Malaysia’s KIP REIT Receives Strong Response from Institutional, Retail Investors

Positive IPO notes from PublicInvest and RHB Research


KUALA LUMPUR — Main Market-bound first hybrid community-centric retail Real Estate Investment Trust, KIP REIT, recently held its balloting ceremony at Malaysian Issuing House Sdn. Bhd.(MIH) where its 10,200,000 Offer Unit made available to the Malaysian Public has been oversubscribed by 5.07 times.

The Institutional Offering of 220,650,000 Offer Units have also been oversubscribed.

PublicInvest and RHB Research have both issued IPO notes providing target prices of RM1.07 and RM1.09 respectively, paying particular attention to KIP REIT’s relatively higher dividend yields and its potential asset injection pipeline.

Key highlights of KIP REIT included its demographics of shoppers being low and middle income segments who shop at KiP Marts for daily provisions and necessities. This makes the tenancy base very resilient across all economic cycles.

Commenting on the oversubscription results, Lim Han Gie, Chief Executive Officer of KIP REIT Management said, “I am pleased that our Offer Units were oversubscribed. The results are evident that the Malaysian public as well as institutional investors view us favourably. We are grateful that the investors understand the business space we operate in and the opportunities it has to offer our REIT.”

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Through this IPO exercise, KIP REIT expects to raise approximately RM234.2 million to be used mainly for the acquisitions of the REIT’s initial portfolio consisting of 5 KiP Marts located in Tampoi, Kota Tinggi, Masai, Senawang and Melaka as well as a neighbourhood retail centre known as KiP Mall located in Bangi.

The portfolios are strategically located in growing catchment townships in the Southern and Central regions of Peninsular Malaysia. Many of its tenants offer daily needs and basic necessities of the shoppers.

Hence, its business model alludes to foresight and strength especially in adverse economic conditions when consumers become more prudent in spending and actively source for value-for-money products or services that are commonly found in KiP Mart.

Lim adds, “It is evident that our focus towards hybrid community-centric retail centres that cater to communities’ need for fresh produce and daily essentials, coupled with our diversified tenant base and strategic geographical locations in growing catchment areas are what makes KIP REIT attractive. Helmed by a dedicated team of highly experienced board of directors, KIP REIT is committed to practice good corporate governance. We believe we will establish good, strong relationships with our new shareholders and receive continuous support from our tenants.”

KIP REIT Posts Strong Rental Income

KIP REIT’s Gross Rental Income for the past 3 financial years have been growing steadily from RM48.30 million in 2014, RM51.63 million in 2015 and RM53.0 million in 2016. These growth are achieved through rental increment, organic growth and acquisitions.

Upon Listing, KIP REIT’s Debt to Asset Ratio will be approximately 14.8%, which is lower than that of the average Malaysian REIT, of approximately 32.0% as at 30 September 2016.

This would allow KIP REIT the opportunity to undertake borrowings for future acquisitions or any asset enhancement that it intends to make.

The Company has the First Rights of Refusal to potentially acquire five new KiP Marts or KiP Malls to be named eventually. These assets in the pipeline are located in Pahang, Kedah, Selangor and Negeri Sembilan. Of the five new properties, KiP Mall Kota Warisan is near completion.

KIP REIT is expected to list on the Main Market of Bursa Malaysia Securities Berhad on 6th February 2017.

CIMB Investment Bank Berhad is the appointed Principal Adviser, Sole Bookrunner for the Institutional Offering and Underwriter for the Retail Offering of this IPO exercise. –