KUALA LUMPUR (Sept 14): IOI Properties Group Bhd (KL:IOIPG) has revised the proposed use of proceeds from the listing of its real estate investment trust (REIT), cutting the allocation for debt repayment by nearly half while almost doubling the amount earmarked for property development and investment.
In a bourse filing on Monday, the property group said IOIPG Malaysia REIT (IOIPG REIT) was established on Sept 11, following the registration of the deed with the Securities Commission Malaysia.
The vendors of the proposed REIT assets have entered into sale and purchase agreements with MTrustee Bhd, the trustee acting on behalf of IOIPG REIT, for the sale of the respective properties.
The master lessees for the six hotel properties also entered into hotel master lease agreements with the REIT manager and MTrustee as lessor. The hotels are Le Méridien Putrajaya and Moxy Putrajaya, Putrajaya Marriott Hotel, Four Points by Sheraton Puchong, Courtyard by Marriott Penang and W Kuala Lumpur.
Under the revised plan, RM1.53 billion, or 32.9% of the estimated proceeds, will be used to repay borrowings, compared with RM3.04 billion, or 65.6%, under the original plan, said IOI Properties.
Of the RM1.53 billion, RM435 million will be used to repay borrowings related to W Kuala Lumpur and Courtyard by Marriott Penang, while RM1.095 billion will go towards partial repayment of other borrowings. The latter will now be utilised within six months of the proposed listing, compared with 12 months previously.
Meanwhile, the allocation for project development, property investment and related activities has been raised to RM3.07 billion, or 66% of the proceeds, from RM1.55 billion, or 33.6%, previously. The revised allocation is to be utilised within 12 months of the proposed listing, compared with 24 months under the original plan.
The total proceeds raised from its REIT listing plan have also increased to RM4.66 billion, assuming the over-allotment option is not exercised, from RM4.62 billion previously.
If the over-allotment option is fully exercised, total proceeds could reach RM4.96 billion.
“The increase in the total proceeds raised from the proposed offering is attributable to the higher illustrative issue price of the offer units, which is based on the revised pro forma NAV (net asset value) of IOIPG REIT upon its establishment of 91 sen per offer unit,” said IOI Properties.
This followed a valuation update by independent property valuer Knight Frank, which raised the aggregate appraised value of the properties to be injected into the REIT to RM7.66 billion, from RM7.58 billion previously.
IOI Properties first announced the proposed establishment and listing of IOIPG REIT in April, with plans to inject a portfolio of Malaysian retail, office and hotel assets into the trust. The REIT was proposed to have an initial fund size of 5.5 billion units and be listed on Bursa Malaysia's Main Market.
The portfolio comprises nine properties, anchored by IOI City Mall in Putrajaya, which was valued at RM5.1 billion and accounted for about two-thirds of the portfolio's acquisition value. Other assets include IOI City Towers, PFCC Towers and six hotels — Putrajaya Marriott Hotel, Le Méridien Putrajaya, Moxy Putrajaya, Four Points by Sheraton Puchong, W Kuala Lumpur and Courtyard by Marriott Penang.
The acquisition of the portfolio is to be satisfied through the issuance of 5.5 billion REIT units and RM2.65 billion in cash, with the cash portion to be funded through a sukuk issuance at the REIT level.
Following the asset injection, IOI Properties plans to offer up to 2.2 billion units, or 40% of the REIT, to investors through a combination of retail and institutional offerings.
The offering was initially expected to raise about RM2 billion based on an indicative issue price of 91 sen per unit.
The retail offering includes 550.61 million units through a restricted offer for sale to existing IOI Properties shareholders, who will be entitled to one REIT unit for every 10 IOI Properties shares held on an entitlement date to be announced later.
Another 55 million units will be allocated to eligible persons, while 110 million units will be made available to the Malaysian public.
The institutional offering will comprise up to 1.48 billion units, including 687.5 million units for Bumiputera investors approved by the Ministry of Investment, Trade and Industry, with up to 796.89 million units allocated to other Malaysian and foreign institutional and selected investors.
IOI Properties' net profit more than doubled to RM2.15 billion for the financial year ended June 30, 2026 from RM1.06 billion in the previous year, while revenue climbed 45.1% to a record RM4.44 billion from RM3.06 billion.
Shares of IOI Properties closed up six sen or 1.65% at RM3.70 on Monday, valuing the group at RM20.37 billion. Over the past year, the counter has gained over 80%.