As Malaysia moves forward with renewed aspirations to become a high-income nation by 2030, the prospects of wealth creation and distribution is now more important than ever. In an uncertain property market outlook, Real Estate Investment Trusts, more commonly known as REITs, present a hopeful solution as a defensive strategy to generate income, for individual investors as well as the public and private sectors.
From left: Hoh Yoon Hoong, Adj Prof Maxshangkar, Hafidz Atrash Kosai Mohd Zihim, Zulhilmy Kamaruddin, Sr. Haji Fakru Radzi Ab Ghani, Hidayah Hassan, Wan Azman Ismail and Yee Wing Peng were part of the panel discussion at the PKNS National C-Level REITs Conference.
Attracting nearly 200 participants from various segments of the property investment industry, the inaugural PKNS National C-Level REITs Conference was held at Dewan Aster, PKNS Headquarters in Shah Alam on 26 February. The event was hosted by Selangor State Development Corporation (PKNS), and organised by PKNS Real Estate Sdn Bhd (PREC) with the IBR Asia Group.
As part of its CEO, Datuk Mohd Azizi Mohd Zain’s vision of PKNS becoming a driver of REITs thought leadership, the conference aimed to be a platform that motivates more entry into REITs market, especially among its counterparts from other states, with Selangor leading the way.
International Business Review brings you the highlights of the event which cultivated high-level discussions on the strategies, potentials and promise of REITs in Malaysia.
The Conference kicked off with a speech by Norita Mohd Sidek, the Chief Operating Officer of PKNS as host for the event. In light of the challenging property market outlook, she urged property developers and management companies to search for other means of generating income, and for REITs to be seriously considered as a viable alternative to the pure physical property market.
In his keynote speech, Prof Dr Sr Ting Kien Hwa, the Professor of Property Investment at Universiti Teknologi MARA, Shah Alam gave an overview of the Malaysia REITs market and relayed the opportunities that comes with securitisation of real property assets. The Conference then flowed to the main itinerary, which consisted of the Panel Session and Roundtable Conference.
Creating New Value with Old Assets
Featuring an esteemed panellists ranging from REIT managers, to tax consultants, bankers and investment experts, the panel session gathered leaders of the Malaysian REITs sector to share their expertise on the fundamentals of establishing and managing REITs in Malaysia.
Moderated by Sr. Haji Fakru Radzi Ab Ghani, CEO of PREC, the session addressed the issue of generating returns for investors and stakeholders within the current market outlook.
Datuk Hashim Wahir, the CEO of KLCC Property Holdings Berhad emphasised on the importance of efficient asset management in ensuring sustainable yield and distribution. He stressed the need to leverage on new technologies to meet the demands of the market, referencing KLCC’s drive to create a “Workplace for Tomorrow” for all its office buildings.
When addressing the resilience of focused REITs compared to diversified REITs, Wan Azman Ismail, Executive Director of Damansara REIT Managers (DRMSB) highlighted that it very much depends on the tenant mix of an asset. He emphasised that in certain cases, having one strong tenant might be more ideal than having multiple tenants, citing the example of KPJ as tenants to DRMSB.
In an environment in which rentals for retail and office properties are pushed down due to oversupply, Hafidz Atrash Kosai Mohd Zihim, the CEO of Pelaburan Hartanah Berhad (PHNB), noted the increasing need to control costs to ensure a good margin for distribution to unitholders. Always on the lookout for new collaborations, he highlighted that PHNB are eyeing for yield-accretive properties that can ensure stability of income over the years.
At this venture, Hidayah Hassan, Managing Director / Co – Head Corporate Finance and Advisory of Maybank Investment Bank noted that managers should take advantage on the growth of industrial sector, notably in warehousing and logistics. Furthermore, before looking to add to their portfolio, REIT managers should consider the outlook of the markets that affect the tenants of the sector that they choose to venture into, according to Hoh Yoon Hoong, a Partner for Ernst & Young PLT.
The panel also discussed the feasibility of entering into REITs with the current tax and low interest rate environment. Yee Wing Peng, Country Managing Partner of Deloitte stated that the tax environment in Malaysia makes for a conducive environment for the growth of REITs. On the other hand, Zulhilmy Kamaruddin, Director of Group Client Coverage of RHB Group urged managers to engage in active liability management by exploring derivatives such as Interest Rate Swaps to mitigate interest rate risks.
Speaking from a global investor perspective, Adj Prof Maxshangkar, CEO of Max Capital Management urged investors to look beyond Malaysia when considering investment opportunities in REITs.
