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Robinsons shutdown will affect IGB REIT but only short term, say analysts

KUALA LUMPUR (Oct 30): Retailer Robinsons, one of the anchor tenants in The Gardens Mall, is shutting down its operations in Kuala Lumpur and Singapore for good.

Investment analysts see the impact of Robinsons shutting operations on IGB Real Estate Investment Trust (REIT), which owns The Gardens Mall, to be minimal and short-term.  

Hong Leong Investment Bank Research analyst Nazira Abdullah told theedgemarkets.com that Robinsons accounted for 12% of The Gardens Mall's net lettable area, which translates into 3% to 4% of the group’s revenue, thus the impact is minimal.

“As the flagship shopping centre, it wouldn't be difficult for them to find a new tenant, to replace the Robinsons,” said Nazira.

She maintained her "buy" call on the REIT with a target price of RM2.17. She suggested investors accumulate the stock at weakness.

“The mall has a good reputation. The management is also positive if one tenant goes out, [a] long list of tenants is waiting to enter the mall,” she added.

RHB Research Institute analyst Loong Kok Wen expects the news to have a knee-jerk reaction on IGB REIT's share price. Nonetheless, she believes the long-term fundamentals of the REIT remain intact.

At the time of writing, IGB REIT fell four sen or 2.37% to RM1.65, valuing the company at RM5.87 billion.

“Robinsons moving out is definitely negative to IGB REIT, but the impact will be short term. It also depends on how the Covid-19 pandemic will progress as we move on,” she told theedgemarkets.com.

She noted Robinsons being an anchor tenant, its rental rate is generally lower than specialties stores.

“It depends on how they want to reposition the mall in [the] longer run, whether they want to get an anchor tenant, or they want to subdivide the floor space and make it as multiple shops, like what Suria KLCC did after Parkson moved out,” she said.  

Loong noted that The Gardens Mall and Mid Valley Megamall, as neighbourhood malls in Jalan Klang Lama, Bangsar, Seputeh, Petaling Jaya, its positioning of the malls remains strong and intact.

She maintains her "buy" call on IGB REIT with a target price of RM1.87.

IGB REIT declined to comment when contacted.

It was reported that Robinson Co (Malaya) Sdn Bhd is set to close its two department stores in Malaysia and start the liquidation process following its inability to continue operations due to weak demand. The department store operator has two stores in Malaysia, which are located at The Gardens Mall and The Shoppes at Four Seasons Place.

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