GuocoLand may consider floating two real estate investment trusts (REITs) – one office and one retail – holding assets in China, Malaysia, Singapore and possibly Vietnam, according to The Business Times.
The assets could be valued at about $6 billion to $8 billion and the REITs may be floated over the medium term.
The group has a pipeline supply of investment properties at different stages of development totalling around 4 million sq ft of gross floor area (GFA) for offices and around 4.6 million sq ft of retail space, as well as about 5,000 car-park lots.
Majority of this portfolio is yet to be completed. Even after these assets are ready, it will take time for yields to stabilise in order that the assets are fit for injection into REITs.
This portfolio of potentially REIT-able properties arises from the group’s strategy of venturing into integrated developments with office, retail and even hotel components aside from residential properties.
For integrated developments such as Guoson Centre Changfeng in Shanghai, Guoson Centre Dongzhimen in Beijing and a large project to be developed on a site near Singapore’s Tanjong Pagar MRT Station, the hotel components are expected to be sold together with the residential units.
Meanwhile, the office and retail space in such projects will be held as investment real estate for recurring rental income until yields have stabilised and the assets are appropriate for injection into the two planned REITs.
Market watchers also said that the significant stock of car parks in those properties could also be possibly sold or spun off as a REIT.
The company recently hired Leslie Yee, the former head of research and funds management of The Link Management Limited, which manages Hong Kong’s The Link REIT. Yee’s appointment as general manager of special projects at GuocoLand has fuelled speculation that the company is preparing for possible REIT flotations holding its regional office and retail portfolios.
However, analysts, said that such flotations would be about three to five years away, considering the projects’ completion timelines.