This article first appeared in The Edge Malaysia Weekly on April 2, 2018 - April 8, 2018

IF a recent job vacancy put up by See Hoy Chan Sdn Bhd on an online job portal is any indication, the property developer may be contemplating a listing of a real estate investment trust (REIT) on Bursa.

The March 16 advertisement sought a senior REIT manager “to spearhead “the corporate exercise in listing SHC properties into a REIT on Bursa Malaysia”, among other things.

Another requirement was that the candidate should be “experienced in pre and post-exercise of listing commercial properties into (a) REIT.”

However, See Hoy Chan would not confirm any plans to establish and list a REIT. “We regret that we will not be able to provide any confirmation, input or comment on the questions,” the company said in an email reply to The Edge.

See Hoy Chan is widely known for developing Damansara Uptown in Petaling Jaya, which began as a commercial hub but later expanded to include residential and retail segments. The company manages the office towers in the hub, and has a parking and facilities management business as well.

The shareholders of See Hoy Chan are Teo Soo Kiat and Teo Soo Chew, who are the sons of the late Datuk Teo Hang Sam. Soo Kiat is executive chairman while Soo Chew and their nephew Teo Chiang Khai are executive directors.

The group was founded by Guangzhou-born Hang Sam and his family has grown his business empire by an impressive degree over the decades.

Another of Hang Sam’s sons was the late Tan Sri Teo Soo Cheng, who spearheaded the development of the Bandar Utama township via privately held units See Hoy Chan Holdings Group, Bandar Utama City Corporation Group and First Nationwide Group.

Soo Cheng’s children now manage the township, with Tan Sri Teo Chiang Kok and Tan Sri Teo Chiang Hong at the helm.

The Teo family also holds 28% equity interest in Bursa-listed Paramount Corp Bhd, whose chairman is Datuk Teo Chiang Quan.

It is worth noting that the three companies are distinct and not connected in terms of shareholding among the Teo family members.

In the case of See Hoy Chan, its latest available audited financial statements show that the total value of its investment properties amounted to RM1.58 billion in the financial year ended Dec 31, 2016. Of these, some RM1.35 billion were investment properties in Malaysia while the remaining RM230 million were in Singapore.

Its portfolio includes office towers Uptown 1, Uptown 2 and Uptown 5; adjoining shophouses referred to as Uptown 37; other shophouses within the commercial hub; as well as Uptown 7, a multi-storey car park. Retail outlet Starling Mall was added to the portfolio in 2016.

By 2020, the company plans to add Uptown 8 — a 31-storey office tower with a net floor area of 480,000 sq ft — to the portfolio. Its website states that it is applying for Multimedia Super Corridor status to attract international and IT firms as tenants.

The National Property Information Centre’s Property Market Report for 1H2017 reveals that Damansara Uptown 1 enjoys some of the best rental rates in Selangor, ranging from RM40.90 to RM118.40 per square metre (psm). Uptown 2’s rental rates range from RM37.45 to RM58.13 psm. Information on the other office blocks and shop houses were not available.

If the plan for a listed REIT materialises, can See Hoy Chan get the valuation it desires given the less than favourable market conditions currently?

An analyst covering REITs believes it all boils down to the portfolio of assets to be injected.

“The market now is not too optimistic about REITs because of the issue of oversupply in both the office and retail space. But having said that, there are some assets that are still thriving. I think a lot would depend on whether they can maintain tenancies for the long term,” says the analyst.

Napic’s report highlights that the office occupancy rate in Selangor declined to 74.7% in 1H2017 compared with 75.5% in 2H2016.

The analyst opines that a listing now could be a bit tough because valuations for most Malaysian REITs are currently below one time book value. IGB REIT and Sunway REIT are the exceptions.

A market observer has a different view. He thinks the time is ripe for See Hoy Chan to inject its assets into a REIT and free up some cash for future projects.

“Starling Mall is doing pretty well based on my observations. The thing about malls is that once you are able to establish steady traffic, you should be able to do quite okay,” he says. Given the Teo family’s reputation in the industry and their growing property empire, a REIT listing of See Hoy Chan’s assets would arguably be attractive to the market. In any event, the establishment of such a REIT has been alluded to for some time already.

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