Al Hadharah Boustead REIT initiates privatization exercise tomorrow

Al Hadharah Boustead REIT initiates privatization exercise tomorrow

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MALAYSIA: Pursuant to its announcement made in July last year, Al Hadharah Boustead REIT, the first plantation-based Islamic real estate investment trust in Malaysia, has confirmed its delisting from the Kuala Lumpur Stock Exchange (Bursa Malaysia). According to a bourse filing, the units of Al Hadharah Boustead REIT will be removed from the official list of Bursa Securities with effect from 9.00 am on Wednesday, the 19th February 2014. Boustead Holdings, the parent company of Al Hadharah Boustead REIT, issued a RM1.2 billion (US$364.46 million) junior Sukuk end of last year, with RM650 million (US$197.41 million) of the first tranche to be used to carry out the privatization exercise. Market analysts have indicated that the probable rationale behind the move is its illiquid position and lackluster interest from equity investors mainly due to the fact that the REIT is pegged to plantation assets, which is a less-than-popular choice among other REIT managers on both the conventional and Islamic side. Since its listing on Bursa Malaysia, Al Hadharah Boustead REIT has not seen much improvement in yields. It has been said that plantation yields are generally not as attractive as other REITs, such as commercial and industrial buildings. They are viewed to be relatively stagnant as they are not tagged to movement in commodity prices. However, in a circular issued by Hong Leong Investment Bank last November, the delisting was a "good opportunity" for unit holders to exit at an attractive price, considering the limited growth prospects of the REIT, reported Reuters. Al Hadharah Boustead REIT is one of four Islamic real estate investment trusts on Bursa Malaysia. Following it delisting exercise, the remaining REITs on the local bourse are: Axis Real Estate Investment Trust, Al-Aqar Healthcare REIT and KLCC Real Estate Investment Trust.