Property trust: A total RM1.1bil worth of assets will be injected into WCT REIT, including the Paradigm Mall in Petaling Jaya.
PETALING JAYA: WCT Holdings Bhd is delaying the listing of its Real Estate Investment Trust (REIT) from the end of 2017 to the second quarter of 2018, said analysts.
According to UOB KayHian, the plan to set up WCT REIT is still intact despite changes in the timeline of completion.
A total RM1.1bil worth of assets will be injected into the REIT, comprising Paradigm Mall in Petaling Jaya as well as AEON Mall and Premiere Hotel in Klang.
“The positive is that the Securities Commission has approved the setting up of the REIT.
“Securitising the assets at their combined market value of RM1.1bil will see WCT receiving up to RM400mil cash,” said UOB KayHian in a research report.
However, CIMB Research is disappointed with the delayed REIT plan due to land and tenancy matters, concluding that the stock lacks strong medium-term catalysts.
Apart from the investment properties, WCT has set aside an estimated RM800mil worth of assets to be monetised via disposal.
These include RM500mil of property development inventories and RM300mil of several plots of land in Sungai Buaya, Selangor.
UOB KayHian also noted that WCT is looking to sell a major stake in its two-acre land at Tun Razak Exchange to a foreign partner. The land was acquired by WCT for a sum of RM223mil.
Meanwhile, CIMB Research highlighted that WCT’s local civil work tenders amounted to over RM9.5bil, which include light rail transit 3, mass rapid transit 2 and a newly-added RM2bil bus rapid transit (BRT) project.
WCT is also bidding for the RM55bil East Coast Rail Link project.
CIMB Research said that for the BRT project, each consortium has a foreign partner or contractor with prior experience in BRT projects.
WCT is one of the five consortiums that have submitted request for proposals.
“WCT did not disclose its partner but historically, the group has had working relationships with Sinohydro for the Bakun hydroelectric dam project in Sarawak and has subcontracted a portion of the ongoing Pan Borneo Sarawak package to China Communications Construction Co.
“It is unknown at this juncture who the remaining consortiums are. The BRT project is currently in the tender evaluation phase and could take another six to nine months to be awarded,” said CIMB Research.
The BRT project shall also boost the order book of the winning consortium, in addition to the benefit of recurring income similar to tolled highway concessions.
It is a build-operate-transfer project, meaning that the two to three years design or construction phase comes with up to a 30-year concession period.
Besides that, WCT has guided that its property rebates and repricing strategy will continue in the second half of the year, solely for its unsold property inventory, with no new launches planned for the second half.
New launches will only resume in the second half of 2018.
