PUTRAJAYA (Nov 3): IOI Properties Group Bhd (KL:IOIPG) is looking to launch a private real estate fund for its Singapore assets in the next few months.
The property developer has started marketing the fund backed by assets worth S$6 billion (RM19.1 billion) to investors, chief executive officer Datuk Lee Yeow Seng said on Tuesday. A sale of a 50% stake in the fund, illustratively, could raise nearly RM10 billion for IOI Properties, he said.
“That would be quite significant,” Lee said at a briefing after unveiling the prospectus for IOIPG Malaysia Real Estate Investment Trust's initial public offering (IPO).
The IPO and the moves in Singapore are part of IOI Properties’ efforts to deleverage and bolster its balance sheet following an earlier acquisition spree. IOI Properties is also targeting early-2027 for its secondary listing on the Singapore Exchange.
The aim is to bring down net debt, as a percentage of equity, to 30%-50% over the next three to five years from about 85% at the end of June.
Lee said IOI Properties had identified South Beach and IOI Central Boulevard Towers for the Singapore private trust fund. Both properties are mature and enjoy near full occupancy, generating “a yield on cost of close to 4% to 5%”, he noted.
The fund could offer investors a yield of at least 3.5%, in line with the market rate for prime Grade-A office space in Singapore, Lee said. “On top of that, we can also provide a capital appreciation of close to 10% over the next five to seven years to our investors,” he said.
WATCH: IOI Properties to launch Singapore private real estate fund
Secondary listing
IOI Properties has begun engaging the Singapore Exchange for its secondary listing, Lee said.
A general offer of a 10% stake in IOI Properties by Vertical Capacity Sdn Bhd, the Lee family controlled vehicle, “should be able to unlock close to RM2 billion of the current valuation of about RM20 billion”, he said.
“These are major exercises, and it is going to generate a lot of cash to the group,” he added.
In an interview with The Edge Singapore last month, Lee said a secondary listing can be completed very quickly, as many compliance requirements are already in place thanks to its primary listing on Bursa Malaysia.
“It’s about time that we actually have more presence in Singapore,” Lee was quoted as saying. “I think our listing in Singapore would receive a very positive response from the investment market.”