S P Setia’s RM1.5 billion REIT is on the way?

S P Setia’s RM1.5 billion REIT is on the way?

Are you thinking about property and you think you like the professionals to manage it for you instead? Real Estate Investment Trust (REIT) may be what you are looking for. Here is one recent article with lots of REIT choices which you could review and decide. Benefits of investing into REITs, another one is coming. I think these days I look at REITs more often because I think it’s generally low risk lah. You already can see what the commercial property which is owned by the REIT looks like. No need guessing even.

One month ago, S P Setia said that is was preparing an IPO for its Real Estate Investment Trust (REIT). Do read the news article below:

Latest News with more details on this S P Setia REIT

Article in thestar.com.my. S P Setia Bhd is setting up a real estate investment trust (REIT) valued up to RM1.5bil.

UOBKH Research also noted that S P Setia is preparing to inject its investment properties into a REIT, estimated within the next 12 months, with a RM1.3bil to RM1.5bil valuation.

For comparison, IGB-REIT, Pavilion-REIT and Sunway-REIT currently have market capitalisations of RM7.1bil, RM5.1bil and RM5.6bil, respectively.

“The REIT is expected to be a diversified REIT and we think its assets such as Setia City Mall (over 90% occupancy), hotels under the Amari brand and Tenby International School may be suitable for injection into the REIT.

“Assuming S P Setia holds 50% of the REIT, cash proceeds for S P Setia could be RM650mil to RM750mil,” it said. Do read here for the full article: Article in thestar.com.my.

Just do not hope that REITs may rise significantly suddenly yeah

If that REIT owns a hotel and that hotel is already at 80 percent occupancy every weekend, it is highlight unlikely that its profit could suddenly jump yeah. Even if it wants to increase its room rate, it has to also look at the market and sometimes when its price increases, the total revenue may even drop versus going up because people may prefer to book a cheaper hotel instead.

Thus, a REIT is unlike a technology counter where the price is more volatile and there’s that upside chance if we somehow bought the right counter. Just look at Apple’s share price over the last 5 years for example. Image below.

Dividends are usually non-stop every year for mature properties

Below are how the dividends may look like just for one particular REIT which owns a mall I frequent often when I was still a student in Subang Jaya. 🙂

Dividends are 5.00 sen per year in 2023. If we assume it stays the same and with the share price at 0.56 per unit today (2nd August 2024), then the potential yield is close to 9 percent! Pretty impressive if you ask me. yeah, that mall is Subang Parade…

You prefer something more modern? How about Mid Valley Megamall? Then, buy IGB REIT yeah. It’s latest dividend per year is 5.52 percent based on its share price of RM1.96 today (2nd August 2024).

Happy investing yeah

Your support keeps me going. Thank you! Please share with people you care.

Sign up for daily investment news updates (FREE since Nov 2013 and FOREVER). 

Alternatively, Follow me on Telegram here.

Please LIKE kopiandproperty.com FB page to get daily updates about the property market beyond kopiandproperty.com articles.