PETALING JAYA: KIP Real Estate Investment Trust (KIP REIT) has received unitholders’ approval for its latest strategic expansion plan, which includes the acquisition of four retail properties in Selangor and Kuantan for RM118 million, alongside a private placement exercise to raise RM132 million.
The newly approved assets – KIPMall Desa Coalfields, Lotus’s Indera Mahkota, and two commercial buildings within an integrated development in Kuantan – are projected to generate RM11.3 million in revenue and RM8.0 million in net property income (NPI) in their first full year of operations.
This equates to 11.7% and 11.6% of KIP REIT’s nine-month FY2025 revenue (RM96.2 million) and NPI (RM68.8 million), respectively, underscoring the earnings accretive nature of the expansion.
These assets are expected to deliver an average initial yield of 6.8%, supported by long-term, stable lease structures.
KIP REIT CEO Valerie Ong expressed appreciation for the strong backing from unitholders, noting that the acquisitions align with the REIT’s strategy to strengthen its income-generating portfolio and support sustainable distribution per unit growth.
“The new assets will provide meaningful recurring income while expanding our footprint in high-potential suburban and emerging growth areas like Selangor and Kuantan. We are also encouraged by early investor interest in the private placement. With disciplined capital management and a proactive asset strategy, we are confident in delivering sustainable long-term returns,” she said.
KIPMall Desa Coalfields features a well-diversified tenant mix, while Lotus’s Indera Mahkota is anchored by a 15-year master lease agreement with built-in rental escalations.
The two commercial buildings include shop lots and a KFC outlet, both secured by multi-year leases with renewal options, providing recurring income from established brands.
To fund part of the acquisitions and upcoming upgrades, KIP REIT will undertake a private placement of up to 160 million new units, targeting gross proceeds of about RM132 million.
The book-building phase is underway, with price-fixing scheduled for mid-August.
Of the total proceeds, RM106.6 million will be used for the partial settlement of the acquisitions, RM21.9 million will be allocated for asset enhancement initiatives (AEI) at KIPMall Tampoi, and RM3.9 million will be allocated for estimated expenses.
The AEI at KIPMall Tampoi forms part of the group’s ongoing asset optimisation strategy, aimed at improving tenant mix, shopper experience, and rental yields. Planned upgrades include façade enhancements, interior refurbishments, and enhanced amenities to attract higher footfall and quality tenants.
Completion and allotment of the new placement units are expected by early September 2025.
This latest round of acquisitions and capital raising marks a significant milestone in KIP REIT’s growth roadmap. Upon full completion – including pending acquisitions – the group’s total portfolio value is projected to reach approximately RM1.6 billion, comprising over 3.4 million square feet of net lettable area.
The move also strengthens KIP REIT’s geographical diversification, adding exposure to Pahang and reinforcing its presence along the East Coast, complementing its existing footprint in the Klang Valley, Johor and Perak.
