IGB shares extend gains amid positive views on commercial REIT plan

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KUALA LUMPUR (Nov 25): IGB Bhd's share price rose as much as 22 sen or 7.12% to RM3.31 in morning trades today after analysts said the group's plan to establish and list a commercial real estate investment trust (REIT) comprising properties at Mid Valley City and those along Jalan Tun Razak here will help realise IGB Bhd's fair value.

At 11:17am, the stock pared gains at RM3.20 among Bursa Malaysia top gainers. The counter saw 356,900 shares traded.

IGB Bhd shares extended gains today after the stock closed up 39 sen or 14% at RM3.09 on Friday (Nov 22). At RM3.09, IGB Bhd has a market capitalisation of RM2.1 billion.

On Thursday (Nov 21), IGB Bhd said the properties within Mid Valley City to be included into the REIT known as IGB Commercial REIT are Menara IGB, Centrepoint South, Centrepoint North, The Gardens South Tower, The Gardens North Tower, Menara Southpoint and Boulevard Offices. The Jalan Tun Razak properties comprise Menara Tan & Tan and GTower.

IGB Bhd said the REIT establishment and listing entail the disposal by the subsidiaries of IGB Bhd of their interests in the properties to IGB Commercial REIT with the sale consideration to be satisfied through a combination of cash and issuance of new units in IGB Commercial REIT.

According to IGB Bhd, the REIT establishment and listing include the "proposed restricted offer for sale and distribution-in-specie by IGB Bhd of the units to the entitled shareholders of IGB Bhd following the proposed disposal, and proposed placement of units to institutional and selected investors to meet the public unitholding spread requirement of at least 25% pursuant to the Main Market listing requirements of Bursa".

Today, The Edge Financial Daily, quoting Singapore-based Pangolin Investment Management senior analyst Kok Chiew Sia, reported that not only will the new REIT help realise part of IGB Bhd's fair value, it would in turn reward shareholders through the proposed restricted offer for sale and distribution-in-specie.

"The REIT will also create greater transparency in the performance of these commercial assets as well as their up-to-date market value ahead," Kok said.