KUALA LUMPUR (June 30): MRCB-Quill Real Estate Investment Trust (MRCB-Quill REIT) is buying Menara Shell in KL Sentral from Malaysian Resources Corp Bhd (MRCB) for RM640 million.

This would raise MRCB-Quill REIT’s asset portfolio size to RM2.27 billion from RM1.63 billion as at December 2015, the trust manager said in a statement posted on Bursa Malaysia.

Menara Shell consists of a 33-storey office tower, a 5-storey podium and a 4-storey basement car park with 915 parking bays and 110 motorcycle bays. The building has 557,053 square feet of net lettable area and a current occupancy of 99.9%.

MRCB-Quill REIT said the purchase consideration will be fully settled in cash, which will be raised through a combination of equity and debt funding exercises.
 
"The equity funding exercise will entail a proposed placement involving the issuance of up to 406.67 million placement units," it said, adding that the units will be placed out to institutional investors by way of a book building exercise at an issue price to be determined later.

As part of the proposed placement, MRCB has given an undertaking to subscribe for placement units to be issued pursuant to the proposed placement, for an amount between RM110 million and RM152.0 million.

According to the trust, the Employees Provident Fund has expressed its interest to subscribe for up to 7% of the enlarged units in circulation, pursuant to the proposed placement via its letter dated June 17, 2016.

Commenting on the deal, MRCB group managing director Tan Sri Mohamad Salim Fateh Din said the disposal of Menara Shell is in line with its strategy to monetise development projects once they are completed and tenanted, in order to reinvest the capital in core businesses of property development and construction.

"This transaction enables MRCB to realign the asset to the more efficient structure of a REIT and allows it to unlock the tremendous value of its investment in Menara Shell," he added.  

Meanwhile, MRCB-Quill REIT chairman Tan Sri Saw Choo Boon said the property is a strategic fit to its current portfolio of 10 quality commercial properties.  

Notwithstanding the soft office market outlook, Saw is positive about the growth prospects of the trust, as it increase its footprint in KL Sentral.

"We believe that KL Sentral will continue to be an attractive and vibrant business location, as it is a prime and strategically-located commercial area within Klang Valley, with an integrated transportation hub," it added.  

MRCB-Quill REIT’s share price was unchanged at RM1.16 today, for a market capitalisation of RM767.2 million; while MRCB fell one sen or 0.93% to RM1.06, giving it a market value of RM2 billion.