Muted debut for KIP REIT on Bursa Malaysia

KUALA LUMPUR (Feb 6): Shares of KIP Real Estate Investment Trust (REIT) opened at RM1.04 sen or 4 sen above its offer price of RM1 on its Bursa Malaysia's main market debut today.

At 10.40am, its counter was 1% or 1 sen higher at RM1.01 with over 9.2 million shares traded.

KIP REIT, the first REIT to be listed on Bursa's main market this year, raised RM234.2 million during its initial public offering (IPO) for the acquisitions of its six assets in Johor, Melaka and Selangor.

The REIT's IPO exercise saw the 10.2 million units offered to the Malaysian public oversubscribed by more than five times.

KIP REIT Management Sdn Bhd chief executive officer Lim Han Gie (pictured) said the REIT has a lower debt to asset ratio at 14.8% compared to the industry's average of 32%, allowing the company the option to undertake borrowings for future acquisitions.

"The company has the First Rights of Refusal to potentially acquire five new KIP marts that are in the pipeline, located in Johor, Pahang, Kedah, Selangor and Negeri Sembilan," Lim told the media during the press conference after KIP REIT's listing ceremony at Bursa Malaysia today.

"Of the five new properties, KiP Mart Kota Warisan has already been completed whilst the rest are under construction," Lim said, adding that the company is setting its eyes towards Sungai Buloh and Kuantan for future assets.

The REIT has seen steady growth in its gross rental income for the past three financial years from RM48.3 million in FY2014 to RM51.63 million in FY2015 and RM53 million in FY2016.

Moving forward, Lim said the group will not be much impacted by the underperforming retail property market as KIP REIT is less focused on premium properties.

"We cater to small businesses that deliver daily essentials and necessities. Most people think that REITs are always linked to shopping, but we are a different breed of retailing.

"With our diversified tenants, our take-up rate for matured properties [is] above 90%. Other properties have take-up rate of over 70%. But these properties still have another three to four years to mature so there is an upside," he said. — theedgemarkets.com

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