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YTL plans Malaysia's 1st real estate investment trust

   

The Star Online, October 9, 2004

YTL Corp Bhd is planning to put RM1.5bil worth of properties into the country's first real estate investment trust (REIT) to raise capital for reinvestment.?

The company intended to put its Starhill and Lot 10 shopping centres in Kuala Lumpur, including retail space bought from Singapore’s C.K. Tang Ltd and the J.W. Marriott hotel, into the trust, said managing director Tan Sri Francis Yeoh. ?

The trust, he added in an interview, would be set up “as soon as possible” to take advantage of tax breaks for REIT investors announced last month. ?

The proposed REIT, the first to be announced in Malaysia, would enable YTL to raise cash from its properties and give investors a stake in its most valuable real estate assets. The country's expanding economy is helping property prices recover from the slump experienced during the Asian financial crisis of the late 1990s, boosting rental income and capital gains.?

“It’s going to be a new asset class for Malaysian investors, in addition to just bonds, shares and government securities,” commented HLG Asset Management Bhd chief executive Richard Lin. “We’re quite excited to see the Government pushing for REITs and giving incentives.”?

The Starhill and Lot 10 shopping malls, together with the J.W. Marriot hotel, had a combined book value of RM471mil as at June last year, according YTL's 2003 annual report.?

The properties, which the company bought for about RM323mil during the Asian financial crisis, have a current market value of as much as RM1.5bil. The proposed trust is expected to give investors a return of 7% to 8%, according to Yeoh. ?

“The REIT is an alternative way to unlock capital for YTL Corp,” said Yeoh. With the additional capital, “we can go look for more properties to reinvest in and give a yield to people who want to invest in the YTL name, especially on property.”?

YTL would sell part of the trust to domestic and overseas investors, and had short-listed two investment banks to advise on the sale, Yeoh said, but declined to name the banks.?

YTL was also expected to record “larger” sales and profits over the next five years, helped by overseas investments, Yeoh said.?– Bloomberg





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