PETALING JAYA: Sime Darby Property Bhd’s (SimeProp) joint venture (JV) to create a fund platform will support the property developer’s efforts to transform into a real estate player.

       According to Maybank Investment Bank Research (Maybank IB), the JV will enhance its investment and asset management business, which manages over five million square feet of total net lettable area and broaden the group’s income stream beyond property development.

       “More importantly, it provides an additional recurring income source to SimeProp group,” the research house said in its latest report.

       Furthermore, the tie-up with LOGOS Property Group will allow the group to tap into the latter’s experience and network in the segment as well as reduce its upfront capital commitment.

       SimeProp, in a filing with Bursa Malaysia on Wednesday, said it had entered into a shareholders’ agreement with LOGOS to set up a 51:49 JV company named Industrial Joint Venture (Holdings) Pte Ltd in Singapore.

       The first seed of the JV is intended to be structured as a Singapore limited partnership that is targeting total capital commitments of US$200mil (RM850mil) from accredited and institutional investors.

       “The fund will be focusing on developing and investing in build-to-suit to lease or sell industrial assets, primarily in the logistics sector,” said Maybank IB.

       It added that the group plans to “REIT” these assets in the future once they stabilise or mature.

       SimeProp has allocated a 177-acre site at its Bukit Raja project for the JV, which would result in decent land sale gains to be recognised progressively over the next three years.

       Maybank IB has a “hold” call on SimeProp and has maintained its earnings forecasts pending further information on the JV.

       Meanwhile, RHB Research is positive on SimeProp’s partnership with LOGOS.

       With LOGOS’ strong background, the research house said SimeProp will be able to tap on the former’s network and experience to accelerate cementing its own foothold in industrial development.

       Nevertheless, any immediate earnings contributions should be minimal, apart from the gain on the land sale, said RHB Research in its latest report.

       It is maintaining a “buy” call on the stock with a target price of RM0.75, a 17% upside with a forecast 2% yield for financial year 2021.

       Apart from the gain from the disposal of land, which will be recognised progressively over three years in three phases, SimeProp’s management indicated that the group could also earn a stream of recurring income via the JV.