TA rises on REIT plan

TA rises on REIT plan

KUALA LUMPUR: The prospect of TA Enterprise Bhd (TA) raising more than RM1bil through the sale of its properties to a real estate investment trust (REIT) sent shares of the stockbroker and property developer to their highest level in six weeks yesterday.

TA Enterprise shares closed up 17 sen to RM1.94 while its warrant-B jumped 7 sen to 88 sen as the group announced it might package property assets in Australia, Canada, Malaysia and potentially South Africa into a REIT.

“REITs are a great way for property companies to unlock value,'' said the head of research at a local stockbroking house.

Shares of TA have been among the better performing stocks this year as it benefits from the stockmarket's two key themes, property and stockbroking.

“There is a need for the company to increase its landbank and grow the financial services side of the business, and that's where the money will come in useful,'' said an analyst.

In the Tuesday report, TA chairman Datin Alicia Tan said the company planned to sell RM1.8bil worth of apartments and offices in the next five years.

She said two of the three projects were located near the KLCC and the company expects income from real estate to contribute 60% of its profit by 2009 from 30% in 2005.

The prospect of having a REIT is also seen as beneficial to TA as ongoing and future property projects could be injected into the REIT to improve returns. As for the stockbroking side of the business, the share price of stockbrokers such as TA Enterprise have also been lifted as the global bull market has led to higher valuations for stockbrokers worldwide.

But for TA, the nature of its financial and stockbroking business is set to evolve after being stable for much of the past few years.

Armed with an investment banking licence, the company is set to capitalise on its assets, which include a big remisier team, a strong retail focus in its clientele, as well as growing contribution from its institutional business. “There is potential for the company to come up with structured products and TA is also eyeing expansion into similar stockbroking services in the region,'' said an analyst.