KIP REIT exploring third-party asset options


KUALA LUMPUR (Sept 27): KIP Real Estate Investment Trust (REIT) said it has options on the table to acquire more third-party ready assets, upon the successful addition of its first external asset, AEON Mall Kinta City in Ipoh, Perak to its portfolio.

“We are still looking at a few options on our table, but nothing is concrete yet. We are waiting for all these conditions precedent for AEON Mall Kinta City to be fulfilled, before we move on to the next steps,” KIP REIT Management Sdn Bhd managing director Datuk Chew Lak Seong told a press conference today.

Chew was speaking to reporters after KIP REIT’s annual general meeting (AGM) here today, which saw its unit holders approving the issuance of new units of up to 20% of the REIT's approved fund size of 505.30 million units.

He said this is in preparation for any acquisition opportunities that may surface in the next 12 months.

“We are exploring everywhere. We are moving from south to central, to north [Peninsula Malaysia] now, and eventually [to] the other side (East Malaysia),” said Chew, adding this is in line with the REIT’s strategy to expand its geographical spread.

Commenting further on diversification, chief executive officer Chan Heng Wah said: “It is all yield play. As long as it gives us good yield, and the property meets our criteria, we will consider it. It will not necessarily be malls, we are diversified geographically, and we may also look at diversity in terms of asset class.”

In the meantime, Chew said the REIT and parties involved will be working on fulfilling conditions for the acquisition over the next six to nine months. Based on the RM208 million purchase consideration, the addition of AEON Mall Kinta City will translate into a yield of 7.2%, according to Chan.

As at end-June, total assets under KIP REIT’s management are valued at RM616.2 million. 

This includes five community-centric retail centres known as KIP Marts — in Senawang, Melaka, Kota Tinggi, Masai, and Tampoi — and one KIP Mall in Bangi. Average occupancy for the six assets stood at 84.9%.

To grow its asset size to its targeted RM1.5 billion to RM2 billion, the REIT is also looking to inject KIP Mall Kota Warisan in Sepang into its portfolio, under the right of first refusal (ROFR). 

The Kota Warisan asset now has an occupancy rate of 85%, after nearly one year in operation. The figure is expected to increase to 90% by year-end, the management guided today. 

KIP REIT also holds the ROFR for the acquisition of four more KIP Marts. As of today, two in Sungai Buloh and Kuantan are under construction, while two others, in Sendayan and Sungai Petani, are still in planning stage, the REIT said.

At 1.55pm, KIP REIT’s unit price was two sen or 2.47% up at 83 sen, translating into a yield of 8.23% based on its 12-month dividend payout of 6.83 sen.

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