IGB going ahead with commercial REIT IPO

KUALA LUMPUR (May 30): The Covid-19 pandemic and its economic fallout may have spooked many companies into putting their business plans on the back burner, but not IGB Bhd, The Edge reported today.

The property developer is marching ahead with plans to spin off its commercial assets into a commercial real estate investment trust comprising nine of its office buildings, and listing it on Bursa Malaysia.

Although IGB remains tight-lipped on the schedule for the planned initial public offering (IPO), sources say it could be as early as November.

“Yes, the plans are still on for IGB’s planned commercial REIT listing and would include the same list of assets announced to Bursa [Malaysia] in November,” IGB’s head of group strategy and risk Tan Mei Sian tells The Edge, without providing additional details.

Hong Leong Investment Bank had been appointed the principal bookrunner for the proposed REIT establishment and listing.

Of the nine office buildings in Kuala Lumpur to be included in the proposed REIT, seven are within Mid Valley City. They are Menara IGB, Centrepoint South, Centrepoint North, The Gardens South Tower, The Gardens North Tower, Menara Southpoint (excluding the residential units) and Boulevard Offices (Blocks 25 and 27). The remaining two — Menara Tan & Tan and GTower — are located in Jalan Tun Razak.

Collectively, the nine properties have some 3.5 million sq ft in net lettable area. A source estimates that “at an average price of RM900 to RM1,000 psf, the assets are roughly valued at between RM3.15 billion and RM3.5 billion”.

However, industry experts believe it may be better for IGB to defer the listing until the market recovers in order to obtain a better valuation for the proposed REIT, or to consider alternative listing options.

Read the full report in this week’s The Edge Malaysia