WCT Holdings Berhad has announced further details on its plan to establish the Paradigm Real Estate Investment Trust (REIT). The company plans to dispose of three of its shopping malls to the newly formed Paradigm REIT for a total value of RM2.44 billion. The malls include Bukit Tinggi Shopping Centre in Klang, Paradigm Mall Petaling Jaya, and Paradigm Mall Johor Bahru. These assets are expected to generate significant interest in the REIT market.
MIDF Stock Broking House have maintained a NEUTRAL outlook for WCT Holdings, with the stock's target price unchanged at RM0.97. This valuation is based on FY25F earnings per share of 5.4 sen, pegged to a price-to-earnings ratio of 18 times. The REIT listing, while not expected to impact immediate projections, is seen as a strategy for WCT to manage its debt. The company's balance sheet will benefit from proceeds, allowing it to reduce net gearing from 0.72x to 0.33x.
The Paradigm REIT will raise funds through a combination of cash and unit issuance. Approximately RM837 million will come from medium-term notes (MTN) under a newly established programme, while 1.60 billion new units will be issued at RM1 per unit. WCT is expected to hold a 60.7% stake in Paradigm REIT, securing continued exposure to the three malls through dividends and management fees.
Management of the REIT will be handled by Paradigm REIT Management Sdn Bhd, an entity jointly controlled by WCT, with Henry Butcher Malaysia acting as the property manager. WCT's proceeds from the disposal will total RM1.40 billion, of which RM838 million will be allocated to repay borrowings within the next year.
The listing of Paradigm REIT is anticipated to attract attention from institutional and retail investors, with 35% of the units being offered for sale. Institutional investors will be offered up to 305.3 million units, while retail investors can acquire up to 254.7 million units. WCT's move to list its assets is expected to take place by the first quarter of 2025, pending approval from relevant authorities, including the Securities Commission (SC).
