It does not have an attractive retail asset in the pipeline from its sponsor.
Going forwards, Gardens Mall would remain the revenue growth driver for the company on lower rental base, with stable cash flow supported by contributions from Mid Valley Megamall.
Third party acquisitions would be challenging due to excessive valuations in spite of low gearing of 25%.
The planned construction of Southkey Megamall in Johor is also expected to be a long term play.
However, Gardens Mall will be the growth driver given the lower rental base than Mid Valley Megamall and 53% of its net lettable area expiring in 2013.
IGB REITs current (July 2013) rental rates are estimated to be below rm10 psf, a large discount to average rents at Pavilion KL and Suria KLCC despite its prime location.
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