IOI Prop’s Singapore Acquisition Fits Into Its Future REIT Ambitions: HLIB
Hong Leong Investment Bank Bhd (HLIB) has maintained its BUY call on IOI Properties Group (IOIPG), keeping its target price at RM4.05, implying a significant 115.4% capital upside and 119.1% total return. The research house believes the group’s recent acquisition of the remaining 50.1% stake in the South Beach development in Singapore reinforces its long-term strategy and presents a rare opportunity to anchor its future REIT ambitions in a stable and high-value asset.
HLIB highlighted that the acquisition, valued at S$834 million (approximately RM2.75 billion), was made possible through IOIPG’s first right of refusal after its joint venture partner, City Developments Ltd, expressed interest to divest. Given IOIPG’s longstanding involvement with the project and operational familiarity, the deal was seen as a natural progression. The bank noted that securing an en-bloc commercial asset of this quality in Singapore is exceptionally rare and significantly reduces development risk.
According to HLIB, the full control over South Beach allows IOIPG to optimise operations, unlock synergies and prepare the asset as a cornerstone for a Singapore REIT listing targeted for 2027. Additionally, the group is planning a Malaysia REIT listing by mid-2026, with both exercises expected to unlock significant cash flow—up to RM3.2 billion and RM10.6 billion respectively—if IOIPG retains a 60% stake in each.
Management is confident in boosting operational efficiency, especially within the JW Marriott Hotel in South Beach. HLIB noted that by diversifying its guest mix to include more independent travellers and retail clients, the group aims to raise average daily rates to S$600, in line with five-star benchmarks in Singapore, and lift occupancy rates beyond the 76% recorded in 1Q2025.
To fund the acquisition, IOIPG has secured financing through bank borrowings and potential sukuk issuance, which HLIB views positively as it helps maintain Shariah compliance—a status the stock recently regained. Management also ruled out any rights issue, easing concerns over equity dilution. Despite the expected rise in net gearing to around 0.93 times, HLIB believes this will gradually decline as cash flow from the upcoming W Residences launch and REIT exercises begin to materialise.
The research house also addressed market concerns about IOIPG’s valuation, noting the stock is currently trading at just 0.44 times book value. With high-value assets like IOI City Mall and IOI Central Boulevard still underappreciated by the market, HLIB sees meaningful re-rating potential as monetisation efforts through REITs crystallise the intrinsic value of these properties.
HLIB has kept its earnings forecasts unchanged and reiterated that IOIPG remains a compelling proxy for exposure to both Malaysia’s property sector—supported by policy reforms and infrastructure expansion—and Singapore’s resilient real estate market. The group’s diversified portfolio, coupled with clear strategic execution, reinforces confidence in its growth and capital management capabilities.