Among other positive attributes, the acquisition gives IOI Properties full control, which makes it easier to optimise operations, unlock synergies and accelerate monetisation strategies.
South Beach and IOI Central Boulevard Towers are expected to be the anchor assets for the Singapore REIT listing, with a combined asset value of between $7 billion and $8 billion. Assuming IOI Properties retains 60% control, Tan says this exercise should unlock cash proceeds of $2.8 billion to $3.2 billion.
Citing IOI Properties’ management, Tan says there is “significant upside” in South Beach. JW Marriott Hotel’s occupancy is now heavily weighted towards corporate clients, providing a stable income base but at discounted room rates.
IOI Properties plans to diversify the guest mix by targeting more of those so-called Free Independent Travellers (FITs), walk-ins and retail customers, segments typically associated with higher rates.
In 1Q2025, the hotel recorded an occupancy rate of 76% and an average daily rate of $470, which is in line with other five-star hotels here. IOI Properties, says Tan, is confident it can fetch 90% and $600, respectively.
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IOI Properties is now trading at around 0.44 times its book value. Tan believes this valuation gap will narrow “considerably” in the near term, with IOI Central Boulevard turning profitable soon and W Residences Marina View slated for launch soon.
The planned REIT listings will help monetise the assets, give better clarity on their value and be a re-rating catalyst. “The stock mispricing is unlikely to persist as these milestones materialise and investor recognition catches up with fundamentals,” says Tan, whose target price for IOI Properties is maintained at RM4.05, based on a 35% discount to IOI Properties’ RNAV of RM6.24.
