KUALA LUMPUR (June 11): S P Setia Bhd (KL:SPSETIA) says it has started pre-IPO (initial public offering) preparatory works to explore the establishment of a real estate investment trust that will have a diverse asset portfolio.

The REIT may include retail complexes, office buildings, schools and a convention centre, S P Setia said in a statement. It aims to establish a new pathway for investor value and company growth via the REIT.

Some of the key properties the group owns, according to its latest annual report, include: Setia City Mall in Setia Alam, the INC Mall (formerly known as KL Eco City Mall) in Kuala Lumpur, Setia City Convention Centre in Shah Alam, Setia Spice Convention Centre in Penang, and the Amari Kuala Lumpur hotel in the group's KL Eco City township.

“Our strategy to realise the values of our identified land assets has brought us one step closer to an even stronger financial state and supports our efforts to diversify our income base. We remain committed to our ethos of excellence and innovation, driving growth while delivering superior value to our stakeholders,” said the group's president and CEO Datuk Choong Kai Wai in the statement.

The update came with the group's announcement that it had sold its 959.72-acre land in Tebrau for RM564 million in cash to Senibong Island Sdn Bhd, a company linked to tycoon Tan Sri Syed Mokhtar Al-Bulkhary.

In March, S P Setia said in its latest annual report that it was planning to continue cutting its debt as well as sell more unimportant assets to improve its investment properties for a potential REIT. At the time, it still owned over 6,300 acres of land that could command a gross development value of up to RM119.74 billion.

In November last year, the company sold 18 acres of land in Setia City to KSL Bestari Sdn Bhd for RM228.8 million. Prior to that, in June, the company disposed of 500 acres of land in Semenyih to Mah Sing Group Bhd (KL:MAHSING) for RM392.04 million.

S P Setia’s share price settled unchanged at RM1.48 on Tuesday, for a market capitalisation of RM7.03 billion. Year to date, the stock has jumped 85%.