As IOI Properties Group (IOIPG, 5249, main board property stock) acquires Tropicana Gardens Mall, analysts are bullish not only on this trade, but also believe that the company is prepared to arrange for a property Real Estate Investment Trust (REIT) to be listed.
IOI Properties Group announced yesterday (23rd) that through its wholly-owned subsidiary - IOI Mall Damansara, it has signed a sales agreement with Tropicana Indah to acquire Tropicana Gardens Mall located in Petaling Jaya, Selangor, for a transaction price of 0.6 billion 80 million Ringgit.
Tropicana Gardens Mall has 7 floors, with a total construction area of 2.95 million square feet and a net lettable area (NLA) of 1.05 million square feet with a rental rate of 77%.
The discounted acquisition price is reasonable.
"This acquisition brings opportunities for IOI Properties Group for business development in the Balakong/Petaling Jaya area. The mall is connected to the Surian MRT station and can be reached via 4 major thoroughfares." According to the securities analyst.
In addition, nearby facilities include medical centers, golf resorts and various educational institutions, while nearby towns include Kota Balakong, Bandar Sunway and Puncak Alam.
"Tropicana Gardens Mall will increase the company's retail net lettable area to 5.6 million square feet, significantly enhancing its market share and operational capability."
The acquisition price of 0.6 billion 80 million Ringgit is far below the book value of the mall of 0.9 billion44 million Ringgit (28% discount) and also below the market value of 0.6 billion 90 million Ringgit (10% discount).
However, analysts caution that this mall has been operating at a loss for a long time, and lost 16 million Ringgit in the fiscal year 2023.
"Considering that IOI Properties Group needs to invest funds to reshape the brand and reconfigure the tenant mix, I believe that the acquisition price proposed by the company is reasonable."
Preparing to list the property Real Estate Investment Trust (REIT).
In addition, with a strong investment portfolio, analysts believe that IOI Properties Group is preparing to arrange for a property Real Estate Investment Trust (REIT) to be listed.
"Although IOI Properties Group's 2023 report mentioned the specific timetable and details for the REIT listing, the company's asset book value of the property investment is 18 billion Ringgit. Once the REIT is listed, the company can release investment value, reduce debt and improve its balance sheet, thereby reducing the impact of these acquisitions on its net debt ratio." According to the securities analyst.
TA Securities maintains its "Buy" rating on IOI Properties Group with a target price of 3.10 Ringgit.
