YTL Corp., Malaysia’s biggest builder, said it will restructure its 8 billion-ringgit ($3.3 billion) property trust and hotel portfolio into distinct units ahead of acquisitions.
Its Singapore-listed Starhill Global REIT will become retail-centric, buying two Malaysian malls and the David Jones Building in Perth, Australia, while Kuala Lumpur-listed Starhill Real Estate Investment Trust will focus on the hotel and hospitality industry, YTL Chief Executive Officer Francis Yeoh told reporters in Kuala Lumpur today.
“This will benefit both REITs in terms of pursuing growth and development strategies in a single, focused class of assets,” Yeoh separately said in a statement.
The restructuring will see assets under the Singapore trust significantly grow, while those under its Malaysian counterpart will initially shrink before other YTL hotel assets are potentially injected.
The trusts have underperformed this year. Singapore’s Starhill Global REIT, previously known as Macquarie Prime Real Estate Investment Trust, has risen 39% this year compared with a 56% surge in the benchmark Straits Times Index. It currently owns two shopping malls in Singapore’s Orchard Road, plus seven properties in Tokyo and one in Chengdu, China.
The Singapore trust will pay 1.03 billion ringgit to buy Starhill Real Estate Investment Trust’s interests in Starhill Gallery and Lot 10 Shopping Centre in Kuala Lumpur, the statement said. It will also acquire the David Jones Building, one of just two retail pedestrian malls in Perth, from Centro Properties Group for $148 million, YTL said.
The purchases will increase the Singapore trust’s portfolio size to about $2.5 billion, the statement added.
Malaysian Trust
Malaysia’s Starhill Real Estate Investment Trust, which Yeoh told reporters may later be renamed YTL Hospitality REIT, has also underperformed this year, climbing 24% compared to a 45% rise in the main FTSE Bursa Malaysia KLCI Index.
After selling its interests in two malls, the Malaysian trust will be left with just two assets in its portfolio, the J.W. Marriott Hotel Kuala Lumpur and some serviced apartments, shopping and parking space within the Residences at the Ritz- Carlton, Kuala Lumpur.
The disposals will “provide yield accretive returns to Starhill REIT’s unitholders,” the statement said.
YTL may inject some of its other hotel assets into this Malaysian trust, including its Pangkor Laut, Tanjong Jara and Cameron Highlands resorts, along with The Ritz-Carlton, Kuala Lumpur hotel and remaining parts of The Residences. Some of the company’s heritage hotels including The Majestic Malacca and business hotels such as the Vistina chain may also be injected, Yeoh said in the statement.
“From a global standpoint, we see tremendous opportunities for Starhill REIT to acquire high-end assets in key international hot-spots, including Bali, Saint Tropez, Phuket,” he added.
Source : The Edge – 18 Nov 2009
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