involved the injection of eight assets – Sunway Pyramid Shopping Mall, Sunway Carnival, SunCity Ipoh Hypermarket, Sunway Resort Hotel & Spa, Pyramid Tower Hotel, Sunway Hotel Seberang Jaya, Menara Sunway and Sunway Tower.
The listing exercise raised some RM520mil for SunCity’s project development activities, including land purchase.
SunCity property investment managing director Ngeow Voon Yean said the divestment and unlocking of the value of the assets marked a new chapter for SunCity.
“We are now looking for opportunities in property development or investment to venture into. In the last two years, the ratio of earnings between investment and development property was about 60:40, but post-REIT, it should be around 50:50,” Ngeow told StarBiz.
Besides distribution income from its 37% stake in Sunway REIT, SunCity can also channel the funds raised from its assets divestment to other income-generating activities.
It recently paid RM129mil to acquire an additional 45% stake in its 51%-owned unit, Sunway Lagoon Sdn Bhd.
Ngeow also said the funds would be used to develop more office blocks and retail-related projects. There are 100 acres still undeveloped in the 800-acre Bandar Sunway Integrated Resort, and SunCity also has other smaller parcels of land in Kuala Lumpur.
He said the first project kicked off The Pinnacle in Bandar Sunway, a 25-storey corporate office block with net lettable area of 560,000 sq ft that was scheduled for completion by 2013.
Next up would be the development of a parcel of land beside Sunway Pyramid Shopping Mall. Currently referred to as SP3, this would be a retail and serviced apartments development with vehicular and pedestrian links to the mall.
“The supply of Grade A and international standard office and commercial space in this part of the Klang Valley is still in short supply. We want to build up Bandar Sunway into a location of choice for quality offices to attract blue chip office tenants here,” Ngeow added.
He said the new state-of-the-art office and commercial buildings would qualify as green and sustainable buildings. “The aim is to integrate and link all the office and retail complexes in Bandar Sunway with covered walkways to make them pedestrian-friendly and promote more walking instead of driving within the township. This will lower the carbon footprint of the township and is also in line with the LOHAS philosophy that Sunway has embraced from the start, ” he added.
LOHAS (Lifestyles of Health and Sustainability) is a term that describes the market and lifestyle of consumers interested in issues of health and fitness, personal development, the environment, sustainable living and social justice.
Ngeow said a new commercial project now underway was Sunway Velocity in Cheras, comprising office towers, serviced apartments, shoplots and a shopping mall. The RM1.5bil project on 22 acres will be completed in 2015. It will have a total net lettable area of 850,000 sq ft and gross development value of RM1.5bil.
SunCity also plans to build a 27-storey office building with a net lettable area of 350,000 sq ft, Sunway Tower, in Jalan Ampang, Kuala Lumpur. Plans for the project on a one-acre site are still being firmed up. “We have a couple of other projects on the drawing board and will keep our project pipeline going for synergistic growth between the various divisions of SunCity,” Ngeow said.
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Sunway REIT records pre-tax profit for Q1
KUALA LUMPUR: Sunway Real Estate Investment Trust (REIT) recorded a pre-tax profit of RM310.64mil for the first quarter ended Sept 30, 2010, on the back of RM72.45mil revenue.
In a filing to Bursa Malaysia, Sunway REIT Management Sdn Bhd, the manager of Sunway REIT said the retail properties of Sunway REIT continued to enjoy increased visitors during the period under review and occupancy remained strong with Sunway Pyramid at 99%, Sunway Carnival at 93% and Suncity Ipoh Hypermarket at 100%.
It also expects the properties to continue to perform well especially Sunway Pyramid supported by positive economic fundamentals and the thriving Sunway Integrated Resort.
It said this was also reflected in the rental reversions achieved whereby Sunway Pyramid renewed 278 tenancies with net lettable area of approximately 924,000 sq ft representing 87% of the total net lettable area due for renewal in financial year ending June 30, 2011 with total rent increase of 15.8% for the three year-term.
The current renewal also saw the entrance of new retailers/food and beverage concept such as Daiso from Japan, Coach and T-Bowl Concept Restaurant.
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