IGB Commercial Real Estate Investment Trust (REIT), part of IGB Group Bhd will become the largest standalone office REIT by market capitalisation, net lettable area, and appraised value when it list next month.

It will also be the sixth-largest Malaysian REIT with an expected market capitalisation (market cap) of RM2.3 billion on the listing.

IGB Commercial REIT, managed by IGB REIT Management Sdn Bhd comprises an initial portfolio of 10 assets, valued at RM3.16 billion.

It was established on March 31, 2021, on the registration of the deed of trust executed between IGB REIT Management and MTrustee, with the Securities Commission.

IGB Commercial REIT, through MTrustee, has inked 10 agreements to buy the properties from IGB's subsidiaries and 50 per cent-owned joint-venture companies under its proposed listing exercise.

The properties include Gardens South Tower (RM391.5 million), Gardens North Tower (RM382.1 million), Menara Tan & Tan (RM239.1 million), GTower (RM739.8 million), Southpoint Properties (RM573.5 million), Centrepoint North (RM196.5 million), and Centrepoint South (RM190.5 million)

The other properties are Menara IGB & IGB Annexe (RM188.9 million), Hampshire Place Office (RM180.6 million), and Boulevard Properties (RM78 million).

IGB REIT Management deputy chief executive officer Wong Khim Chon said its large size and corresponding free-float could enhance the REIT's visibility among the local and international investment community.

The market cap of RM2.3 billion was computed based on the restricted offer for sale (ROFS) price of RM1 per ROFS unit, he said in a statement to announce the launch of the REIT's prospectus today in conjunction with its listing.

The investment objective of IGB Commercial REIT is to provide unitholders with regular and stable distributions, sustainable long-term unit prices, and distributable income and capital growth.

It intends to achieve this through investment strategies which included proactive asset management and asset enhancement strategy; potential yield accretive investments and acquisition growth strategy, as well as prudent capital and risk management strategy.

In the past three years, the properties achieved an average occupancy rate (AOR) of between 75 per cent and 80 per cent while the average rental rate (ARR) was RM5.80 per square feet (psf) to RM6.30 psf.

The portfolio recorded an AOR of 75 per cent and an ARR of RM5.73 psf for the financial year ended December 31, 2020 (FY20).

Its net property income (NPI) for the year was RM129.2 million and an NPI margin of 68 per cent after accounting for leases.