Saturday, 20 April 2013

KLCCP to list stapled REIT by May

KUALA LUMPUR (April 9, 2013): KLCC Property Holdings Bhd (KLCCP), which is expected to list its stapled real estate investment trust (REIT) by early May this year, is in the process of securing an anchor tenant for its latest development in the Kuala Lumpur City Centre (KLCC) area, said its group CEO Hashim Wahir.
"We are not a speculative developer. What we're working on now is to secure the anchor tenant and once it is secured, then we will start planning (for the development). Our target has always been the multinationals because we would like to enhance the precinct by having a mix of tenants," he told reporters after its EGM yesterday.
Hashim said the 0.6ha vacant land in front of Mandarin Oriental in Kuala Lumpur, known as Lot D1, could possibly be an office building with retail component but the building plans will only be confirmed once it has secured the anchor tenant.
"It can be equivalent to Menara 3 Petronas, with one million sq ft of gross floor area," he said, adding that it is in talks with potential anchor tenants but declined to comment on when it expects to finalise talks.
At yesterday's meeting, shareholders approved KLCCP's proposal to create Malaysia's first syariah-compliant stapled REIT in Malaysia, including the injection of Petronas Twin Towers, Menara 3 Petronas and Menara ExxonMobil into the REIT vehicle, KLCC REIT.
Hashim said KLCCP will retain the remaining assets which are Dayabumi Complex, Suria KLCC and Mandarin Oriental, as well as the management services namely KLCC REIT Management Sdn Bhd which will be formed under KLCCP as the manager of the REIT.
"We have a three-pronged growth strategy. We have retained Dayabumi Complex, which has quite a significant redevelopment potential. That's why we're not injecting it into the REIT yet.
"We also have Lot D1, which has a significant development potential," he said.
"Once the assets are stable, we can inject it into the REIT. Of course, we have the normal growth as mentioned, our tenancy will have rental increases and under this arrangement, we also have the first right of refusal on future assets belonging to KLCC (Holdings) Sdn Bhd, which is the ultimate shareholders of KLCCP Stapled Group before Petroliam Nasional Bhd (Petronas)," he added.
In November last year, KLCCP announced that it had signed 15-year triple net lease agreement with Petronas in regard to the Petronas Twin Towers effective Oct 1, 2012. During the first three years, rental would be RM29.1 million per month.
At the same time, its wholly-owned subsidiary Arena Merdu Sdn Bhd also signed a 15-year triple net lease agreement for Menara 3 Petronas, where rental for the first three years would be RM6.1 million per month.
Hashim said the rental rates will be reviewed every three years and the increase in rental rates would be 3% per year, compounded every three years. For its other properties, the leases are between three and five years and will be reviewed based on the market.
On acquiring new assets, he said: "We are focusing on developing what we have in our portfolio but any opportunities that come by that meets the profile of our investment, adds to the value creation of our shareholders and REIT unit holders in future, it will be considered."
Meanwhile, KLCCP director Datuk Manharlal Ratilal said the KLCCP Stapled Group will become one of the largest property groups in Asia, with a RM12 billion market capitalisation if the restructuring exercise and listing proceed as planned.
"The three assets (Petronas Twin Towers, Menara 3 Petronas and Menara ExxonMobil) are worth about RM15 billion. The group's debt is around RM2.3 billion and the balance is the market capitalisation," he said.
KLCCP Stapled Group intends to distribute 95% of the overall distributable income to unit holders for 2013 and 2014. The REIT will be the largest in Malaysia, almost three times bigger than Sunway REIT.

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