This article first appeared in The Edge Malaysia Weekly on August 1, 2022 - August 7, 2022
SEE Hoy Chan Holdings Sdn Bhd (SHCH) is mulling plans to inject its retail assets into a real estate investment trust (REIT) that will be listed on Bursa Malaysia, according to sources. “Several investment banks have been approached for the corporate exercise,” one of them tells The Edge.
The assets, with a potential value of more than RM3 billion, are said to include 1 Utama Shopping Centre and Centrepoint in Petaling Jaya, Selangor, all of which are parked under First Nationwide Group Sdn Bhd. The group also owns One World Hotel and First City University College, according to its website.
But when contacted by The Edge, SHCH director Tan Sri Teo Chiang Hong said he was unaware of such a corporate exercise.
Currently the largest shopping mall in Malaysia, 1 Utama has a net lettable area (NLA) of about 2.19 million sq ft. However, its top position will be taken over by IOI City Mall in Putrajaya, when Phase 2 opens its doors on Aug 25. With the expansion, the mall — parked under IOI Properties Group Bhd — will see its NLA increase to 2.5 million sq ft from 1.5 million sq ft.
While the value of 1 Utama and Centrepoint is not immediately known, a look at the financials of another unit, Bandar Utama City Corp Sdn Bhd (BUCC), may offer some clues. A CTOS search shows that BUCC had RM3.84 billion in net assets at end-2020 while its net profit stood at RM116.06 million, a 672-fold jump from RM172,609 a year earlier. Its financial results for FY2021 were not available.
BUCC is owned by Teik Long Sdn Bhd, which in turn is held by the sons of the late Tan Sri Teo Soo Cheng — Tan Sri Teo Chiang Kok, Tan Sri Teo Chiang Hong and Tan Sri Teo Chiang Liang. Soo Cheng, who spearheaded the development of the Bandar Utama township, was the son of See Hoy Chan Group’s late founder Datuk Teo Hang Sam.
It is worth noting that See Hoy Chan Sdn Bhd — which is helmed by Hang Sam’s two other sons, Teo Soo Kiat and Teo Soo Chew — had in 2018 reportedly mulled plans for a REIT listing that involved its assets in Damansara Uptown, Petaling Jaya. However, nothing concrete has been announced since.
With Malaysia having started its transition to the endemic phase of Covid-19 about four months ago, retail outlets across the country have started to see a recovery judging by the increased footfall at shopping malls. Retail sales rose 18.3% year on year in 1Q2022, according to Retail Group Malaysia’s June 2022 Retail Industry Report.
As at end-December 2021, Sunway REIT’s Sunway Pyramid Shopping Mall and Sunway Carnival Mall recorded the highest occupancy rates in the country at 98%. When combined with Sunway Putra Mall, the three main retail assets of the REIT have a total NLA of 2.64 million sq ft and are valued at RM4.75 billion.
By comparison, Mid Valley Megamall and The Gardens Mall — core assets of IGB REIT — have a total NLA of 2.68 million sq ft and are worth RM4.96 billion. Meanwhile, Pavilion REIT’s four retail assets — namely, Pavilion Kuala Lumpur Mall, Intermark Mall, DA MEN Mall and Elite Pavilion Mall — have a total NLA of 2.22 million sq ft and are valued at RM5.75 billion.
In July, Pavilion REIT announced that its discussions to buy Pavilion Bukit Jalil Mall — which opened in December 2021 and has a NLA of 1.8 million sq ft — from Malton Bhd were still ongoing.
Of these retail REITs, IGB REIT offers the highest gross dividend yield at 5.9%, while that of Pavilion REIT and Sunway REIT stand at 3.3% and 1.87% respectively. In terms of share price performance, Pavilion REIT has seen a 7.2% gain year to date, followed by Sunway REIT (+6.38%) and IGB REIT (+0.61%).
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