Pavilion REIT outshines mega IPOs, earns chairman billionaire status

Christmas decorations are seen outside the Pavillion shopping centre in Kuala Lumpur, December 10, 2009. — File picChristmas decorations are seen outside the Pavillion shopping centre in Kuala Lumpur, December 10, 2009. — File picKUALA LUMPUR, Nov 22 ― Rising consumption and increased tourism in Malaysia have raised property trust Pavilion Real Estate Investment Trust’s (PREIT) profile above all other local companies that made their market debut in the last 12 months and put its chairman, Desmond Lim Siew Choon, into the world billionaire list, Bloomberg reported today.

Its shares have swelled nearly 60 per cent since it was listed on December 7 last year, the financial newswire reported, while Malaysia’s gross domestic product (GDP) crossed five per cent for at least the fifth quarter with the federal government pumping in more cash into spending and public infrastructure projects to prop up the domestic market ahead of the 13th general election due soon.

“Pavilion has been a success story among Malaysian REITs,” Philippe Espinasse, the author of “IPO: A Global Guide” and former co-head of Asian equity capital markets at Nomura Holdings Ltd told Bloomberg, saying the “scale of the properties” and its high-end positioning had added to its gains.

Pavilion is the biggest property trust by market value in the country after IGB Real Estate Investment Trust, which also made its market debut this year.

Six out of nine analysts who cover PREIT have a “buy” or “outperform” recommendation on the trust, Bloomberg reported, adding that it hit a record high at RM1.46 on November 14.

The newswire reported that the property trust’s total return of 62 per cent since its debut up to yesterday has beaten the 13 per cent return by the benchmark FTSE Bursa Malaysia KLCI in the same time period.

The low-profile Lim, 52, who has never appeared on any global wealth ranking, is now said to be worth at least US$1 billion (RM3.06 bilion), according to the Bloomberg Billionaires Index.

Lim and his wife, Tan Kewi Yong, own a majority 38 per cent stake in PREIT, which has outperformed other companies that raised at least US$50 million in their initial public offering (IPO) here over the past 12 months, Bloomberg reported.

Tan is reportedly the sister of Robert Tan Hua Choon, who controls at least half a dozen Malaysian listed companies including ceramic ware maker Goh Ban Huat Bhd and investment holding firm FCW Holdings Bhd, Bloomberg reported.

“In Malaysia, connections are necessary especially if you are in property development.

“Connections help to speed up things and you get more favourable terms when you submit your proposals to the right authorities,” Ang Kok Heng, the chief investment officer at Phillip Capital Management Sdn, told the newswire.

“The turning point for him is through this development project,” he was quoted adding.

Lim’s stake in real estate with the sovereign wealth fund is valued at US$60 million based on the average price-to-book of four publicly traded peers: IGB Corp, KLCC Property Holdings Bhd, Eastern & Oriental Bhd and Overseas Union Enterprise Ltd, Bloomberg reported.

It added that both the billionaire and his wife once owned about 24 per cent of electronics maker Paracorp Bhd, before it was delisted from Bursa Malaysia in 2007, according to company filings.

Bloomberg noted too that Lim also owns almost 13 per cent of Hong Kong-listed Nan Hai Corp, which focuses on property development in China. He sold a 4.8 per cent stake in Nan Hai in 2007 for HK$957 million (RM378 million).

PREIT is reported to have recorded a better-than-expected net property income of RM61 million in the third quarter due to higher rental yields and advertising earnings as Bank Negara maintains its forecast that Malaysia’s economy to grow by five per cent or better as it is less exposed to potential external influence.

“It won’t be surprising that Malaysia will be able to mint out its own fair share of Asian billionaires,” William Chan, the chief executive officer of Singapore-based family office Stamford Privee, told Bloomberg.

Another analyst, RHB Research Institute’s Loong Kok Wen, told the newswire the property trust is likely to climb to RM1.60 per share as consumer spending remains resilient and the mall, the “crown jewel” of the trust, attracts more visitors once a nearby mass rapid transport project is completed, expected as early as 2016.

The property trust plans to acquire other malls in the land-strapped city’s golden triangle including Fahrenheit88, sited opposite the Pavilion shopping centre.


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