The Selangor State Development Corp, better known as PKNS is still keen to enter into the real estate investment trust (REITs) business.
During the inaugural PKNS National C-Level REITs Conference held last month in Shah Alam, PKNS chief operating officer Norita Mohd Sidek expressed the corporation's intention to enter into REITs through its investment arm, PKNS Real Estate Sdn Bhd (PREC).
Norita said REITs have always been viewed by investors as a defensive investment and are particularly in demand in times of economic uncertainty, given their good sustainable dividend yields.
A REIT is a company that owns, operates or finances income-producing properties. Properties in a REIT portfolio may include commercial, retail, industrial or hospitality assets.
There are currently 18 REITs listed on Bursa Malaysia.
It was reported in 2015 that PKNS was looking to put its commercial property assets like the Shah Alam Convention Centre (SACC) Mall, Menara PKNS (Petaling Jaya) and Menara Worldwide, valued at about RM500 million into a REIT and list it on Bursa Malaysia within three years.
PKNS had targeted to establish the REIT via PREC in 2018 but postponed the plan to 2019, while it looks for quality assets like Grade-A office space to raise PREC's total asset value to RM1 billion.
Norita did not say when PREC would be listed or which assets will be included in the REIT.
PREC CEO Fakru Radzi Ab Ghani said at the conference that companies have to be disciplined in managing their assets.
"It all comes down to the fundamentals of asset management. You have to ensure that the revenue is optimised and expenses controlled. Only then, will you be able to get a good yield out of your property,” he said.
Fakru was addressing the roundtable with regards to PREC’s own experience in handling commercial properties for PKNS.
PREC is managing SACC Mall, Menara PKNS, Menara Worldwide, Wisma Yakin in Kuala Lumpur, Kompleks PKNS Shah Alam and Kompleks PKNS Bangi, which collectively are worth about RM700 million.
The conference titled ‘The Malaysian Property Outlook in the New Decade’ revolved around the topic of “Creating New Value with Old Assets-The REIT Way”.
The session gave way to insightful opinions on the opportunities REITs have to offer to property developers, asset managers, owners, and the State Economic Development Centres (SEDCs).
The panel held positive views with regards to the growth of the REITs market, with an emphasis on the need to leverage on new growth sectors such as warehousing and logistics.
At the closing of the conference, Mahdzir Othman, director of the securities market at Bursa Malaysia said in his speech that the local bourse is looking forward to the "inclusion of exciting quality assets listed as a REITs on Bursa Malaysia”.