By ANNA MARIA SAMSUDIN

PROPERTY group YTL Corp Bhd plans to raise about RM523.39 million from the initial public offering (IPO) of its Starhill real estate investment trust (REIT), which would be Malaysia’s largest property trust to be listed so far.

The REIT would use 80 per cent of its proceeds to buy more assets in the country, Europe and even the US, said Tan Sri Francis Yeoh Sock Ping, managing director of YTL Corp, which also operates power plants and hotels.

The trust would be the second to be listed in the country after Axis REIT Managers Bhd, which raised about RM123 million in its IPO in August.

Analysts expect REITs — companies or funds that own real estate assets that pay almost all their income as dividends — to flourish in Malaysia, helped by tax breaks and their attractive dividend yields.

“There is an abundant supply of properties that could fit into the Starhill brand in Malaysia and other countries. We won’t run short of appropriate properties to fit into Starhill REIT,” he told a press conference after the launch of Starhill REIT prospectus in Kuala Lumpur yesterday.

Apart from its high-profile property portfolio, the bullish future earnings outlook also serve as a pull factor to investors, MIDF Sisma Securities Sdn Bhd analyst Asnul Badrisyah said.

Starhill and Lot 10, have occupancy rates of 99 per cent and 96 per cent, respectively as of October.

“The occupancy rate is very impressive. In addition, plans to expand its properties beyond Malaysia would also promise a bullish future outlook,” he said.

En route to a main board listing on December 16, Starhill REIT is offering 509.6 million new units, which accounts for 49 per cent of its total units.

About 29.99 million units will be offered to retail investors at 98 sen a piece.

The balance of 479.6 million will be offered to institutional investors via a bookbuilding exercise.

The property trust comprises three of the city’s top retail and property icons, namely the Starhill and Lot 10 shopping complexes and JW Marriott hotel, valued at RM1.15 billion collectively.

The REIT will pay all of its earnings as dividend in the first two years and 95 per cent of earnings in subsequent years.

Based on the indicative price of RM1.03 per unit, the REIT would have a dividend yield of 6.1 per cent. It would have a yield of 6.4 per cent based on a retail IPO price of 98 sen.

Starhill REIT has been forecast to make a distributable income of RM32.3 million for the six months to June 30 2006, on the back of RM47.4 million in net revenue.

ECM Libra Securities Sdn Bhd, DBS Bank Ltd and the Hong Kong and Shanghai Banking Ltd are the joint book-runners for this offering with AmMerchant Bhd Group as the senior co-lead manager.

ECM Libra is also the lead financial adviser for this IPO.

ECM Libra chairman Datuk Kalimullah Hassan, in his speech, said the listing of Starhill REIT would be an important milestone for the YTL group as well as the country’s investment scene.

This is based on its potential in reeling in foreign institutional investors.

“This is an issue many are waiting for where investors will get opportunity to own these exclusive and high-quality properties, which are otherwise not within reach,” he said in his speech.

REIT offerings have received enthusiastic public attention since the Government revised the REIT guidelines last year.

The Axis REIT was oversubscribed when it closed its initial public offering in August. Institutional investors asked for about 18 times more than what was on offer, while the retail portion of 15 million units was also oversubscribed by 3.72 times.

Other companies expected to float their REITs are fund manager Permodalan Nasional Bhd and hospital operators Pantai Holdings Bhd and KPJ Healthcare Bhd.