IGB REIT to raise RM838m

By Star Online: Business
10 August 2012

PETALING JAYA: IGB real estate investment trust (IGB REIT) expects to raise RM837.5mil from the initial public offering (IPO) of 670 million units on Bursa Malaysia's Main Market.

The IPO represents 19.7% of the REIT's total listing of 3.4 billion units. Based on a retail price of RM1.25 per unit, the total market capitalisation of IGB REIT upon listing will be approximately RM4.25bil.

IGB REIT, a unit of property developer IGB Corp Bhd, said in its prospectus exposure issued to the Securities Commission that it intended to distribute up to 100% of its distributable income for the period commencing from the date of establishment until Dec 31, 2014, and subsequently at least 90% on a half-yearly basis.

IGB Corporation - RM0.67/share accretion to IGB! BUY

By Am Research
14 May 2012

RM0.67/share accretion to IGB!

- We reaffirm BUY on IGB, with an unchanged fair value at RM3.50/share based on a 22% discount to our NAV estimate of RM4.50/share.

- It was announced on Bursa that IGB’s 75%-owned KrisAssets will sell MidValley Megamall and Gardens Mall for RM4.6bil to IGB REIT. The deal values the two malls at a whopping RM1,815psf – an about 25% discount to Pavilion Mall’s valuation of RM2,400psf – and would result in a revaluation gain of RM1.3bil to KrisAssets or RM992mil (or RM0.67/share accretion) to IGB.

- We understand the acquisition of the mall will be satisfied via the issuance of 3,400 million units in IGB REIT and the balance of RM1.2bil via cash. 

- Of the 3,400 million units, 2,730 million units will be distributed to its entitled shareholders and KrisAssets has proposed an offer for sale of the remaining 670 million units via an IPO of IGB REIT, of which 469 million units will be offered to institutional funds.

- The 2,730 million units form part of KrisAsset’s proposed distribution to its entitled shareholders amounting to RM3.9bil. The remaining RM1.27bil would comprise special dividend and capital repayment which translates into an attractive RM2.88/share. 

- Based on IGB’s 75%-stake, the company stands to get a handsome cash payoff of RM951mil or RM0.64/share.

- Nonetheless, IGB would need a delicate balance between a special dividend and deploying freed capital to fund development projects overseas. 

- As we have highlighted earlier, IGB is exploring development opportunities in London and Taipei, whereby we understand that IGB would require about RM1bil to fund the acquisition of a site in London.

- IGB rose by close to 20% after our upgrade in January, but has been hovering at RM2.75-RM2.80/share over the past two months given the weak sentiment in the market.

- We expect the stock to trade at a narrower discount – now at about 39% - given the good valuation given to its prime assets.

Price RM2.74 

Fair Value RM3.50 


[Source]

IGB Corporation - Going ahead with REIT of MidValley retail assets BUY

By AmResearch
17 Apr 2012

- It was announced yesterday that IGB's 75%-owned, KrisAssets has proposed to set up a retail REIT (IGB REIT), comprising its two valuableassets i.e. MidValley Megamall and MidValley Gardens. 

- We understand CIMB Investment Bank, Credit Suisse and HongLeong Investment Bank have been appointed as joint global coordinators andjoint book-runners for this proposed IPO. 

- Although not mentioned, we believe both assets would be ableto gain valuation of at least RM4bil or at a cap rate of 6%.

- As we have highlighted in our previous reports, the monetisationmove 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 structureof its prime properties. This move, we believe, is triggered by the highimplied capital values evident in the recent listing of Pavilion REIT andCapitaMall 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 trail blazer for IGB tolaunch an office REIT further out.  

- A hospitality REIT for its hotel assets would complete there-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 ofRM4.50/share.

Price- RM2.83 

Fair Value- RM3.50

[Source]