What is REIT?

A Real Estate Investment Trust, or REIT, is a collective investment scheme that allows
investors to invest indirectly in a portfolio of income-producing real estate. Instead of
purchasing an entire shopping mall, office building or hotel, an investor buys units in the
REIT and receives a proportionate share of its distributable income.

In Malaysia, listed REITs are generally listed on the Main Market of Bursa Malaysia and are
regulated principally by the Securities Commission Malaysia under the Capital Markets
and Services Act 2007, the SC’s Guidelines on Listed Real Estate Investment Trusts, and
Bursa Malaysia’s Listing Requirements. Malaysia accommodates both conventional REITs
and Islamic REITs.

The REIT is normally established under a trust structure. The properties and assets are
held by an independent trustee on behalf of the unit holders, while a licensed REIT
management company is responsible for investment strategy, acquisitions, financing,
leasing and asset management. A property manager may be appointed to manage the
day-to-day operation of the properties.

The main income comes from rent collected from tenants. After deducting operating
expenses, financing costs, management fees and other permitted expenses, the
distributable income is paid to unit holders. One important feature in Malaysia is that a
REIT may obtain full exemption from income tax at the REIT level where it distributes at
least 90% of its total income, although the distribution received by unit holders may be
subject to the applicable tax or withholding-tax treatment.

From a regulatory perspective, at least 75% of the REIT’s total asset value must be
invested in real estate that generates recurrent rental income. The aggregate investment
in property development activities and real estate under construction is generally limited
to 15% of total asset value, while total borrowings or financing facilities must not exceed
50% of total asset value.

Common REIT property sectors in Malaysia include retail malls, offices, industrial and
logistics properties, hotels, hospitals, education-related assets and diversified portfolios.
Examples include IGB REIT, Sunway REIT, Axis REIT, KLCCP Stapled Group, Al-Aqar
Healthcare REIT and CapitaLand Malaysia Trust. Bursa Malaysia maintains the current list
of listed Malaysian REITs.

For investors, the main advantages are regular income distributions, liquidity because
the units can be traded on Bursa Malaysia, professional management, portfolio
diversification and access to large institutional-quality properties with relatively small
capital.

However, REITs are not risk-free. Their performance is affected by occupancy, rental
reversions, tenant concentration, property operating expenses, capital expenditure,
financing cost, interest-rate movements, changes in property values and the economic
outlook. A REIT may have good properties but still perform poorly if it is excessively
leveraged, pays too much for acquisitions or faces weak rental growth.

From a valuer’s perspective, valuation is particularly important because property values

affect the REIT’s net asset value, gearing ratio, acquisition or disposal pricing and
financial reporting. Under the SC Guidelines, all properties in a listed REIT’s portfolio
must be valued by an independent valuer at least once every financial year, and
properties to be acquired or disposed of must also be valued. The valuation should
normally consider sustainable net property income, market rent, occupancy, lease
profile, capital expenditure and an appropriate capitalisation or discount rate.

Therefore, I would describe a Malaysian REIT as a regulated and tax-efficient vehicle that
converts relatively illiquid income-producing real estate into tradable investment units,
while providing investors with recurring income and potential capital appreciation.

Investors / Unit Holders

contribute capital and receive REIT units
↓
Trustee
Holds the properties and protects unit holders’ interests
↓
REIT Manager
Makes investment, financing and asset-management decisions
↓
Property Manager
Manages leasing, maintenance and daily operations
↓
Tenants
Pay rent to the REIT
↓
REIT
Pays operating costs, financing expenses and fees
↓
Distributable Income
Paid to unit holders according to their units held

Matter REIT Property Developer

Primary objective Recurring rental income Development and sale profits
Main assets Predominantly income- Land, development inventory
producing properties and projects
Investor return Income distribution and unit- Dividends and share-price
price appreciation appreciation
Development Restricted Core business activity
exposure
Distribution policy Normally distributes a high At directors’ discretion
proportion of income
Structure Trust with trustee and manager Company managed by board of
directors

How do you assess whether a REIT is performing well?

Net Profit Margin (NPI) whether rental operations are becoming more
profitable
Occupancy Rate whether the vacancy is temporary or structural
Rental Reversion whether renewed leases achieve higher or lower
rentals
Distribution Per Unit (DPU) Preferably on a recurring and sustainable basis
Gearing Ratio debt maturity and refinancing risk
Interest Coverage Ratio ability to service financing obligations
 Weighted Average Lease Expiry stability of future rental income
(WALE)
Tenant Concentration reliance on major tenants or industries
Net Asset Value (NAV) per unit whether the REIT trades above or below the
Price to Net Asset Value (NAV) underlying net asset value
Distribution Yield considered together with risk, growth and interest
rates.

Net Asset Value = Fair Value of Assets – Total Liabilities

¿
NAV per unit = NAV atrributable ¿ unit holders
No . of units∈circulation

Rule of Thumb : 75-15-50-90

75% minimum of total assets value in real estate generating recurrent rental
income
15% general limit for property development activities and real estate under
construction
50% maximum total borrowings or financing against total asset value
90% income-distribution threshold for full income-tax exemption at REIT level
ESTABLISHMENT OF REIT
IOIPG Real Estate Investment Trust

Flow Chart

1. Sponsor identifies REIT strategy

↓
2. Select seed income-producing assets
↓
3. Establish proposed REIT manager
↓
4. Appoint trustee, property manager and advisers
↓
5. Independent property valuation
↓
6. Property/legal/financial due diligence
↓
7. Structure acquisition, debt and master leases
↓
8. Draft trust deed, SPAs, prospectus and other agreements
↓
9. Obtain sponsor corporate/shareholder approvals
↓
10. Apply to SC + Bursa + MITI/other authorities
↓
11. SC evaluates assets, valuation, manager, trustee, deed and prospectus
↓
12. Obtain SC approval subject to conditions
↓
13. Execute + register/lodge trust deed → REIT established
↓
14. Register and issue prospectus
↓
15. Institutional bookbuilding + final IPO pricing
↓
16. Satisfy conditions precedent
↓
17. Complete property acquisitions + debt / Sukuk funding
↓
18. Complete retail/institutional offering
↓
19. Bursa listing
↓
20. Ongoing REIT regulatory, valuation and governance compliance
1. Sponsor first decides
IOIPG determines whether it has suitable portfolio in mature + income-producing
properties
- Quality of properties
- Rental income (NPI) + historical performance
- Occupancy
- Tenant profile
- WALE
- Future CAPEX
- Title and tenure
- Encumbrances
- Valuation
- Expected distribution yield
- Financing requirements
- Attractiveness to institutional and retail investors

IOI City Mall

IOI City Towers
Putrajaya Marriott Hotel
Le Méridien Putrajaya
Moxy Putrajaya
Four Points by Sheraton Puchong
W Kuala Lumpur
Courtyard by Marriott Penang

Total approved purchase consideration = RM7.578 billion

2. Sponsor sets up REIT management structure

Establish the parties to perform different functions :
Sponsor  IOI Properties Group Brhad
REIT Manager  IOIPG REIT Management Sdn Bhd incorporated on 11 June
2025
Trustee  MTrustee Berhad
Property Manager  Henry Butcher Malaysia (Mont Kiara) Sdn Bhd

Property Manager ≠ REIT Manager

REIT Manager : investment + strategic management of fund

Property Manager : Physical property management, operations, maintenance,

leasing-related functions, property-level administration

3. Proposed trust structure & investment mandate are designed

- name of fund
- investment objective
- investment policy
- fund size
- initial portfolio
- distribution policy
- financing structure
- permitted investments
- management fee
 - trustee fee
- governance arrangements
- acquisition/disposal rules
- unitholder rights

4. Independent valuation of seed properties

Knight Frank Malaysia  appraised value 31 Oct 2025 = RM7.578 billion
 updated value 31 May 2026 = RM7.664 billion
RM68 mil or 1.1% discount to appraised fair value

5. Property, legal, financing, commercial due diligence

Property
- title
- tenure
- registered ownership
- encumbrances
- land use
- building approvals
- tenancy schedules
- occupancy
- rental income
- arrears
- major CAPEX
- building condition
- insurance
- licences and approvals

Legal
- title defects
- litigation
- tenancy documents
- material contracts
- existing financing and charges
- hotel management agreements
- regulatory approvals

Financial
- historical income
- property expenses
- NPI
- financial statements
- financing
- forecasts and assumptions

Valuation of W Kuala Lumpur was reduced by RM3 mil due to revised assumptions
concerning 3,649 sq ft void area  does not form part of existing strata titles

6. Decide how REIT will acquire the properties

IOI  dispose 9 properties  MTrustee (IOIPG REIT)
Acquired through Trustee acting on behalf of REIT / Unit Holders
RM7.578 billion = RM4.925 billion (units) + RM2.653 billion cash
 5.5 billion consideration units  RM0.90 per unit (65%)
RM2.653 billion funded through Sukuk insurance (35%)

IOIPG remains as substantial unitholder of its own REIT

7. Special structuring for operational properties (hotels)

Hotel are operating businesses
IOIPG proposed Hotel Master Lease Agreements (HMLAs)
Trustee owns the hotels through REIT  IOIPG acts as Master Lessee 10 + 10
years
Recurring rent paid to REIT as higher variable rent + guaranteed rent (predictable
rental stream)

8. Prepare legal instrument - Deed of Trust

REIT is not formed by incorporating under Companies Act 2016
REIT is a trust  will be constituted by Deed of Trust between Manager & Trustee
Established after registration and lodgement of Deed with SC  approval
IOIPG REIT Manager Sdn Bhd  incorporated under Companies Act 2016
IOIPG REIT  constituted under a trust deed between Manager & Trustee

9. Prepare prospectus and transaction documents

- Trust deed
- Prospectus
- Valuation reports / certificates
- Sale and purchase agreements
- Master lease agreements
- Financial information
- Forecast / projections
- Material contracts
- Risk disclosures
- Corporate governance disclosures
- Related-party / conflict disclosures
- Offering structure
- Financing documentation

SC Assessment :
- whether the proposed real estate portfolio complies with the Listed REIT
Guidelines
- whether the trust deed contains the required covenants
- whether the prospectus complies with the applicable prospectus
requirements and gives investors adequate information

[Link] sponsor / shareholder corporate approvals

Announcement in April 2026  shareholders at EGM :
- Proposed disposals
- Proposed offering
- Proposed listing
- Pink Form allocations

2 layers of compliance :
REIT  Capital Market compliance (SC)
 Sponsor  Bursa compliance

[Link] REIT IPO application to SC

Applications for SC approval :
- establishment of the REIT
- appointment of manager
- trustee
- property manager
- proposed offering
- proposed listing
- relevant fund-management licences
- various waivers/reliefs where required

MITI Approval  Bumiputera equity requirements

Bursa Securities Approval  listing

[Link] review portfolio, manager, trustee, deed, valuation and prospectus

Assets acceptable?
↓
Valuations acceptable?
↓
Manager fit/licensed?
↓
Trustee acceptable?
↓
Governance adequate?
↓
Trust deed compliant?
↓
Offering compliant?
↓
Prospectus sufficiently disclosed?
↓
Listing requirements satisfied?

[Link] grant conditional approval

Granted by SC on 6 August 2026  Received by IOIPG on 7 August 2026
- Establishment + Main Market listing of IOIPG REIT
- Appointment of IOIPG REIT Manager Sdn Bhd as management company
- Bumiputera equity application

[Link] to be satisfied
- Obtain REIT manager license for fund management + asset management
- Operational audit within 6 months after listing
- Bumiputera allocation = 12.5% of enlarged issued units
- Public balloting = at least 50% offered to public through balloting

[Link] and register Trust Deed  REIT is constituted

To be registered and lodged with SC
IOI proposes a future REIT
↓
 SC approves establishment
↓
Manager + Trustee execute Deed
↓
Deed registered/lodged
↓
IOIPG REIT legally exists as the Trust

[Link]  registered and issued

To be registered with SC + issued before SPA become unconditional
Prospectus = fundamental investor-disclosure document

[Link] bookbuilding  determine market price

Property Valuation ≠ IPO Unit Price

Retail investors = Retail price

Institutional investors = Bookbuilding

Capital Market Pricing / Bookbuilding considering income, DPU, yield,

expectations, NAV, market sentiment, investment demand

[Link] asset transfer

All conditions precedent fulfilled  SPA = unconditional  completion of
properties transfer

MTrustee Berhad = Trustee of IOIPG REIT

Vendors receive : REIT consideration units + cash
Seed portfolio successfully injected into REIT

[Link] financing
Asset = RM7.578 billion property portfolio
Funding = equity / units + sukuk / debt financing

[Link] out retail and institutional offering

Retail offering = 715.615 million units
- 550,615 million units for entitled IOIPG shareholders (1 REIT unit for every
10 IOIPG share held)
- 55 million units for eligible persons (1% for eligible person)
- 110 million units for public (2% for public)
Institutional offering = 1.484 billion units including Bumiputera allocation

[Link] admit REIT to main market

5.5 billion REIT units can be admitted to official list and quoted on Main Market of
Bursa Malaysia
 Actual IPO / Listing event : investors can trade IOIPG REIT units in the market
22. Compliance obligations after listing
REIT continuously comply with :
- SC Listed REIT Guidelines
- Bursa Listing Requirements
- terms of the trust deed
- asset-allocation requirements
- gearing limits
 - related-party transaction rules
- disclosure obligations
- valuation requirements
- financial reporting
- distribution policy
- public spread
- governance requirements
- trustee oversight
- property management arrangements

Why establish IOIPG REIT now?

1. IOIPG now has enough mature, stabilised assets to form a credible REIT
2. Unlock the value embedded in mature properties
3. Capital recycling
4. Reduce IOIPG's substantial borrowings
5. Reduce financing burden and create debt headroom
6. Fund the next phase of development
7. Separate the two different property businesses
8. Create liquidity for otherwise illiquid properties
9. Establish an independent capital-raising platform
10. Create a future asset-injection pipeline
11. IOIPG can monetise assets without completely losing future upside
12. Broaden the investor base

Holder / offering
Units % of total REIT
category
IOIPG retained holding ~3.30 billion 60.0%
Institutional offering up to 1.4844 billion ≈27.0%
Retail offering 715.6 million ≈13.0%
Total 5.50 billion 100%
Level Legislation / regulation What it governs
Statutory framework and SC powers over
Capital Markets and REITs, collective investment schemes,
1. Primary Act
Services Act 2007 (Act 671) securities, licensing, prospectuses and
approvals
2. Main REIT SC Guidelines on Listed
Detailed requirements for establishment
regulatory Real Estate Investment
and operation of a listed REIT
guideline Trusts
3. Unlisted REIT SC Guidelines on Real Requirements applicable to REITs outside
guideline Estate Investment Trusts the listed-REIT framework
Bursa Malaysia Main Market Admission to listing and continuing
4. Listing rules
Listing Requirements obligations after listing
SC Prospectus Guidelines
5. Prospectus Information and disclosures required in the
for Collective Investment
rules REIT IPO prospectus
Schemes
6. Valuation SC Asset Valuation Independent valuation of properties for
rules Guidelines + MVS 17 SC/Bursa capital-market purposes
Income Tax Act 1967 and
7. Tax REIT-level taxation, distributions and
related tax
legislation taxation of unitholders
provisions/rulings
SC Guidelines on Islamic
Additional Shariah requirements for Islamic
8. Islamic REIT Capital Market Products and
REITs
Services