MESSAGE BY
TAN SRI DATO’ SERI DR JEFFREY CHEAH, AO
CHAIRMAN, SUNWAY REIT MANAGEMENT SDN BHD
&
DATO’ JEFFREY NG
CEO, SUNWAY REIT MANAGEMENT SDN BHD

The debut of the Sunway Real Estate Investment Trust (‘Sunway REIT’) marks a significant milestone for Sunway City Berhad, its Sponsor as it is not only the largest IPO in Malaysia year-to-date, but also the largest REIT IPO in Asia ex Japan since 2007. This has been a long awaited transaction.

Turning a derelict tin mine into a fully integrated resort requires patience, persistence and determination…sometimes against all immensurable odds. The successful listing of the Sunway REIT is indeed a reward for almost four decades of growing Sunway City Berhad’s Property Investment business.

The Sunway REIT is launched in the midst of volatile global market conditions, with several regional IPO transactions being held back or even deferred recently. While market sentiments have fluctuated between bearish and bullish, we are pleased to note the enthusiastic support for this hallmark transaction, which has raised a total of RM1.49 billion.

The institutional offering for the Sunway REIT was priced at 90 sen per offer unit, with the book equally taken up by both domestic and international investors. Based on this price, Sunway REIT offers a dividend yield of approximately 7.5% for the forecast financial year 30 June 2011. The retail portion, which makes up of 5% of the total offering, was priced at 88 sen per offer unit. The market capitalization of Sunway REIT upon listing will be approximately RM 2.41 billion, and this makes Sunway REIT the largest REIT on the Main Market of Bursa Malaysia.

STEADFAST PERFORMANCE AMIDST CHALLENGING TIMES
The fact that Sunway REIT’s public offering was over-subscribed in spite of the volatility in the market, demonstrates faith in this unique offering and the Sunway brand.

The investors’ faith is not misplaced. In a cautious environment, the size of the Sunway REIT itself draws investors, as well as its liquidity. The inherent defensive nature of a real estate investment trust appeals particularly in these times as it favoured for its yield stability. We believe that the Sunway brand coupled with the defensive qualities of a real estate investment trust lead were some of the factors which lead to the participation of the four cornerstone investors of Sunway REIT.

A distinctive difference that distinguishes the Sunway REIT from other M-REITs is the fact that four properties under management synergise to benefit from the Sunway Integrated Resort City, an iconic 800-acre integrated master planned township in Bandar Sunway, Petaling Jaya

These four properties, which makes up 85.5% of the Sunway REIT, are Menara Sunway, Sunway Pyramid Hotel and Spa, Pyramid Tower Hotel and the Pyramid Shopping Mall. This presents an unparalleled advantage for our Unitholders as these are not standalone properties, but synergistically backed by Bandar Sunway’s compelling compendium of residential, retail, commercial, hospitality, leisure, medical, convention and educational developments.

Annually, Sunway Integrated Resort enjoys tourist arrivals of about 30 million, domestically and internationally. Sunway Medical Centre has recently completed its expansion while Monash University Sunway Campus and Sunway University College are currently undergoing growth plans of their own. Additionally, construction works is being undertaken for a 28 storey mixed use commercial building with office and retail elements neighbouring the Sunway Pyramid Shopping Mall. Next to the Menara Sunway, a 25 storey office building is being built. Sunway South Quay, the masterpiece residential development is also currently taking shape nicely.

The portfolio properties also have resilient qualities. The Sunway Pyramid Shopping Mall which accounts for 62% of the Sunway REIT’s total asset value offering, is a primary example, having continuously garnered increasing rentals and occupancy rates from 97.9% to 99.3% in the past year, despite the economic downturn.

The Sunway REIT’s diversified portfolio, which encompasses real estate in the retail, hospitality and commercial sectors will effectively buttress against any particular risk associated to any one particular real estate subsector. This gives Sunway REIT a significant edge above pure-play REITs. The diverse quality tenant mix of the rental properties will benefit from diverse sources of income from various retail sub-sectors profiting from both well-known international and domestic retailers.

The close relationship of Sunway REIT to its sponsor, Sunway City Berhad also serves to ameliorate the attractiveness of the offering. Sunway City Berhad has presence in not only Malaysia but also in China, India, Australia and Cambodia, and this enhances the growth potential and opportunities to the Sunway REIT in the future.

SPURRING THE REIT TREND
With the successful listing of the Sunway REIT, we hope there will be greater appreciation for real estate investment trusts in Malaysia, and it is heartening to note the strong support, from investors and regulators alike. We hope this will increase awareness and spur investments into the M-REIT market.

APPRECIATION
We trust that the Sunway REIT management team will keep up the good momentum and continue to manage the Sunway REIT’s assets effectively and efficiently. We would like to take this opportunity to thank our colleagues, our Trustees, our advisors and the regulatory authorities who have turned a vision into reality with the listing of the Sunway REIT.

To our new unitholders, we welcome you to the Sunway REIT.

Dated: 8th July 2010