Investing into “property”? Latest new REIT on the block: IGB Commercial REIT. (Mid Valley City, familiar?)

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The stock market is known as a scary place, somehow. Too many people have bought into some frenzy buying and well, losing lots of money. When asked what were they buying, many would reply that they did not know and they were only buying because their friends told them to do so. Well, guess what, stocks are quite volatile but it’s really possible to buy a property related stock in BURSA and yet still enjoy mostly stable returns.

Do you love these office buildings? Menara IGB, Centrepoint South, Centrepoint North, The Gardens South Tower, The Gardens North Tower, Menara Southpoint (excluding the residential units), Boulevard Offices (Blocks 25 and 27). They are all located within the Mid Valley City, Kuala Lumpur. Do you wish to buy a unit in one of the towers then? Okay, perhaps it will be unaffordable for most Malaysians. However, how about owning ALL of them via Real Estate Investment Trust (REIT) then? We only need to buy units of this newest REIT in Bursa and we will become ‘owners’ of these offices.

Article in thesundaily.my IGB Bhd is planning to establish and list IGB Commercial REIT on the Main Market of Bursa Malaysia Securities. This will be IGB’s second REIT. IGB said the listing of IGB Commercial REIT will allow the group to unlock the value of its commercial property portfolio. “The proposed REIT establishment and listing will be subject to, amongst others, valuation of the subject properties to be conducted, finalisation of the structure, terms and conditions, the necessary approvals, waivers and/or consents from the relevant authorities and the approval of the shareholders of IGB.”

IGB also announced that its net profit for the third quarter ended September 2019 dropped slightly to RM66.46 million against RM68.29 million in the previous corresponding period. This is because of lower contribution from the property investment (commercial) and hotel divisions. Its revenue rose 3.2% from RM353.22 million to RM364.36 million. In the property investment (commercial) division, average occupancy rates for the group’s commercial buildings in the third quarter were above 80% with average rental rates at RM6 per square foot. Please do read full report here: Article in thesundaily.my

REITs are suitable for those who prefers to invest into property but does not like the long time spent on evaluating, viewing, buying and even renting it out later on. With REIT, what happens is that the evaluating, viewing, buying and even finding tenants will be done by the professionals instead. This meant that the chances for mistakes are lower than an average Malaysian investor. The downside is dividends are usually on a yearly basis and currently, REITs remain unpopular when compared to blue-chip or even attractive penny stocks. This meant that prices do not move too much for any flipping to be done. Happy understanding yeah.

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