REIT deals hit RM2b in 2020, says report

KUALA LUMPUR (Dec 19): The value of transactions linked to real estate investment trusts (REITs) have reached about RM2 billion this year, The Edge Malaysia reported in its latest issue.

They involved mainly office assets “followed by industrial assets”, while hospitality and retail assets did not figure much.

“Investors are wary about market conditions and the impact of Covid-19 on offices, so the major office deals [this year] were related-party acquisitions by REITs, where the buyer has the comfort of knowing the asset and all the tenants intimately,” Nabeel Hussain, Savills Malaysia’s deputy managing director and head of capital markets told the weekly.

Reports stated that GuocoLand (Malaysia) Bhd announced the sale of 19-storey Menara Guoco in Damansara Heights to Tower Real Estate Investment Trust for RM242.1 million (in March), Sunway Bhd announced it would inject the 24-storey The Pinnacle Sunway in Sunway City, Petaling Jaya, into Sunway Real Estate Investment Trust for RM450 million (in June) and UOA Development Bhd revealed it was selling the 38-storey UOA Corporate Tower in Bangsar to its 76.55%-owned UOA Real Estate Investment Trust for RM700 million (in September).

Siva Shanker, CEO of real estate agency at Rahim & Co International Sdn Bhd, told The Edge in the report that he is “confident that these transactions are in the REITs’ favour”.

“The entire world has overreacted to Covid-19 and the economy has suffered because of this. The fear of the pandemic will subside, as the availability of the vaccine is just around the corner.

“The market (recovery of the property market) should come back in 2022/23 and these office transactions will bear fruit with higher yields, as rentals will improve,” added.

As for industrial REITs, Siva says they “are solid investments” since “they are backed by long-term tenancies or leases”.

Meanwhile, an industry “expert” said that RPT deals were more apparent this year as “developers were running out of money”.

“These (the three office REITs) were their prized possessions, which they could have held on to for capital gains but they ended up monetising the assets instead.

“During normal times, it is likely that the developers would have held on to the assets for longer,” he opined.

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

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