By Kalpana Rashiwala
SINGAPORE - Malaysian tycoon Quek Leng Chan's Singapore-listed unit GuocoLand may look at floating two real estate investment trusts (Reits) - one office and the other retail - holding assets in Singapore, China, Malaysia and possibly Vietnam, BT understands. The assets could be worth about $6 billion to $8 billion in total and the Reits, now under study, may be floated over the medium term.
A study of the group's portfolio shows it has a pipeline supply of investment properties - at various stages of development - totalling about four million square feet gross floor area (GFA) for offices (more than the office space at Marina Bay Financial Centre) and about 4.6 million sq ft retail space (about 31/2 times the shop space at Ngee Ann City) as well as some 5,000 car-park lots.
Most of this portfolio is not completed. Even after the properties are ready, it will take some time for yields to stabilise so that the assets are suitable for injection into Reits.
This portfolio of potentially Reit-able assets stems from GuocoLand's strategy of embarking on integrated developments with retail, office and sometimes even hotel components in addition to residential properties. In the past, the group would develop only residential projects for sale, but this changed a few years ago.
For integrated projects such as Guoson Centre Dongzhimen in Beijing, Guoson Centre Changfeng in Shanghai and a big project to be developed on a site next to Tanjong Pagar MRT Station in Singapore, the hotel components are likely to be sold off along with the residential units.
On the other hand, the retail and office space in these projects will be held as investment property for recurring rental income until their yields have stabilised and these assets are ripe for injection into the two proposed Reits.
Market watchers say the considerable stock of car parks in these assets could also be potentially divested or spun off as a Reit.
GuocoLand recently hired Leslie Yee, formerly head of research and funds management of The Link Management Limited, the manager of The Link Reit in Hong Kong. Mr Yee's appointment at GuocoLand - as general manager of special projects - has sparked speculation in the industry that the group is laying the groundwork for potential Reit flotations holding its regional office and retail portfolios respectively.