This article first appeared in The Edge Malaysia Weekly on December 21, 2020 - December 27, 2020

Amid these unprecedented times, IGB Bhd will stay focused on four key areas — property development, retail, commercial and hospitality. Its core focus areas ensure a balance between business risks and opportunities, and generate healthy, long-term recurring income for the group.

Its unwavering performance has secured IGB a spot on the list of Top Property Developers Awards at The Edge Malaysia Property Excellence Awards.

Founded in 1971, the group’s portfolio of projects includes co-living @ Damai Residence, Stonor 3 KLCC, Park Manor and Sierramas Heights. In recent years, IGB has started to shift its focus to commercial assets. It even has plans to list a commercial real estate investment trust (REIT) in the near future.

IGB Bhd group CEO Datuk Seri Robert Tan tells City & Country in an email interview, “We hope to unlock value from our commercial assets with the proposed listing of IGB Commercial REIT. The proposed REIT comprising 2.31 billion units will be listed on the Main Market of Bursa Malaysia after an initial public offer.”

According to Tan, the total disposal consideration of the 10 properties is RM3.15 billion. “As at Nov 4, 2020, Hong Leong Investment Bank (HLIB) had submitted the application for the proposed REIT establishment and listing to the Securities Commission Malaysia,” he says.

Along with its plans for the next financial year, Tan discusses the group’s overall performance and future targets in the following Q&A.

Datuk Seri Robert Tan: In terms of the macro overview, the last 12 months have been a challenging period with the Covid-19 pandemic around the world. We see a general decline in consumer sentiment due to the enforcement of lockdowns worldwide. We also remain cautious of uncertainties due to the various ongoing geopolitical events.

Domestically, the enforcement of the Movement Control Order (MCO) and border closure in Malaysia to curb the spread of Covid-19 has affected the businesses under the group. However, we feel that the proactive measures undertaken by the Ministry of Health (MoH) to contain the spread of the virus has prevented a deeper impact on the economy.

IGB has been staying focused during this challenging time. As at June 30, our cumulative revenue had decreased to RM460 million (FY2020) from RM651 million (FY2019) during the same period last year due to the Covid-19 pandemic.

Our retail segment was affected by the MCO as consumers have been cautious with their spending. Our commercial properties division saw less impact as most of our corporate tenants have maintained their office leases.

Our property development division was impacted by the lockdown as overseas buyers could not come into the country to visit our projects’ sites. Also, the suspension of the MM2H (Malaysia My Second Home) programme dampened buying interest from overseas buyers.

Our hospitality division was severely affected by the lockdowns in various countries. We have taken steps to contain costs and be innovative by offering new packages to consumers.

We are prudent in conserving cash to prepare for any major unexpected downturn in the market. Our senior management team constantly reviews our business strategies and directions and risk management. We remain attentive to any threats and opportunities to ensure the growth of our businesses. IGB’s diversified portfolio includes assets that deliver constant recurring income for the group.

IGB remains focused on four core areas of business: retail, property development, commercial properties and hotels. Our core focus areas ensure a balance between business risks and opportunities, and generates healthy, long-term recurring income for the group.

During these times, the challenges include a decrease in revenue, ensuring the safety and health of our communities and enforcing the appropriate SOPs (standard operating procedures). There are also the geopolitical uncertainties in various parts of the world and their impact on Malaysian economy.

IGB has made some plans to tackle these challenges. Upon the onslaught of Covid-19, the group immediately kicked off our business continuity plans for all our business divisions. We manage our cash flow, develop strong trust and communicate with our key stakeholders, namely our financiers, tenants, customers and business partners.

We enforce the SOPs implemented by MoH for all our patrons, tenants and staff. Projects such as property launches have to be delayed. We are utilising the time to do all the groundwork and be prepared for upcoming projects. Our key focus is on working with tenants in a win-win partnership to overcome the economic challenges of this period.

We have increased our online engagement with our stakeholders. We run promotional activities online to attract our target audiences. Additionally, we are looking for another potential site to expand our co-living business when the market is more conducive to co-living developments. Our senior living project is in the pipeline and it’ll be one of our key focus areas in the years to come.

IGB’s vision is ‘creating and managing spaces that work now and in the future’. This is the philosophy of our founding owners in sustaining our business. We are constantly creating and managing versatile spaces to meet the needs of the market. We seek to unlock value within the group and maximise returns for our shareholders.

Our focus is on generating recurring income for the group. Rental-based business activities such as retail, office building, co-living and senior living will be our focus in the coming financial year.

In the retail segment, we are continuing our efforts to strengthen our relationships with our tenants and working to support their businesses wherever possible during these difficult times. In the commercial segment, we will be increasing the total net lettable area of the group’s office portfolio, which stands at 3.8 million sq ft, with the addition of the two new office towers at Mid Valley Southkey in Johor Baru.

For the co-living project, we are looking for expansion in the near future. Our senior living project is in the pipeline and it’ll be one of our focus areas in the years to come. As for the property development segment, we are excited that the residences at Menara Southpoint are scheduled to be launched in 3Q2021. This will be the final development in Mid Valley City.

We are also looking at launching our landed residential development project called D’Laman Kundang in Kundang Jaya. Plans are also underway for our projects in Wangsa Maju and Melawati.

We have landbank in Selangor, Kuala Lumpur, Negeri Sembilan, Pahang and Perak. We are open to acquiring land at any time when the opportunity arises.

Please share updates on ongoing and upcoming projects at home and abroad.

In terms of our residential side, the sales for Stonor 3 KLCC and Park Manor are ongoing and we have seen steady interest in both properties from potential buyers. We have seen strong interest in Park Manor, especially after the lockdown in March. This could be due to its spacious built-up as people redefine the importance of space after the lockdown. Park Manor is 98% sold.

Our 2-storey residential project called D’Laman Kundang in Kundang Jaya is targeted for launch in 2Q2021. Our highlight next year will be the launch of residences at Menara Southpoint, which is estimated to be in the 3Q2021. This will be the last phase of Mid Valley City.

As for our commercial and hospitality segments, the occupancy rate of all our office buildings is currently at 73%. Mid Valley Southkey North Tower and South Tower, which are scheduled for launch in 2Q2021, have 24 storeys of office space each. The net floor area of each tower is about 322,000 sq ft. St Giles Southkey, Johor is estimated to launch in 2H2021. The hotel comprises 575 rooms over 29 floors.

Please share IGB’s future plans, targets and upcoming projects.

The upcoming year will be a challenging one for IGB as our portfolio of businesses have been affected by the impact of Covid-19. We will continue to take a prudent stand in line with all the uncertainties internationally and locally. However, we continue to strengthen our business, create sustained long-term value and enhance returns to our stakeholders. We have planned several launches of our residential and commercial projects next year.

For our residential side, we will be launching D’Laman Kundang in Selangor, which comprises 179 two-storey houses. We also plan to launch Menara Southpoint in Kuala Lumpur: a 172-unit luxury condominium that is estimated to be launched in 3Q2021.

For our SouthKey Johor Baru development, we will launch the Mid Valley Southkey North Tower and South Tower. The net floor area of each tower is about 322,000 sq ft and they are expected to be launched in 2Q2021. St Giles Southkey comprises 575 hotel rooms and is anticipated to open in 2H2021.

One of our highlights in the near future is the proposed listing of IGB Commercial REIT. Over the years, we have been grooming our prime commercial assets through careful selection of tenancies. In June, we announced our plans for a proposed commercial REIT.

Our aim is to unlock value from our commercial assets with the proposed listing of IGB Commercial REIT. The proposed REIT will comprise 2.31 billion units to be listed on the Main Market of Bursa Malaysia after an initial public offer. The total disposal consideration of the 10 properties will be RM3.15 billion. As at Nov 4, 2020, Hong Leong Investment Bank had submitted the application for the proposed REIT establishment and listing to the Securities Commission Malaysia.

Our commercial properties division has been a steady revenue generator and we feel confident that the proposed disposal will unlock value and maximise returns for our loyal shareholders in the near future.

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