KUALA LUMPUR: IJM Land Bhd expects significant growth from real estate investment and is contemplating the formation of a diversified real estate investment trust (Reit) in the future.
Datuk Tony Ling Thou Lung, the company's chief operating officer, said while the plans are in their early stages, they may materialise once the company has built up its portfolio of assets and they have matured.
"A lot of developers have launched Reits to expand. For IJM Land, it will be a diversified Reit. I won't be able to give you numbers as to how big the Reit will be. But for a Reit to be set up, it has to be at least RM1 billion. We don't even have assets worth half of that.
"It will take us time to build the assets. We have to plan it properly. When I map out the strategy for the company's investment assets, I want to make sure the investment properties have a value that has a high yield, and potentially they can become a reitable asset. That is important.
"For a matured asset, a good yield should be 5.5 per cent to six per cent. Anything less than three per cent is not worth it, as you have to look at the long term prospects," he told the New Straits Times.
IJM Land plans to build more commercial properties in Pantai Sentral Park (PSP) in Kuala Lumpur and The Light City in Penang.
Among them are office towers, hotels, malls, convention centres, retail, wellness, and medical facilities.
"The assets would mature in three to five years after completion, and they will be worth slightly over RM1 billion collectively," he said.
Ling - who has spent more than 20 years of his career focusing on integrated development for property projects involving offices, commercial, residential, and retail components - did not rule out the possibility of injecting industrial assets into the Reit.
IJM Land is looking for suitable locations for an industrial park development near airports and ports in the Klang Valley and Johor.
The long-term strategy is to hold the industrial assets, which could include warehouses, distribution centres, commercial buildings, and staff housing, as recurring income.
According to Ling, the yield on industrial real estate is on the higher side.
"When you build an industrial park, you can design it so that certain properties can be sold and others can be leased, giving you income in both directions. Whether you build commercial or industrial properties, you must offload some assets while maintaining others.
"The same is true for integrated developments. We will sell some assets and keep others," he said.
IJM Land has established a presence in major sites throughout Penang, Kuala Lumpur, Selangor, Negri Sembilan, Johor, Sabah and Sarawak.
It currently has a land bank of 4,497 acres and an expected gross development value of RM46 billion.
