MRCB to inject Menara Shell into MQREIT for RM640m

MRCB to inject Menara Shell into MQREIT for RM640m
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KUALA LUMPUR (Dec 3): Malaysian Resources Corp Bhd (MRCB) is planning to inject the 33-storey Menara Shell into MRCB-Quill Real Estate Investment Trust (MQREIT), to unlock RM640 million worth of investment value in the property.

In a filing with Bursa Malaysia today, MRCB said its wholly-owned subsidiary 348 Sentral Sdn Bhd has entered into a heads of agreement (HOA) with Maybank Trustees Bhd, trustee for MQREIT, for the disposal of the office tower that is located next to Kuala Lumpur Sentral at Jalan Tun Sambanthan.

The property comes together with a five storey podium and a four storey basement car park.

MRCB said the RM640 million price tag for the proposed disposal is based on the valuation of Menara Shell by independent valuer, CH Williams Talhar & Wong Sdn Bhd, via a certificate of valuation dated Nov 25, 2015.

The purchase is expected to be funded by MQ REIT, via a combination of cash and issuance of new units.

The proposed disposal is subject to a definitive sale and purchase agreement (SPA) to be entered between Maybank Trustees and 348 Sentral within 30 business days from the date of the HoA, with an automatic extension of a further 30 business days if MQREIT is unable to complete its due diligence investigations.

The disposal is subject to approval being obtained from the shareholders of 348 Sentral, MRCB, and MQREIT. Astramina Advisory Sdn Bhd has been appointed the financial advisor for the proposed disposal.

In a statement today, MRCB said Menara Shell has a total net lettable area of 556,468 sq ft.

It commenced operations since May 2013 and has, to-date, achieved almost 100% occupancy with tenants like Shell People Services Asia Sdn Bhd, AmGeneral Insurance Bhd, and Tradewinds Corp Bhd.

MQREIT’s manager MRCB Quill Management Sdn Bhd (MQM)’s chief executive officer Yong Su-Lin said the acquisition demonstrated MRCB’s commitment as one of the REIT’s sponsor to provide it opportunity to access pipelines of completed commercial office properties.

“By leveraging from the strong backing of its sponsors, the fund (MQREIT) has within eight months from the completion of the acquisition of Platinum Sentral, commenced another acquisition exercise that will see MQREIT add into its portfolio an additional quality commercial property in KL Sentral,” she said.

Yong also mentioned that Menara Shell is a strategically located, with tenants that generate a stable and growing income stream.

“Hence, subject to the satisfactory due diligence exercise to be completed, we believe that the proposed acquisition would fit well with MQREIT’s investment objective and provide a good opportunity to grow MQREIT’s portfolio and expand it foothold into KL Sentral,” she added.

MQM is owned by MRCB (41%), Quill Resources Holding Sdn Bhd (39%) and Global Jejaka Sdn Bhd (20%).

MRCB (fundamental: 1.3; valuation: 2.0) fell one sen or 0.79% to RM1.26 today, valuing it at RM2.27 billion; while MQREIT gained one sen or 0.93% at market close, giving it a market capitalisation of RM714.3 million.

(Note: The Edge Research's fundamental score reflects a company’s profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuations.)