Key Takeaways
- • IOI Properties Group Bhd (KL:IOIPG) has begun marketing a private real estate fund backed by Singapore assets worth S$6 billion (RM19.1 billion) and plans to launch it within the next few months, according to CEO Datuk Lee Yeow Seng.
- • An illustrative sale of a 50% stake in the fund could raise nearly RM10 billion for IOI Properties.
- • The fund would target South Beach and IOI Central Boulevard Towers, both mature assets with near-full occupancy and a yield on cost of about 4% to 5%, offering investors a yield of at least 3.5%.
- • IOI Properties is targeting a secondary listing on the Singapore Exchange in early 2027 and has begun engaging SGX on the process.
- • The moves are part of an effort to cut net debt-to-equity from about 85% at end-June to 30%-50% over three to five years.
Summary
IOI Properties Group Bhd (KL:IOIPG) is looking to launch a private real estate fund for its Singapore assets in the next few months, according to chief executive officer Datuk Lee Yeow Seng, who spoke to reporters in Putrajaya on Tuesday. The developer has started marketing the fund, which is backed by assets worth S$6 billion (RM19.1 billion), to investors. Lee said an illustrative sale of a 50% stake could raise nearly RM10 billion for the company, calling that "quite significant." He made the remarks at a briefing following the unveiling of the prospectus for the IOI Properties-related IOIPG Malaysia Real Estate Investment Trust initial public offering.
The Singapore fund and the REIT IPO are part of IOI Properties' efforts to deleverage and strengthen its balance sheet after an earlier acquisition spree. The company aims to bring net debt, as a percentage of equity, down to 30%-50% over the next three to five years, from about 85% at the end of June.
Lee said IOI Properties has identified South Beach and IOI Central Boulevard Towers for the Singapore private trust fund. Both properties are mature and near fully occupied, generating a yield on cost of close to 4% to 5%. The fund could offer investors a yield of at least 3.5%, in line with the market rate for prime Grade-A office space in Singapore. Lee also said investors could see capital appreciation of close to 10% over the next five to seven years.
On the listing front, IOI Properties has begun engaging the Singapore Exchange for a secondary listing targeted for early 2027. Lee said a secondary listing can be completed quickly because many compliance requirements are already met through its primary listing on Bursa Malaysia. Separately, a general offer of a 10% stake in IOI Properties by Vertical Capacity Sdn Bhd, a Lee family-controlled vehicle, "should be able to unlock close to RM2 billion" of the current valuation of about RM20 billion, Lee said. "These are major exercises, and it is going to generate a lot of cash to the group," he added.
The Singapore fund and the REIT IPO are part of IOI Properties' efforts to deleverage and strengthen its balance sheet after an earlier acquisition spree. The company aims to bring net debt, as a percentage of equity, down to 30%-50% over the next three to five years, from about 85% at the end of June.
Lee said IOI Properties has identified South Beach and IOI Central Boulevard Towers for the Singapore private trust fund. Both properties are mature and near fully occupied, generating a yield on cost of close to 4% to 5%. The fund could offer investors a yield of at least 3.5%, in line with the market rate for prime Grade-A office space in Singapore. Lee also said investors could see capital appreciation of close to 10% over the next five to seven years.
On the listing front, IOI Properties has begun engaging the Singapore Exchange for a secondary listing targeted for early 2027. Lee said a secondary listing can be completed quickly because many compliance requirements are already met through its primary listing on Bursa Malaysia. Separately, a general offer of a 10% stake in IOI Properties by Vertical Capacity Sdn Bhd, a Lee family-controlled vehicle, "should be able to unlock close to RM2 billion" of the current valuation of about RM20 billion, Lee said. "These are major exercises, and it is going to generate a lot of cash to the group," he added.
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