MCT plans to launch REIT earliest by 2020

KUALA LUMPUR (May 11): MCT Bhd plans to form a real estate investment trust (REIT) at the earliest by 2020. The REIT would acquire properties MCT has developed, including shopping malls and hotels, according to a report in The Edge Financial Daily today.

The REIT is part of the integrated property developer’s long-term strategy to generate a recurring income stream, contributing 30% to its net profit. The remaining 70% will be derived from its core property development business.

MCT CEO Datuk Seri Tong Seech Wi (pictured, left) said the REIT will be set up with a “sizeable” portfolio of assets that generate recurring income.

“A lot of our investment assets are expected to be completed by 2020,” he told The Edge Financial Daily on the sidelines of the recent Invest Malaysia Kuala Lumpur 2015 conference.

“Optimally, all the shopping malls and hotels of MCT will be included in the REIT. We are looking at the long term. It is not short-term thing,” he said.

To date, MCT has completed property projects in Subang Jaya and Cyberjaya in Selangor, with total gross development value (GDV) of RM1.32 billion.

For Tong, earnings sustainability plays an important role in managing MCT. He believes the group will be better positioned with recurring income generated from the REIT.

“There are companies in Malaysia that are solely property developers. That to me is not healthy because it doesn’t give you sustainability,” he said.

MCT executive director Lim Kok Boon (pictured, right) said the REIT will allow the company unlock the value of its property assets.

“As we progress, we will go into REITs. We will monetise our assets and thus have another round of cash flow to expand [the group],” he said.

MCT is currently constructing a hotel in Cyberjaya and will develop two at its One City development in Subang Jaya over the next few months. Construction should be completed in four years.

Tong declined to name the hotel brands involved in the negotiations, but said the successful party will operate the three hotels and possibly its existing hotel in Subang Jaya, which MCT currently manages.

Noting Philippine-listed Ayala Land Inc's strategic investment in MCT, Lim said the firm will leverage Ayala's expertise because it has tie-ups with international hotel brands to operate its hotels.

The group has ongoing development projects with a total GDV of RM3.02 billion, while its future projects are estimated at RM5.73 billion in GDV.