Paradigm-REIT expected to grow with hotel assets

PETALING JAYA: Main Market-bound Paradigm Real Estate Investment Trust (Paradigm-REIT) is poised to acquire some hotel assets after its listing on Bursa Malaysia.

The REIT, which is scheduled to list on June 10 as a retail trust, could see the addition of hotel assets in its stable as soon as 2026.

These hotels, which are presently owned by Paradigm-REIT’s sponsor WCT Holdings Bhd, are in the vicinity of its mall assets in the trust.

The hotels are Hyatt Place Johor Baru Paradigm Mall, Le Méridien Petaling Jaya and Premiere Hotel, Klang.

“We have the right of first refusal (ROFR) to acquire these hotels and at the right time we will grow the REIT with these assets.

“We are looking to do this as early as 2026 to inject these three hotels and then potentially 2027 or 2028 for the gateway@klia2 mall asset,” Paradigm REIT Management Sdn Bhd’s chief executive officer and executive director Selena Chua said at a press briefing last Friday.

The ROFR is a right but not an obligation to purchase these assets in the event WCT opts to sell them.

The REIT will contain assets like Paradigm Mall Petaling Jaya (PMPJ), Paradigm Mall Johor Baru (PMJB) and Bukit Tinggi Shopping Centre (BTSC) upon listing.

The malls have a cumulative average occupancy rate of 99% at present.

Paradigm-REIT will be listed at a reference price of RM1 per offer unit with an estimated market capitalisation of RM1.6bil upon float.

Its fact sheet states Paradigm-REIT will have an annualised distribution yield of 7.16% in the projected financial year 2025 (FY25).

Net gearing upon listing is at 34% of its total asset value of RM2.476bil or RM841.7mil, well below the 50% regulatory limit.

This offers it a debt headroom of up to RM1.24bil, the REIT’s manager said.

“We feel very confident about this listing in spite of the recent market sentiment. Paradigm-REIT is defensive in nature. The dividend yields are there and we distribute at least 90% of profits twice a year,” its director for investment, finance and accounts Chong Kian Fah said.

“The REIT’s assets are competitive – the occupancy is close to 99% on average which is similar to being fully occupied.

“The net property income (NPI) margins show the profitability of the assets and this was close to 68% last year and we target to achieve 69% in 2025,” Chong added.

Paradigm-REIT will focus on investing in a diversified portfolio of real estate assets including in retail commercial, office, industrial and hospitality purposes, and such other non-real estate assets.

PMPJ had 680,048 sq ft of net lettable area as at March 31, and is part of the integrated commercial development located within Kelana Jaya in Petaling Jaya.

PMJB is the largest shopping mall in Iskandar Malaysia and had around 1,292,956 sq ft of NLA as at March 31 and is a 20-minute drive from the Woodlands Checkpoint of Singapore, encouraging foot traffic from Singaporean tourists.

BTSC spanned 1,000,950 sq ft of gross lettable area as at March 31 and is located in the integrated and mature township development of Bandar Bukit Tinggi in Klang, Selangor.

The initial public offering (IPO) comprises of a total offering of up to 560 million offer units, in which 254.7 million offer units are allocated for the retail offering and at least 305.3 million offer units are offered to institutional investors.

“We are very happy about this milestone with the imminent listing of Paradigm-REIT. The team has worked very hard towards this goal. All the hard work has finally come to fruition,” Chua said.

Interested retail investors have until May 23 before the retail offering closes for IPO applications. Maybank Investment Bank Bhd is the principal adviser, lead bookrunner and sole managing underwriter of this REIT listing.