Business Times Malaysia, 26 November 2005
By DALILA ABU BAKAR
YTL Corp Bhd’s planned international roadshow to sell its Starhill real estate investment trust (REIT) will simultaneously include its own initiatives to promote Kuala Lumpur and Malaysia.
The infrastructure and property group will market the REIT to as far as London in the UK and the Netherlands. It expects to raise RM523.4 million from the initial public offering (IPO).
“The roadshow is not because we really need to sell REIT to them, but because we want to tell about Malaysia ... its exciting retail sector in Kuala Lumpur,” YTL Corp managing director Tan Sri Francis Yeoh said in an interview with “The Exchange” programme aired on TV3 last night.
Yeoh, who is also the managing director of Pintar Projek Sdn Bhd, a subsidiary of YTL Corp which manages the trust, said that while Starhill is new in the retail sector, it has the honour of having the biggest floor area in the world catering to watch retailers.
“We have attracted leading brands which are the icons in the world’s watch retail industry. We now have 20,000 sq ft on one floor, which is the largest in the world. This is the story that the world has not known.
“We are only five years, a new kid on the block, but we have placed ourselves in the same league with the world’s leading watch producers,” he said.
Yeoh said Starhill is also an exclusive food destination, offering some 70,000 sq ft of fine restaurants that offer the best food and cuisine from the best chefs.
He said the company wants to take the Starhill brand regionally and internationally. “It’s quite easy to do that because all the existing branded icons will follow us.”
YTL Corp, which also has power stations and hotels in its stable, hopes to become a US$100 billion (US$1 = RM3.78) company by 2020, from US$5 billion currently.
“With our resources such as skilled and intellectual capital and cash, it is not difficult to achieve the target. Our people only need to ensure that the company achieves an annual growth of 20 per cent. With the 20 per cent compounded growth, we can achieve that,” Yeoh said.
Proceeds from the REIT will be used to buy more assets in Malaysia and overseas, including in Europe.
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.
Yeoh said that although Starhill is a new player in the global retail industry, its returns to date have been encouraging, contrary to what some parties think.
“The rental rate is still low now compared to that in Singapore and Hong Kong, but investors know that the rental rate which will be revised will be high, so Starhill will record an impressive performance,” he said.
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 the REIT IPO.
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