IGBREIT ... Apr13

IGB has stepped up its share buyback activity. IGB Had 5.66% in its share base in treasury as at April 2013.

Its net assets per share stood at rm2.78.

At current level (15 April 2013), investors are valuing IGB’s assets at rm900 million if one were to exclude its 51% stake in IGB REIT. The book value of IGB’s top five investment properties – hotels and offices – is already rm900 million in its 2011 annual report.

It was reported that IGB’s north and south office tower blocks at The Gardens alone worth rm763 million instead of rm280 million they are carried at in their books.

IGB’s investment in the owner and operator of Renaissance KL Hotel is rm303 million. The hotel was valued at rm710 million.

IGB’s other hotel assets include a 60% stake in Cititel Mid Valley which was carried at rm284 million as at end 2011. IGB also owns 100% of the 390 room Boulevard Hotel in Mid Valley City, the 627 room Gardens & Residences and Micasa Hotel in Jln Tun Razak, KL.

The group’s other hotels include Cititel Penang, Pangkor Island Beach Resort, Cititel Express Kota Kinabalu and Micasa Hotel Apartments in Myanmar.

Internationally, the group manages associate hotel chain St Giles that has over 1808 keys in cities. IGB’s assets also include an office building in Australia.

However one concern about the company is the possibility of it needing cash from shareholders to fund its expansion locally and abroad.

For now (April 2013), market observers prefer IGB REIT over IGB. IGB lacks clear catalyst as it transitions to its next growth phase in the longer term. Execution of overseas projects also a key downside risk for IGB.

One nearer term potential catalyst for IGB is a firm news of its hotels and offices being spurn off into another REIT.