Relative to other Malaysian REITs, KLCC REIT has been trading at a substantial premium with yields at about 1% above the 10-year Malaysian Government Securities.

Based on theedgeproperty.com’s analysis of transactions in the 12 months to 3Q2014, the combined average transacted price per square foot (psf) was RM384, with an average transacted unit price of RM330,000.

Note that S P Setia has changed its financial year-end from October to December, and we have applied the same earnings forecasts for the 14 months ending Dec 31, 2015 period as we did for the 12 months ending Oct 31, 2015 period, in view of weak property market conditions and the group’s lowered sales target for this year.

KSL remains an “outperform” albeit the lowered TP as its dividend yield for FY16E remains attractive at 7.7% vs its peers’ average of 5.9%. At our current TP, it implies a 77% discount to its RNAV of RM7.07.

Based on theedgeproperty.com’s analysis of transactions, the combined prices of Subang/Ara Damansara properties remained fairly stable in 2012 and 2013, averaging just under RM300 psf, before shooting up to RM384 psf in 3Q2014. 

ARC @ Austin Hills is Andaman Group’s first project in Johor Bahru. The three-block serviced apartment project has 1,843 units and a gross development value (GDV) of RM600 million.

In 1Q2015, the average selling prices of Johor high-rises and landed properties sampled remained flat. In fact, the prices of all landed properties sampled have not changed since 4Q2014.

First developed in the 1970s, Taman Desa remains one of the most popular residential suburbs in Kuala Lumpur for both homeowners and developers. Its appeal lies in its location and connectivity to the city centre and other areas in the Klang Valley.

We believe that the REIT should focus on filling up its vacant spaces in Axis Business Park and Axis Eureka (which currently have occupancy rates of below 60%), as this could potentially boost  distribution per unit contribution by about 3.9 sen.

IGB Real Estate Investment Trust’s (IGB REIT) key strength lies in its track record of high renewal rates with the more established Mid Valley a testament, with occupancy rates consistently at 100% even during challenging economic times. The Gardens also has an occupancy rate of 100% and has seen the entry of new high-profile tenants annually.