Igb Real Estate Investment Trust

Introduction

IGB is the Sponsor of IGB REIT, which has an established track record as a property developer in Malaysia, with over 40 years of property development experience. Listed on Bursa Securities, IGB has a market capitalisation of approximately RM3.427 billion, as of 31 December 2012. In its latest financial year ended 31 December 2012, IGB group generated revenue of approximately RM994 million, with a total asset base of approximately RM7.114 billion.

IGB Real Estate Investment Trust (IGB REIT) is a real estate investment trust (REIT). IGB REIT invests, directly and indirectly, in a diversified portfolio of income producing real estate used primarily for retail purposes in Malaysia and overseas, as well as real estate related assets. The primary objective of IGB REIT is to provide unitholders with regular and stable distributions, sustainable long term unit price and distributable income and capital growth, while maintaining an appropriate capital structure. The business activity within the investment properties portfolio of IGB REIT consists of Mid Valley Megamall (MVM) and The Gardens Mall (TGM). The MVM property has a gross floor area of approximately 6,107,100 square feet with a net lettable area of over 1,822,320 square feet. TGM property has a gross floor area of approximately 3,379,510 square feet with a net lettable area of over 866,410 square feet. IGB REIT Management Sdn Bhd serves as manager for IGB REIT.

IGB has a track record of developing and operating retail malls as well as properties in other asset classes such as office properties, residential properties and hotels. In 2012, for the tenth consecutive year, IGB was among The Edge's Top Ten Property Developers Awards recipients. In addition, some of IGB's noteworthy residential projects include Seri Ampang Hilir Condominium, Garden Manor Sierramas, Hampshire Place Residences, Laman Sierramas West, Cendana and One Jelatek.

Since 1999, Mid Valley Megamall has received more than 18 awards and accolades, some of which include Merit of Innovative Shopping Outlets 2010/2011 by Tourism Malaysia, Best Promotions and Events (Central Business District) Category for the Malaysia Mega Sale Carnival Awards 2009 by Tourism Malaysia, Best Retail Development Award 2001 by FIABCI Malaysia, Best Shopping Complex Award 2000 by Tourism Malaysia and Gold Award in the Shopping Complex of the Year Category 1999 by Retail World Excellence Award.

Conclusion

For the financial period ended 31 December 2012, IGB REIT posted a pre-tax profit of RM153.3 million with total revenue amounting to RM115.3 million. IGB REIT’s current year period-to-date, revenue and net property income, mainly from the rental income of Mid Valley Megamall and The Gardens Mall were RM115.3 million and RM76.2 million respectively. We believe that the relatively young The Gardens Mall should act as the growth driver for IGB REIT. This mall is only four years old and has gone through only one cycle of rental reversion. A very size able 54.2% of its occupied net lettable area will be expiring in financial year ending 31 December 2013. This second round of rental reversion will give the mall the opportunity to enjoy significant upward rental reversion. We believe there is potential for room for growth in rents as the mall’s luxury and premium brand tenants have the ability to pay high rents, as witnessed in the city centre. IGB REIT is also expected to continuously flourish in the first half of 2013, triggered by the Chinese New Year celebrations , year-end bonus payouts and government incentives such as the Bantuan Rakyat 1Malaysia (BR1M).

This is IGB REIT’s first full year for financial reporting. IGB REIT posted a revenue of RM430.7 million and net property income of RM285.7 million with profit before tax of RM311.9 million for the financial year ended 31 December 2013. These were mainly from the rental income of Mid Valley Megamall and The Gardens Mall. IGB REIT’s full year financial results reflect the steps being taken to ensure that we can deliver sustainable returns and long-term growth for unitholders. IGB REIT’s distributable income for financial year end 2013 totalled about RM241.1 million or 7.04 sen per unit for the year of which 3.43 sen per unit on 3.37 sen taxable and 0.06 sen non-taxable for the first half of 2013, and 3.61 sen per unit on 3.52 sen taxable and 0.09 sen non-taxable for the second half of 2013. The net asset value of IGB REIT as at 31 December 2013 after income distribution was approximately RM3.58 billion. The net book value of Mid Valley Mall increased from RM3.50 billion to RM3.56 billion, where as The Gardens Mall went up to RM1.245 billion from previous RM1.20 billion, as at 31 December 2013. The increase of IGB REIT’s net asset value came mainly from organic growth and return on asset enhancement initiatives.

Driven by an experienced management team that understands evolving consumer needs and demands, IGB REIT has continued to execute asset enhancement initiatives to achieve steady, long term growth, and optimal returns for our unit holders. The success of these initiatives is reflected in our financial performance, allowing us to post a financial year end 2014 revenue of RM461.8 million and a net property income of RM312.6 million, reflecting a 7.2% and 9.4% year on year growth respectively. Distributable income for financial year end 2014 totalled RM268.8 million or RM7.79 sen per unit for the year, up 10.7% from the year before, while Net Asset Value for IGB REIT as at 31 December 2014 after income distribution was RM3.66 billion, compared with RM3.58 billion the year before. Fair value for Mid Valley Mall increased from RM3.56 billion at the end of 2013 to RM3.61 billion as at 31 December 2014, while the corresponding figure for The Gardens Mall increased from RM1.245 billion to RM1.28 billion in the same period.

...