Sunrise may inject some assets into Reit

It has no plans to enter markets of Vietnam and China

(KUALA LUMPUR) Malaysian property developer Sunrise may consider injecting some of its property assets into a real estate investment trust (Reit) as they begin to deliver stable income, its executive chairman said.

'We have invested considerably in a pool of investment assets over the last few years, which are now starting to bear fruit,' said Tong Kooi Ong.

Sunrise, ranked ninth by market value among listed Malaysian developers, may consider a Reit 'at a later stage', Mr Tong said in an e-mail interview.

This month, larger rival Sunway City said that it will inject eight retail properties into a Reit in a deal that bankers said may raise up to RM1 billion (S$429 million) for the company.

Reits mainly invest in commercial property and pay most of the rent to shareholders as dividends, which are usually higher than yields of government bonds and offer capital gains if property prices rise.

Mr Tong, a former banker and stockbroker, said that Sunrise has not yet planned to enter the fast-growing markets of Vietnam and China.

'For the medium term, our overseas focus will be on Canada. We do not have plans for the moment to venture into Vietnam or China,' he said.

Later this year, Sunrise plans to launch two projects - an office tower project in the Malaysian capital, as well as a residential project in Vancouver, Canada, Mr Tong said.

Malaysian property developers, such as SP Setia and Gamuda, have embarked on multi-billion ringgit developments in Vietnam to tap rapid growth. Sunway City has formed property joint ventures in fast-growing China and India.

Malaysian developers expect higher sales from home this year as the economy rebounds from last year's downturn. The stock market rally in 2009, which saw the benchmark share index jump nearly 40 per cent, is expected to further boost house buyers.

Malaysia is one of the first in Asia to withdraw crisis measures when the central bank raised its key policy rate by 25 basis points to 2.25 per cent in March. Most economists expect more hikes later this year.

Sunrise shares trade at 6.57 times 2010 earnings, compared with Sunway City's 10.61 times, IJM Land's 24.98 times and Gamuda's 20.31 times, according to Thomson Reuters I/B/E/S.

Sunrise shares have risen 6.8 per cent so far this year, outpacing the 5.6 per cent gain in the property sector index . -- Reuters

Source: Business times, 29 Apr 2010