Key Takeaways
- • IOI Properties Group has begun marketing a private fund backed by S$6 billion ($4.7 billion) in Singapore office assets, with a partial sell-down potentially bringing S$3 billion to the developer, according to CEO Lee Yeow Seng.
- • The initial assets are South Beach Tower and IOI Central Boulevard Towers in Marina Bay; the fund is targeted to launch within the next few months and is being marketed to a select group of private equity firms.
- • The fund is overseen by former Pimco Prime Real Estate executive Varun Singh, with minimum holdings of about S$500 million and a five- to seven-year lockup.
- • IOI's Malaysia REIT is scheduled to list on Bursa Malaysia's main market on 25 November, targeting MYR 2.1 billion ($516 million) and described by Maybank Investment Bank as Malaysia's largest REIT IPO.
- • The fund and REIT are part of a deleveraging push, with IOI aiming to reduce net debt from about 85% of equity at the end of June to 30-50% over three to five years.
Summary
Malaysia's IOI Properties Group has begun marketing a private fund backed by S$6 billion ($4.7 billion) in Singapore office assets, according to Mingtiandi. Chief Executive Lee Yeow Seng said in a press briefing following the unveiling of the prospectus for the company's Malaysia REIT that a partial sell-down of two flagship properties could bring S$3 billion to the developer, representing a 50 to 60 percent sale of the fund portfolio. The initial assets are South Beach Tower and IOI Central Boulevard Towers in Marina Bay. IOI aims to launch the fund within the next few months, and Lee said the group had begun marketing to a very select group of private equity firms about three months earlier.
The fund would bring outside capital into South Beach's office component after IOI bought City Developments Ltd's remaining 50.1 percent stake in the wider mixed-use complex last year for S$834.2 million. Lee said South Beach Tower is close to fully occupied and generating a yield on cost of 4 to 5 percent. IOI Central Boulevard Towers, wholly owned and developed by IOI, counts Morgan Stanley and Jane Street among its tenants; Lee said the fund could offer investors a yield of at least 3.5 percent, in line with prime Grade A offices in Singapore. Lee said in October that former Pimco Prime Real Estate executive Varun Singh had been tapped to oversee the vehicle, which would market minimum holdings of about S$500 million with a five- to seven-year lockup. He also said IOI could add more Singapore properties and eventually list the fund as a REIT.
The fund follows a series of large Singapore transactions, including IOI's S$2.48 billion agreement in April to buy Asia Square Tower 2 from CapitaLand Integrated Commercial Trust. Lee said IOI remains in exclusive talks over the Capitol Kempinski Hotel and CHIJMES, a deal previously reported at S$1 billion. IOI is also pursuing One Raffles Place in a 50:50 joint venture with CapitaLand Investment, with partners conducting due diligence and holding exclusive talks with vendors for the complex, which Mingtiandi reported in August could fetch close to S$2.4 billion. IOI has also begun engaging with the Singapore Exchange over a secondary listing targeted for early 2027; its primary listing is on Bursa Malaysia.
The fund and the Malaysian REIT are part of a push to strengthen IOI's balance sheet after its acquisition spree. The group aims to reduce net debt to 30 to 50 percent of equity over the next three to five years, from about 85 percent at the end of June. The IOIPG Malaysia REIT opened its offer on Tuesday, with up to 2.2 billion units expected to raise MYR 2.1 billion ($516 million) for IOI Properties. At the retail offer price of 96 sen per unit, the trust would have a market capitalisation of about MYR 5.3 billion, and IOI intends to retain up to 60 percent of units after listing. The REIT's nine freehold properties were appraised at MYR 7.66 billion as of 31 May, anchored by IOI City Mall and including six Marriott-branded hotels with 1,920 rooms and two office properties. The trust projects a 6.6 percent distribution yield for 2027 at the retail offer price, with a manager intending to distribute at least 90 percent of distributable income quarterly.
The fund would bring outside capital into South Beach's office component after IOI bought City Developments Ltd's remaining 50.1 percent stake in the wider mixed-use complex last year for S$834.2 million. Lee said South Beach Tower is close to fully occupied and generating a yield on cost of 4 to 5 percent. IOI Central Boulevard Towers, wholly owned and developed by IOI, counts Morgan Stanley and Jane Street among its tenants; Lee said the fund could offer investors a yield of at least 3.5 percent, in line with prime Grade A offices in Singapore. Lee said in October that former Pimco Prime Real Estate executive Varun Singh had been tapped to oversee the vehicle, which would market minimum holdings of about S$500 million with a five- to seven-year lockup. He also said IOI could add more Singapore properties and eventually list the fund as a REIT.
The fund follows a series of large Singapore transactions, including IOI's S$2.48 billion agreement in April to buy Asia Square Tower 2 from CapitaLand Integrated Commercial Trust. Lee said IOI remains in exclusive talks over the Capitol Kempinski Hotel and CHIJMES, a deal previously reported at S$1 billion. IOI is also pursuing One Raffles Place in a 50:50 joint venture with CapitaLand Investment, with partners conducting due diligence and holding exclusive talks with vendors for the complex, which Mingtiandi reported in August could fetch close to S$2.4 billion. IOI has also begun engaging with the Singapore Exchange over a secondary listing targeted for early 2027; its primary listing is on Bursa Malaysia.
The fund and the Malaysian REIT are part of a push to strengthen IOI's balance sheet after its acquisition spree. The group aims to reduce net debt to 30 to 50 percent of equity over the next three to five years, from about 85 percent at the end of June. The IOIPG Malaysia REIT opened its offer on Tuesday, with up to 2.2 billion units expected to raise MYR 2.1 billion ($516 million) for IOI Properties. At the retail offer price of 96 sen per unit, the trust would have a market capitalisation of about MYR 5.3 billion, and IOI intends to retain up to 60 percent of units after listing. The REIT's nine freehold properties were appraised at MYR 7.66 billion as of 31 May, anchored by IOI City Mall and including six Marriott-branded hotels with 1,920 rooms and two office properties. The trust projects a 6.6 percent distribution yield for 2027 at the retail offer price, with a manager intending to distribute at least 90 percent of distributable income quarterly.
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