IPO ... Pavilion KL

Datuk Desmond Lim Siew Choon is preparing to list Pavilion Kuala Lumpur, in what could be Malaysia's largest initial public offering of a real estate investment trust (REIT).

Sources said that the assets under it could be worth between RM4 billion and RM5 billion. Others, however, said the asset size may not be that large but its market capitalisation could be comparable to that of Sunway Real Estate Investment Trust (SunREIT).

Pavilion KL's listing could happen as early as end-2011 and will include the retail portion of the mixed development.

It is also believed that CIMB Investment Bank, Credit Suisse and Maybank Investment will be involved in the deal.

Lim, who controls Malton Bhd, developed the mall via Malton's subsidiary Kuala Lumpur Pavilion Sdn Bhd. The mall is owned by Urusharta Cemerlang Sdn Bhd, which is 51 per cent-owned by Urusharta Cemerlang Development Sdn Bhd and 49 per cent by Qatar Investment Authority (QIA).

A company by the name of Pavilion Reit Management Sdn Bhd had been set up. Lim and his wife Datin Tan Kewi Yong each hold a share in this company, which was registered on April 7 2011. The nature of business of Pavilion Reit Management is described as "management of real estate investment trust, investment holding and property management".

While it is certain that the retail portion of the building, which has a total net lettable area of 1.37 million sq ft, will form part of the REIT, it is unclear if the corporate office tower with a nett floor area of 185,000 sq ft will be included in it.

Pavilion KL, opened in 2007, is said to be profitable. It is enjoying a 98 per cent tenancy.

Talk is that Fahrenheit 88, the shopping centre opposite Pavilion KL and managed by Pavilion KL, may later be injected into the REIT. The mall is now 92 per cent occupied. Fahrenheit 88 belongs to Makna Mujur Sdn Bhd, which is owned by Pavilion International Development Fund Ltd, of which the principal is the QIA.

In 2010, Urusharta Cemerlang (KL), owned by Tan Sri Zainol Mahmood and another individual, made history by paying RM7,209.80 per sq ft for the land in Jalan Bukit Bintang adjacent to Pavilion KL.