IOI Properties earmarks RM3.07b in REIT proceeds for investment, development

PETALING JAYA (Sept 15): IOI Properties Group Bhd has more than doubled the allocation for project development, property investment and related activities under its Malaysian real estate investment trust (REIT) exercise to RM3.07 billion, from RM1.55 billion previously.

The RM3.07 billion represents 66% of the estimated RM4.66 billion in total gross proceeds from the proposed disposals and offering for IOIPG Malaysia Real Estate Investment Trust (IOIPG REIT), assuming the over-allotment option is not exercised.

If the option is fully exercised, total estimated proceeds would rise to RM4.96 billion, of which RM3.37 billion, or 68%, would be allocated to project development, property investment and related activities, IOI Properties said in a Bursa Malaysia filing on Monday (Sept 14).

Under the previous proposal in April, IOI Properties had allocated RM1.55 billion, or 33.6% of estimated proceeds, for project development and property investment expenditures, excluding property-related investment and acquisition opportunities.

Correspondingly, the allocation for debt repayment has been reduced to RM1.53 billion, or 32.9% of proceeds, from RM3.04 billion, or 65.6%, previously.

Of the RM1.53 billion, RM435 million is earmarked for the repayment of borrowings related to W Kuala Lumpur and Courtyard by Marriott Penang hotel developments, while RM1.095 billion is for the partial repayment of other borrowings.

IOI Properties expects to use the RM1.095 billion within six months of the proposed listing, compared with 12 months under the previous plan. The RM3.07 billion for project development, property investment and related activities is expected to be utilised within 12 months of the proposed listing.

REIT established, property agreements signed

IOIPG REIT was established on Sept 11 following the registration of its deed with the Securities Commission Malaysia on the same day.

On Monday, the vendors entered into sale and purchase agreements with MTrustee Bhd, acting on behalf of IOIPG REIT, and the relevant registered proprietors, where applicable, for the properties proposed to be injected into the REIT.

The proposed disposals are expected to generate RM2.65 billion in cash consideration.

Based on an illustrative issue price of 91 sen per unit, the proposed offering of 2.2 billion offer units is expected to raise RM2 billion, bringing total estimated gross proceeds from the disposals and offering to RM4.66 billion before any exercise of the over-allotment option.

Full exercise of the option would raise an additional RM300.3 million from the proposed offering, taking total estimated gross proceeds to RM4.96 billion.

The illustrative issue price of 91 sen per unit represents IOIPG REIT’s revised pro forma net asset value upon its establishment. The revision followed an increase in the aggregate appraised value of the properties to about RM7.66 billion from RM7.58 billion.

Hotel lease agreements signed

The relevant master lessees also entered into hotel master lease agreements on Monday with the REIT manager and MTrustee, acting on behalf of IOIPG REIT as lessor.

The agreements cover Le Méridien Putrajaya, Moxy Putrajaya, Putrajaya Marriott Hotel, Four Points by Sheraton Puchong, Courtyard by Marriott Penang and W Kuala Lumpur.

IOI Properties said the other terms and conditions of the proposals remain unchanged.

The initial REIT portfolio comprises retail, office and hotel assets, including IOI City Mall, IOI City Towers, PFCC Towers and the six hotels.

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