By Sharen Kaur
Published in NST on January 12, 2013
Sunway REIT will consider opportunities for mergers and acquisitions to form another REIT.
KUALA LUMPUR: Sunway REIT, Malaysia's largest real estate investment trust (REIT), will consider opportunities for mergers and acquisitions (M&As) to form another REIT.
"We may consider an M&A, but we have no intention for a dual listing (of Sunway REIT) at this juncture," Sunway REIT Management Sdn Bhd chief executive officer Datuk Jeffrey Ng told Business Times.
Speculation has been rife that Sunway REIT is seeking a dual listing in Singapore, after its total assets under management surpassed RM4 billion.
Its assets will reach RM4.95 billion with the acquisition of Sunway Medical Centre (SMC) by end-December 2012.
On how Sunway REIT plans to remain attractive to investors, Ng said the focus will be on organic, inorganic and turnaround growth, translating into higher dividend per unit growth to unitholders.
Organic growth will be achieved through asset enhancement and asset management initiatives such as rental reversion, conversion of common areas into lettable area, space reconfiguration, as well as planned and ongoing refurbishments, Ng said.
Inorganic growth refers to acquisitions leading to new income stream, while turnaround growth is presented to Sunway REIT by virtue of its acquisition of Sunway Putra Place in 2011.
Ng is bullish on growth in the Malaysian Real Estate Investment Trusts (M-REITs), underpinned by several factors including the entry of new REITs.
The growth of M-REITs in the last two years has enhanced the visibility and prominence of M-REITs among international investors, he said.
From a relatively small and unknown market in Asia, M-REITs are now ranked fourth by market capitalisation in Asia after Japan, Singapore and Hong Kong. In Southeast Asia, M-REITs are ranked second (by market cap) after Singapore.
The prevailing accommodative interest rate environment presents M-REITs the opportunities to enjoy a period of low cost of debt regime.
He said REITs may exploit such opportunity to restructure their existing loans to reflect the prevailing low interest rate regime.
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