KUALA LUMPUR (Jan 20): KIP Real Estate Investment Trust's (REIT) 10.2 million offer units made available to the Malaysian public has been oversubscribed by 5.07 times.

The hybrid community-centric REIT said its institutional offering of 220.65 million offer units was also oversubscribed.

The units, offered at an indicative retail price of RM1 each, are expected to be listed on the Main Market of Bursa Malaysia Securities Bhd on Feb 6.

"I am pleased that our offer units were oversubscribed," KIP REIT Management chief executive officer Lim Han Gie said in a statement today. "The results are evident that the Malaysian public as well as institutional investors view us favourably."

KIP REIT expects to raise approximately RM234.2 million from the initial public offering (IPO) to be used mainly for the acquisitions of the REIT's initial portfolio consisting of five KIP Marts located in Tampoi, Kota Tinggi, Masai, Senawang and Melaka as well as a neighbourhood retail centre known as KIP Mall located in Bangi.

The company said its gross rental income has been growing steadily for the past three financial years from RM48.3 million in 2014, RM51.63 million in 2015 and RM53 million in 2016.

"These growth are achieved through rental increment, organic growth and acquisitions," it said

KIP REIT said that upon listing, its debt to asset ratio will be approximately 14.8%, which is lower than that of the average Malaysian REIT.

The company hopes this would allow KIP REIT the opportunity to undertake borrowings for future acquisitions or any asset enhancement that it intends to make.

The company is also to potentially acquire five new KIP Marts or KIP Malls which will be named eventually. The assets in the pipeline are located in Pahang, Kedah, Selangor and Negeri Sembilan. Of the five new properties, KiP Mall Kota Warisan is near completion.

Research houses PublicInvest and RHB Research have issued target prices of RM1.07 and RM1.09 respectively for KIP REIT, taking into consideration its relatively high dividend yields and its potential asset injection pipeline.