19 May 2025

 

The upcoming initial public offering (IPO) of Paradigm Real Estate Investment Trust (Paradigm REIT) on the Main Market of Bursa Malaysia Securities Bhd presents a compelling opportunity for investors seeking diversification and resilience amid today’s evolving macroeconomic landscape. With a strong portfolio of three established, strategically located shopping malls valued at RM2.4 billion, Paradigm REIT is positioned to deliver stable income and long-term growth.

 

Portfolio anchored by robust fundamentals

 

The initial portfolio of Paradigm REIT comprises three prime assets in the retail market:

 

a. Bukit Tinggi Shopping Centre (BTSC): Retail mall with 1,000,950 sq ft of gross lettable area (GLA) (excluding ancillary area of 7,490 sq ft), located in Klang, Selangor.

 

b. Paradigm Mall Petaling Jaya (PMPJ): Retail mall with 680,048 sq ft of net lettable area (NLA), integrated into a commercial development in Petaling Jaya.

 

c. Paradigm Mall Johor Bahru (PMJB): Retail mall in Iskandar Malaysia with 1,292,956 sq ft of NLA.

 

The portfolio demonstrates leasing resilience, with all assets reporting near-full average occupancy rate in 1QFYE2025 at 100.0%, 97.9% and 99.2% respectively, outperforming the 

 

average occupancy rates in Selangor and Iskandar Malaysia for three consecutive years, solidifying Paradigm REIT as a high-occupancy, income-generating retail platform.

 

Paradigm REIT also maintains a well-structured lease expiry profile, with only 10.8% of its NLA up for renewal in the nine-month period ending Dec 31, 2025, as at March 31, 2025. Larger lease expiries are evenly distributed, with 29.5% due in FYE2026 and 23.6% in FYE2027. This reflects Paradigm REIT’s conscious efforts in ensuring smooth revenue assurance that mitigates concentration risks.

 

 

Strong financial performance outpacing industry peers

 

Paradigm REIT’s portfolio has delivered impressive financial results for the past three years, achieving a revenue of RM217.7 million in FYE2024, a 37.9% increase from FYE2022, propelled by buoyant rental income, surging retail traffic, and diversified ancillary revenues. Net property income (NPI) rose to RM147.2 million, with margins expanding to 67.6%, outperforming the average NPI margin of 65.9% for retail-focused Malaysian REITs. Meanwhile, distributable income reached RM99.4 million, reinforcing Paradigm REIT as a high-performance income vehicle.

 

The annualised FYE2025F indicators highlight continued strong performance and growth potential, with revenue (excludes other income, which includes interest income from rental arrears, forfeiture of deposits, fit-out fees, and car park clamping fees) projected to rise to RM232.7 million, NPI increasing to RM161.3 million with an NPI margin of 69.3% and profit after tax (PAT) forecasted at RM110.9 million, with a PAT margin of 47.6%.

 

 

Riding on strong macro waves

 

Paradigm REIT is well-positioned to capitalise on key macroeconomic drivers. The Visit Malaysia 2026 campaign is expected to boost tourism, driving higher foot traffic and consumer spending across the malls. The development of the Johor-Singapore Special Economic Zone and the Johor Bahru-Singapore RTS Link is expected to increase cross-border traffic, reinforcing PMJB as a key retail hub, attracting both local and international visitors.

 

BTSC benefits from consistent traffic from its surrounding neighbourhood, with its master lessee AEON Co (M) Bhd providing secured rental income. 

 

 

The anticipated completion of the LRT 3, located next to BTSC, is expected to significantly improve accessibility and boost foot traffic.

 

Meanwhile, PMPJ benefits from its integration within an integrated development that includes residential, office, commercial and hotel spaces. Steady traffic from office tenants, hotel guests and residents ensures consistent footfall throughout the week.

 

Delivering value through strategic management and innovation

 

Beyond its resilient asset base, Paradigm REIT’s value proposition lies in its proactive management team that employs proactive tenant engagement, dynamic leasing and advanced technology. “We prioritise long-term relationships through regular communications, flexible lease terms and tailored solutions to meet evolving tenant needs. This approach fosters loyalty and reduces vacancy risks,” says Paradigm REIT Management Sdn Bhd CEO Selena Chua.

 

Paradigm REIT actively adjusts rental rates in line with market trends to maintain competitiveness. It maximises value through asset revitalisation and space optimisation, transforming underutilised areas into income-generating zones. At PMPJ and PMJB, these spaces were transformed into vibrant retail and F&B zones. Innovative concepts are introduced as well, such as outdoor events and unique experiential offerings, including the indoor go-kart circuit at BTSC and the Escape Challenge Park at PMPJ, to attract a more active demographic and increase mall liveliness.

 

Paradigm REIT also strategically reshuffles its tenant mix at PMJB to better cater to high-value shoppers, particularly from Singapore, leveraging their high spending power. “With a focus on popular retailers and enhanced experiential offerings, PMJB has become a vibrant retail and leisure destination, catering to cross-border visitors to capture their growing retail demand,” says Chua.

 

Exclusive access to promising pipeline of assets

 

Paradigm REIT is poised for strategic acquisitions, backed by a right of first refusal from its sponsor, WCT Holdings Bhd, over both existing and future assets within the sponsor’s portfolio. These include high-value assets such as gateway@klia2, Le Méridien Petaling Jaya, Hyatt Place Johor Bahru and Première Hotel. This access to prime assets strengthens Paradigm REIT’s growth pipeline, complementing its strategy of exploring third-party acquisitions that align with its investment strategies.

 

Strong investment opportunity in retail REIT

 

Paradigm REIT’s upcoming IPO presents investors with the opportunity to participate in a stable, income-generating portfolio. The current low-interest rate environment creates a favourable climate for investing in the REIT. Lower borrowing costs will reduce financing expenses, improve profitability and drive growth in distribution per unit.

 

Paradigm REIT’s gearing level of approximately 34% (well below the regulatory cap of 50%) enables explorations into future acquisitions of prime assets from WCTH Group as well as enhancements to its current assets, ensuring a sustained rental income and capital appreciation for investors seeking stability and growth. Paradigm REIT is committed to distributing at least 90% of its distributable income every six months, providing reliable returns for yield-focused investors. The expected annualised distribution yield for FYE2025F based on the retail price of RM1.00 is estimated to be at 7.16%.

 

Paradigm REIT’s IPO application opened on May 16, 2025, and will close on May 23, 2025, with balloting of applications taking place on May 28, 2025. Following this, allotment to successful applicants will occur on June 9, 2025.

 

Click here to read the original article from The Edge.