Airport REIT a powerful way to monestise infrastructure assets: MRMA

 Publish date: Mon, 12 Nov 2018, 2:00 PM

KUALA LUMPUR: The proposed airport real estate investment trust (REIT) under the 2019 Budget is a powerful way for the government to securitise and monetise its infrastructure assets, says the Malaysian REIT Managers Association (MRMA).
In a statement, MRMA said it would also be a strategic way to unlock the country’s aviation infrastructure value, creating a sustainable structure to fund the airports’ future capital expenditure and expansion as well as igniting capital market interest.
Chairman Datuk Jeffrey Ng said with the right pricing and valuation, the Airport REIT initial public offering (IPO) would garner strong interest from both institutional and retail investors as the REIT is supported by high-quality government-backed assets.
“In line with the local bourse’s priority to attract higher foreign participation in the domestic capital market, we suggest that the government consider increasing the free-float of the Airport REIT to more than the proposed 30 per cent stake in order to increase liquidity and tradability of the proposed REIT.
“With a sizeable free-float, the IPO will attract greater interest from international funds,” he said.
Furthermore, he said, the success of the proposed Airport REIT is premised on balancing growth potential vis-à-vis protecting any downside risks.
He said as the distributable income from the Airport REIT is based on user fees collected from the established airport management concession holder Malaysia Airports Holdings Bhd (MAHB), the lease structure of the REIT should have a minimal guaranteed income.
This would protect the downside risk while unitholders may also enjoy the upside growth of the user fees derived from aeronautical and non-aeronautical revenues, which include duty-free retail, food and beverages offerings, car park management and advertising, he added. 



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