- It was announced yesterday that IGB’s 75%-owned, KrisAssets
has proposed to set up a retail REIT (IGB REIT), comprising its two valuable
assets i.e. MidValley Megamall and MidValley Gardens.
- We understand CIMB Investment Bank, Credit Suisse and Hong
Leong Investment Bank have been appointed as joint global coordinators and
joint book-runners for this proposed IPO.
- Although not mentioned, we believe both assets would be able
to gain valuation of at least RM4bil or at a cap rate of 6%.
- As we have highlighted in our previous reports, the monetisation
move would unleash a significant revaluation surplus from assets re-pricing,
and free up capital for redeployment.
- The establishment of a REIT would optimise the ownership structure
of its prime properties. This move, we believe, is triggered by the high
implied capital values evident in the recent listing of Pavilion REIT and
CapitaMall Trust and a flat interest rate cycle.
- IGB may rake in between RM465mil and RM1.4bil cash, depending
on its equity stake in the REIT. We would expect a special dividend and IGB
would deploy the freed capital to fund development projects overseas whereby it
is looking at opportunities in London and Taiwan.
- There is a further RM1.05bil revaluation surplus in IGB’s under-appreciated
portfolio of well-occupied office buildings (2.2msf), which are carried in its
book at low historical costs. The retail REIT may be the trailblazer for IGB to
launch an office REIT further out.
- A hospitality REIT for its hotel assets would complete the
re-pricing of its assets, transforming IGB to an asset-light fee-based entity
with controlling stakes in three listed asset-specific REITs.
- We maintain our BUY rating on IGB Corp with our fair value
unchanged at RM3.50/share based on a 22% discount to our NAV estimate of
RM4.50/share.
Source: AmeSecurities
No comments:
Post a Comment