KUCHING: Aeon Japan’s acquisition of Carrefour Malaysia Sdn Bhd’s (Carrefour Malaysia) operations will positively impact IGB Real Estate Investment Trust (IGB REIT) through Mid Valley Megamall.
To recap, Aeon Japan (the parent to Aeon Co Malaysia) has formally announced that it has entered into a sale and purchase agreement (SPA) to acquire 100 per cent of the shares of Carrefour’s Malaysian hypermarket operating subsidiary, Magnificient Diagraph Sdn Bhd(Magnificient Diagraph) and Carrefour Malaysia Sdn Bhd (Carrefour Malaysia) which owns 9.3 per cent of voting rights in Magnificient Diagraph.
Aeon Japan has successfully completed the acquisition as at October 31. Magnificient Diagraph’s corporate name will now be changed to Aeon BIG (M) Sdn Bhd as part of the group’s rebranding and restructuring exercise.
In a research report yesterday, RHB Research Institute Sdn Bhd analyst Alia Arwina Izyani Azani revealed that Aeon’s acquisition of Carrefour will leave an impact towards Mid Valley Megamall, which is one of the properties within IGB REIT’s portfolio.
“Based on our checks with Aeon Malaysia’s management, the short-term impact to Mid Valley Megamall will be minimal, as Carrefour will undertake a rebranding,” highlighted Alia in her report.
“This is expected to take place over the next six months in phases.” Presently, both Aeon and Carrefour are operating as anchor tenants in Mid Valley Megamall, taking up a total of 29.9 per cent or approximately 514,000 square feet of the megamall’s total net lettable area.
Aeon BIG should be assuming the lease signed by Carrefour until the expiry of the current lease.
“In our view, should there be a cannibalisation in the shopper traffic and sales between Aeon and Aeon BIG in the future, leading to the closure of Carrefour or Aeon BIG in Mid Valley Megamall, the impact should be positive for IGB REIT,” she highlighted.
“IGB REIT’s management will have a good opportunity to do a tenant-remixing exercise and bring in higher-yielding tenants, which could be a catalyst for earnings growth going forward.” Some of the risks and concerns pertaining to this, Alia added, was a lack of pipeline assets and competition from other malls.
“We believe that the recent pullback in unit price presents an opportunity for investors to buy into the REIT, which still gives a decent dividend yield of less than four per cent.
“Overall, we remain positive on IGB REIT given its asset quality surrounded by huge population catchment and the significant growth prospects for The Gardens Mall,” she highlighted.