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IGB REIT

IGB REIT AGM 2017 (Doorgift inside)

By Leigh
Updated May 14, 2019 Filed Under: Annual General Meetings (AGM), Doorgift / Goody Bag 26

IGB REIT AGM 2017

IGB REIT AGM

IGB REIT AGM was held on 25 April 2017 (a Tuesday). I was really interested in putting a face to the management team of one of my favourite REITs, not to mention I’ve read online that they give out Cititel buffet vouchers every year. With that in mind, I journeyed to Mid Valley Megamall on a wet Tuesday morning.

If you’ve never heard of a REIT (Real Estate Investment Trust), you may find out more HERE.

This being my second AGM of 2017 (the first was Public Bank’s), I was a little more privy to the timing of it all. Making use of the KTM to avoid the anticipated traffic jam around Mid Valley, I arrived with about 10 minutes to spare. IGB REIT AGM was set to start at 11.30 am at Cititel.

The Venue and the sights that greeted me

IGB REIT AGM 2017
The Venue: Cititel
IGB REIT AGM 2017
Yup. This.
IGB REIT AGM 2017
And this.
IGB REIT AGM 2017
And more.

So the first guy in the picture, I don’t know why he had to sit down with his legs wide open right at the entrance. I saw him as soon as I got out of the lifts. Classy.

Don’t know if you’ve caught on by now, but AGMs in Malaysia are apparently attended 99% by our elders. I had a sliver of hope that this IGB REIT AGM would attract some youngER folks but I guess not. Turnout wasn’t as good as Public Bank’s AGM – I’d say IGB REIT’s was about 25% of the crowd.

Again, I have nothing against old people. Just wish there were younger folks showing interest in the companies they invest in.

The Refreshments

IGB REIT AGM 2017
Wow!! Empty Line?

See the nicely arranged cups and snacks in the first pic? My first thoughts: Wow I could actually have something before going in for the AGM.

I was then politely told that these were for another meeting. Walking ahead, I came across the familiar queue for refreshments. I didn’t want to waste my time in line, I think they served soya milk?

IGB REIT AGM 2017

IGB REIT AGM 2017 Doorgift

The moment some of you have been waiting for – I present you the Cititel buffet voucher! To be precise, a discount voucher. I expected a fully subsidized buffet..

After the AGM, I headed to Citi Cafe and found out a huge line outside. Apparently, the lunch buffet was close to RM38, dinner wasn’t though.

Oh and guess what some of the shareholders were doing right there? Offering to purchase the discount vouchers for RM20. Some even offered RM15. Another one of those Malaysian moments I guess.

IGB REIT AGM 2017 Buffet Voucher
IGB REIT AGM 2017 Doorgift – Buffet Voucher
IGB REIT AGM 2017
Parking Validation (submitted by a reader)

IGB REIT AGM 2017

As I mentioned earlier, the turnout was only about 25% of Public Bank’s. The ballroom started to fill out as the management team arrived.

IGB REIT AGM 2017
Pretty dismal turnout
IGB REIT AGM 2017
All set for AGM
IGB REIT AGM 2017
A familiar face from Public Bank’s AGM
IGB REIT AGM 2017
The management (4th from right is the main man).
IGB REIT AGM 2017
Spot Ms Elizabeth Tan on the left (Chief of Operations for the Gardens Mall)
IGB REIT AGM 2017
A closer look  : )

Remember my post on the CEO of Axis REIT – Leong Kit May? Well, it looks like IGB REIT is giving them a run for their money with their Chief of Operations (Gardens Mall) Ms. Elizabeth Tan. All jokes aside, she has been doing a good job, the whole team has.

This time around, the questions from shareholders were much better compared to Public Bank’s. The main topic of discussion was the parking bays at the malls. One particular suggestion was really good – Instead of having green and red lights to indicate and empty spot, a shareholder suggested that management instead put up only one green light (saving 50% of costs). As he astutely pointed out, no one looks for the red light.

Notice Mr. Singh from Public Bank’s AGM a month earlier, he attended this meeting as well. Though his complaints were nonsense in my opinion – He complained about the KTM’s being congested and packed. Dude, that’s a good thing. Also, it’s out of the management’s control. 

Findings

I found the management team of IGB REIT to be practical. These guys know what they’re doing. Tenancy for Mid Valley and The Gardens has never been an issue as they’ve a long queue of tenants waiting to rent. The issue right now is with the weak economy, it’s tough for IGB REIT to raise rental rates by a substantial amount. They’ve indicated that the rates however, will not be lowered but instead remain stagnant or raised slightly.

Even with the economy in bad shape, IGB REIT has managed to cut costs and increased profits in 2016. That is why their share prices has been going up. My confidence in the management has been greatly boosted after the AGM. I’m now waiting for the right price to add more of the REIT to my portfolio.

I’ve tried my best to take as many pictures as I could that day although they could’ve been better. I’ll practice my photography. Tips and suggestions on what you’d like to see the next time are welcome!

Thank you.

For more AGMs, head over hERE for a long list of Malaysian companies and their door gifts.

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The Complete Guide to REITs in Malaysia

Complete Guide to REITs in Malaysia

Table of Contents

  • Real Estate Investment Trust (REIT)
  • What are REITs?
  • How do I invest in REITs in Malaysia?
  • Tax Advantages of REITs in Malaysia
  • Why Invest in Malaysian REITs?
    • 1. 90% Distribution = Huge Dividends
    • 2. Diversification
    • 3. Low Initial Investment
    • 4. Liquidity
    • 5. Let the Professionals take care of it
  • How many REITs are there in Malaysia?
  • My Investment in Malaysian REITs
    • 1. Axis REIT
    • 2. IGB REIT
    • 3. Sunway REIT
  • End.

Real Estate Investment Trust (REIT)

I’m sure most of you have, at some point in your investing journey heard of a REIT. REITs are a type of security that invests in real estate and are often listed publicly on stock exchanges. REITs in Malaysia and around the world receive special tax considerations and usually offer higher dividend yields compared to other companies.

The first REIT was created in the United States back in 1960, giving investors the opportunity to invest in huge real estate. The first REIT formed in Malaysia was Axis REIT all the way back in 2004, a good 44 years after our friends in the USA. From here on out, we will be discussing REITs in Malaysia.

What are REITs?

REITs in Malaysia

REITs are all around us, in fact, one could even say that almost every Malaysian has been in contact with a REIT in one form or another. You’ve surely walked into shopping malls, office buildings, hotels, factories warehouses.  Well, lo and behold! REITs own and manage these properties.

Recall your favorite malls from your younger days: Mid Valley and Sunway Pyramid, they belong to IGB REIT and Sunway REIT respectively, and have been solid performers in my Freedom Fund.

When explaining what are REITs to people, I like to compare them to mutual funds. The beauty of a REIT is that it allows small-time investors like us to acquire and own a slice of the pie in an otherwise impossibly expensive piece of real estate.

REITs are a very underrated security in Malaysia. Though they have been gaining traction for the past few years as a good defensive stock for every portfolio.

They are perfect for beginners due to their low-risk nature as well as high dividend yield. Further advantages of Malaysian REITs will be discussed below.

How do I invest in REITs in Malaysia?

Why would I even bother including this in the article? You’d be surprised how many times I’m asked this question, most Malaysians aren’t even aware that REITs are listed on our stock exchange. Yes! You can own real estate through Bursa Malaysia.

For all intents and purposes and to make things simple for all, REITs are shares. You buy REITs exactly like how you purchase shares. To invest in shares (and therefore REITs), you can learn about share investing hERE.

REITs in Malaysia

Tax Advantages of REITs in Malaysia

The Malaysian government has constantly been introducing tax incentives to promote REITs in the capital market. One huge tax benefit of a REIT is that most income earned by it is exempted from income tax. As long as REITs in Malaysia distribute at least 90% of their current year taxable income, the REIT will not be levied the 25% income tax. This allows the REIT to distribute its income on a gross basis.

With this tax system, most Malaysian REITs (if not all) distribute at least 90% of their taxable income. Coupled with the absence of a 25% income tax, dividend payments from REITs are always expected to be well above other shares.

However, as REITs are publicly listed companies, investors can range from your average local investors to foreigners and foreign entities. Malaysia’s taxman will be hard-pressed to keep track on tax payments by all these investors, hence you may notice that REITs charge a withholding tax on their dividends. Although Malaysia’s withholding tax rate is considered one of the lowest in the world, we are still behind a few countries – mainly our neighbour Singapore.

Another huge advantage of Malaysian REITs is the exemption of tax on the moving of properties. When a Malaysian REIT acquires properties, it doesn’t have to fork out for stamp duties, normally fixed at a maximum of 3% of the purchase price. When REITs in Malaysia dispose of their assets, they do not have to pay real property gain tax (RPGT) as well. Imagine the amount of savings REITs are afforded, I’m sure you can come up with your own calculations.

I’ve written an extended article on the tax treatment of Malaysian REITs hERE for further information.

Why Invest in Malaysian REITs?

Let’s compare REITs to other corporations on the stock market as well as physical properties.

1. 90% Distribution = Huge Dividends

As mentioned earlier, in order to take advantage of the tax system, REITs will almost always distribute at least 90% of their earnings. That’s right, 90% of all rentals collected from all those colossal buildings will be distributed to shareholders. The savings on stamp duty and RPGT alone run into the millions, those savings will eventually be transformed into dividends for investors like us.

More often than not, the dividends distributed by REITs in Malaysia will be higher compared to other corporations. This is why I always see REITs as more of a defensive stock due to their investments in physical properties and their high dividend yield.

2. Diversification

There are so many ways REITs offer diversification for your portfolio. For example, just by investing in Sunway REIT, your funds are already spread out among several property types and also geographically. Your funds are invested in malls, hotels, and offices across several states in Malaysia.

If you were to purchase a physical property by yourself, at most, due to the constraint of time and availability of funds, you’d have 3-4 properties in your portfolio. Which sounds better?

3. Low Initial Investment

With as little as RM1,000 you can add shopping malls, office towers, industrial warehouses, and even hotels to your real estate empire. Although I mentioned RM1K, please note that ideally, you’d want to start off with at least RM3K, with RM7-8K being the most ideal due to brokerage fees.

You can compare Malaysian brokerages and their fee structures here.

4. Liquidity

Compared to physical property, you’re able to buy and sell shares in Malaysian REITs in a few minutes. I cannot emphasize this enough, think of the hassle you have to go through just to sell an apartment unit now. The lawyers, agents, potential buyers, it’ll be at least a few weeks before you’re able to rid yourself of that apartment unit.

Whenever you find yourself in a pickle and you need cash fast, you will realize how important liquidity is. Emergencies aside, liquidity will save you a huge amount of time when disposing of REITs not to mention the fees.

5. Let the Professionals take care of it

Malaysian REITs
Leong Kit May – CEO of Axis REIT 

Just lay back and let the actual real estate experts handle and manage your properties. Who do you think owners of an RM1 billion shopping mall like Mid Valley and the Gardens will hire to manage their properties? The managers will, of course, be the very best in the field and have tons of experience. With expertise like that on your side, you leave the acquisitions, the disposals and the management of your properties to true professionals.

With professionals handling the day-to-day, your dividends from REITs are true passive income.

How many REITs are there in Malaysia?

There are a total of 18 REITs in Malaysia as of October 2016. Of these, I currently own 3 – Axis, IGB and Sunway REIT.

REITs in Malaysia

REITPortfolioStock Short Name
Amanah Harta Tanah PNBRetail, OfficeAHP
Al-Aqar Healthcare REITHealthcare, HotelsALAQAR
Al-Salam REITOffice, IndustrialALSREIT
AmFirst REITOffice, Retail, HotelsAMFIRST
Amanah Raya REITIndustrial, Office, Hotel, RetailARREIT
Atrium REITIndustrial, Warehouse, OfficeATRIUM
Axis REITIndustrial, Office, WarehouseAXREIT
Capital Malls Malaysia TrustRetailCMMT
Hektar REITRetailHEKTAR
IGB REITRetail, HotelsIGBREIT
KLCC REITRetail, OfficeKLCC
Pavillion REITRetail, OfficePAVREIT
Quill Capita TrustCommercial, Carparks, Office, IndustrialQCAPITA
Starhill REITCommercialSTAREIT
Sunway REITRetail, Hotels, OfficeSUNREIT
Tower REITOfficeTWRREIT
UOA REITOfficeUOAREIT
YTL Hospitality REITHotelsYTLREIT

My Investment in Malaysian REITs

I currently own 3 REITs in my portfolio. Axis REIT, IGB REIT and Sunway REIT.

Their performance in 2018 for me personally are as follows:

1. Axis REIT

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Dividends (2020) – RM726.01

Dividend Yield (2020) – 4.18%

2. IGB REIT

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Dividends (2020) – RM2,144.76

Dividend Yield (2020) – 4.14%

3. Sunway REIT

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Dividends (2020) – RM1,081.154

Dividend Yield (2020) – 2.32% (Lower as I added more units in 2020).

REITs make up a huge proportion of my Freedom Fund and are my dividend cash cows. May they provide for you as they have for me. Looking for a more general guide to stock investment? Head over to my article on A Guide to Stock Investment in Malaysia.

What are the REITs you’ve invested in?

End.

I hope I’ve been able to shed some light on REITs in Malaysia. I am not against anyone purchasing a physical property on their own. Instead, one should always make their decisions based on as much information as possible and I believe REITs are a very viable option in Malaysia.

REITsPhysical Property
Dividend yield: 5 - 7%Rental yield: 3-5%
LiquidIlliquid
Low transaction costs, doesn't take up timeHigh transaction costs, time consuming
Managed by expertsSelf-managed mostly
Highly diversifiedVery little chance at diversification

Physical properties are so hyped in recent years because you have every Tom, Dick and Harry bragging about how they earned RM100K or RM1 million by buying and selling properties. Yes, this may be true but why? Well, because you are actually borrowing 90% from the bank to finance that deal, you could earn that same amount with stocks if any banks were crazy enough to lend you that same amount.

At the end of the day, REITs are a form of investment and has their own risks. They are susceptible to all forms of market risks and you should conduct your due diligence before making a decision.

REITs are defensive stocks and are less volatile compared to other stocks. I love them due to their high dividend yield and REITs will continue to be a big part of my portfolio.

As it has always been my mantra, I say – To each his own. Invest in what you know and what you feel comfortable in. If it is properties, by all means, invest and plough your trade in the property market. However, for the rest of you, please give REITs your consideration the next time you are making an investment decision. I have been advising my clients to invest in REITs for years now and there have been no regrets.

I’d suggest taking a look at the Basic Financial Plan I drafted for everyone. You’ll need to have a proper plan to adhere to if you’re to start investing. It’s free and it’s here.

Let me know if I’ve missed anything important on Malaysian REITs. I will be continuously updating this page when I come across any relevant information so don’t forget to subscribe to the site, bookmark this page and check back often.

For the next article of the Investing Series, check out article 003 – Malaysia Stock Brokers Comparison.

As always, my Facebook and Instagram. Follow, and keep up to date.

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IGB REIT – Annual Report 2015

By Leigh
Updated October 30, 2016 Filed Under: Dividends, Companies in the News, Portfolio - Freedom Fund 4

IGB REIT Annual Report

What is a REIT?

So first and foremost, what is a Real Estate Investment Trust (REIT)? A REIT is a company that owns, and in most cases, operates income-producing real estate. They are listed on the KLSE and its shares are open to the public to purchase.  Learn more about them here in my Complete Guide to REITs in Malaysia.

Now, on to one of my favorite REITs – IGB REIT.

IGB REIT

IGB REIT Annual Report

I was awaiting the arrival of the dividend voucher from IGB REIT when to my surprise, it came together with its annual report in the form of a CD. Personally, I like how companies are mailing their annual reports in a CD instead of the old days when they printed thick copies of the reports and mailed those to every single shareholder.

Before we go into the details, you may download and open IGB REIT’s annual report here: IGBReit AR15

For the benefit of those who don’t know, IGB REIT’s property portfolio consists of Mid Valley Megamall and The Gardens Mall in the Klang Valley. Their main shareholders are IGB Corporation Berhad and Goldis Berhad whose main shareholders are the family of IGB Corp’s co-founder the late Datuk Tan Kim Yeow.

I will attempt to brief everyone on some of the more significant details of IGB REIT.

Balance Sheet

Dear shareholders of IGB REIT, these are yours.

IGB REIT The Gardens Mall

Photo Source: thisismetrixit.blogspot.com

IGB REIT Mid Valley Megamall

Photo Source: mapio.net

There were no significant changes in the REIT’s assets and liabilities, value of the company’s investment properties stood at RM4.9 billion. Mid Valley Megamall is valued at RM3.61 billion and The Gardens Mall at RM1.28 billion by Henry Butcher as at 31 December 2015.

Cashflow

A Real Estate Investment Trust’s (REIT) main source of income comes from rentals and the company’s gross rental income increased by 7% in 2015 to RM380 million a year. I particularly liked that IGB REIT also managed to not only keep expenses low, they were able to reduce it by almost RM3 million a year.

However, a lower net profit was declared for 2015 mainly because there was no changes in the fair value of the REIT’s properties. Generally most properties held by REITs would have an increase in value every year, I am not concerned with this aspect of IGB REIT because fair value of properties are paper gains, the true value of a REIT comes from its rental income.

Apart from rental income, I’d like to bring your attention to their Other Income section mainly car park, advertising an kiosk rental. The REIT is rakin in RM44 million a year in parking fees alone, RM6 million for advertisements and a cool RM23 million from renting out kiosk booths. All of which have increased compared to 2014.

My Holdings

IGB REIT has been in my PORTFOLIO since July 2015 with my gross investment at RM1.3152. I’ve been adding to my position when the price was right. As of today (3/3/16), the market price is RM1.54, giving me an unrealized capital gain of 16.33%. I have also received dividend income from IGB REIT recently amounting to RM766.08. Total gains including dividends received stands at 20.93%.

At the current price, dividend yield for the REIT is still above 5%, I will consider disposing off some of my shares in IGB REIT when the yield dips below the 5% mark and will top up on the REIT depending on their next quarterly results.

Do you own any REITs in your investment portfolio? 

Thanks for reading.

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