IGB Real Estate Investment Trust was listed on Bursa Malaysia on 21 September 2012 with an initial portfolio of 2 properties. Since its IPO listing, IGB REIT has not acquired or disposed any investment properties. Thus, it maintained its original portfolio of 2 properties over the past 5 years. As I write, the 2 properties are valued at RM 4.89 billion, placing IGB REIT as the fourth largest REIT listed on Bursa Malaysia. In this article, I’ll share 9 quick things that you need to know about IGB REIT before you invest.
#1: Stock Symbol
Ticker Symbol: KLSE: IGBREIT / KLSE: 5227
Market Capitalization: RM 5.54 billion (19 December 2017)
Share Price: RM 1.58 (19 December 2017)
Syariah Compliant: Nope
#2: The Business
IGB REIT derives income from:
Mid Valley Megamall
Mid Valley Megamall is a 5-storey shopping centre located in Kuala Lumpur. It is valued at RM 3.61 billion, accounting for 73.8% of IGB REIT’s portfolio valuation. Today, it is one of the largest retail malls in Malaysia with a net lettable area of 1.82 million sq. ft. In 2016, Mid Valley Megamall has recorded a 99.9% occupancy rate with a total of 512 tenants. The retail mall has 4 major anchor tenants such as Aeon Big, Golden Screen Cinemas, Metrojaya and Aeon. In 2016, the retail mall has contributed RM 354.7 million and RM 266.3 million in gross revenue and net property income respectively.
The Gardens Mall
The Gardens Mall is a 6-storey premium shopping centre which is situated next to Mid Valley Megamall. It is valued at RM 1.28 billion, accounting for 26.2% of IGB REIT’s portfolio valuation. The Gardens Mall has a net lettable area of 0.87 million sq. ft where it has achieved a 99.7% occupancy rate in 2016. It has a pool of 247 tenants with key tenants such as Robinsons and Isetan. In 2016, The Gardens Mall has contributed RM 152.7 million and RM 94.8 million in gross revenue and net property income respectively.
#3: The Financials
I’ve excluded the results of 2012 as the period covered was just a little more than 3 months (21 September 2012 to 31 December 2012).
Over the last 4 years, IGB REIT has achieved growth in gross revenue, net property income, and distributable income.
Source: Annual Report 2016 of IGB REIT
Source: Annual Report 2016 of IGB REIT
#4: Major Acquisitions
As at 30 September 2017, there is no announcement or proposal of any major acquisition or disposal of investment properties by IGB REIT.
#5: Lease Profile
There is no information revealed on IGB REIT’s lease expiry profile.
As I write, IGB REIT is trading at RM 1.58 a unit.
As at 30 September 2017, IGB REIT has reported to have RM 1.07 in net asset value a unit. Thus, its current P/NAV works out to be 1.48.
IGB REIT adopts a distribution policy to declare and pay out at least 90% of its distributable income on a half-yearly basis. For the 1st half of 2017, IGB REIT has paid out 4.38 sen in DPU.
If IGB REIT is able to maintain its DPU at 4.38 sen for the next 2 half yearly distributions, it would pay out 8.76 sen in DPU. As such, its gross dividend yield is expected to be 5.54%. For individual investors, it is prudent to deduct 10% withholding tax from 8.76 sen when calculating your net dividend yield, as such, I would expect net dividend yield to be 4.99%.
#7: Debt Profile
On 18 August 2017, IGB REIT announced that IGB REIT Capital Sdn Bhd, a special purpose vehicle (SPV) wholly-owned by IGB REIT had lodged the Medium Term Notes (MTN) programme with the Securities Commission of Malaysia.
On 20 September 2017, IGB REIT Capital Sdn Bhd issued its first tranche AAA-rated MTN amounting RM 1.2 billion to IGB REIT for the purpose of full settlement of its previous fixed rate term loan. The first tranche (Tranche 1) of MTN has a tenure of 7 years effective from 20 September 2017 with a fixed coupon rate of 4.4%.
As at 30 September 2017, IGB REIT has recorded RM 1.2 billion in total borrowings. It works out to be 23.5% of IGB REIT’s total asset value of RM 5.11 billion, thus, is in line with its intention to maintain below 50% in debt-to-total assets.
#8: Investor Relations
For further enquiries or to request for additional investment information on IGB REIT’s Investors Relation matters, you may contact:
#9: Major Shareholders
As at 31 December 2016, the substantial shareholders of IGB REIT are:
– IGB Corporation Bhd: 52.37%
– Employees Provident Fund Board: 6.36%
– Kumpulan Wang Persaraan (Diperbadankan): 7.47%
– Newton Asian Income Fund: 2.23%
– Public Regular Savings Fund: 1.89%
Dato’ Seri Robert Tan Chung Meng is ultimately the largest shareholder with 0.27% direct shareholdings and 53.27% indirect shareholdings held within IGB Corporation Bhd. Dato’ Seri Robert Tan Chung Meng is appointed as the Managing Director of IGB REIT.