The Government of Singapore Investment Corp (GIC) has reaped gains from the Sunway Real Estate Investment Trust (REIT)’s recent listing in Malaysia.
GIC divested its stakes in the Sunway Resort Hotel portfolio and Sunway Pyramid Shopping Mall to the REIT, reaping returns that exceeded its long-term benchmark.
GIC first purchased a 48-percent interest in Sunway Pyramid for RM182 million (S$78 million) in 2000 and later took a share in the RM500-million refurbishment exercise of the mall. This year, Sunway REIT purchased the mall for RM2.13 billion.
GIC also purchased a 48-percent stake in Pyramid Tower Hotel and Sunway Resort Hotel & Spa for RM170.1 million in 2005. Both hotels received a RM39-million make-over and eventually went to Sunway REIT for RM695 million.
GIC’s links with Sunway City Bhd – the parent company of Sunway REIT – began in the aftermath of the financial crisis in Asia. The debt-ridden property developer sold the interest in Sunway Pyramid and a 20-percent-plus stake to GIC.
The fortunes of Sunway City have since picked up. Jeffrey Cheah, chairman of Sunway City, said that GIC “should be very pleased” with its investments.
Seek Ngee Huat, president of GIC Real Estate, said that the investments have been “very good for us” and returns have “exceeded our internal benchmark substantially”.
“We are happy, but (Mr. Cheah) should also be happy,” he added. “And that’s how it works, a win-win for both sides.”
The key for GIC is to find good partners to work with to improve the value of the assets. Sunway City “had very good local knowledge, a very able team on the ground”, said Dr. Seek.
GIC took an active role in managing the Sunway properties that it invested in. “We’re able to continue to participate in the decision-making process, to bring to the table our global perspective. It’s not just the fact that GIC has a lot of capital,” said Dr. Seek.