KUALA LUMPUR (April 6): IGB Real Estate Investment Trust (IGB REIT) closed in negative territory yesterday on a knee-jerk reaction from investors to news that one of its properties here was involved explosions.

The stock fell as much as 1.9% to touch an intraday low of RM1.53 before settling at RM1.55, one sen or 0.64% lower than Monday’s closing price, with 1.31 million shares changing hands. Its market capitalisation stood at RM5.39 billion.

Earlier, IGB REIT reported minor explosions at two food and beverage (F&B) outlets in Mid Valley Megamall, which it said were possibly caused by a gas leak.

IGB REIT said the incident occurred at approximately 9.45am yesterday during reinstatement work to the mall’s liquefied petroleum gas (LPG) system after maintenance works. No fatalities were reported, neither were there any injuries to the public.

“During reinstatement work to our LPG system after maintenance works, we had minor explosions at two F&B outlets. There were minor injuries to our maintenance staff, LPG contractor and tenant staff,” said the trust in a filing with Bursa Malaysia yesterday.

In a separate statement, IGB REIT said as at 1pm, six of the eight people injured had been discharged, while two remained in hospital and were being treated and monitored.

“We would like to stress that investigations are still being carried out by Bomba (Fire and Rescue Department Malaysia) and relevant authorities, and that only minimal interruption is caused to our business,” it added.

“Safety remains our utmost priority and we will focus our attention on the well-being of our tenants and guests. We sincerely apologise for any inconvenience caused,” said IGB REIT.

Analysts tracking the stock do not see the incident having any potentially adverse effect on the performance of IGB REIT.

“The mall remains open to visitors except for certain areas that will be closed. Overall I don’t think the incident will have an impact on IGB REIT’s earnings, while damage from the explosion is likely to be compensated by insurance claims,” an analyst with a local brokerage firm told The Edge Financial Daily.

She viewed the fall in IGB REIT’s share price yesterday as a knee-jerk reaction.

“The fundamentals of IGB REIT remain intact. We might see some form of knee-jerk reaction for the next one to two weeks,” said another analyst.

In the longer term, analysts expect Mid Valley Megamall to remain as one of the favourite shopping spots among people in the Klang Valley.

“[A] gas explosion can happen at any mall. It occurred at Empire Subang Gallery [in Subang Jaya in September 2011],” the analyst said.

“As the gas explosion was an accident, I don’t think it will drag down the share price [of IGB REIT]. If any, it (the fall) won’t be significant. But if it (the explosion) was a terrorist attack, then it could be more negative,” she added.

A spokesman from Mid Valley Megamall told The Edge Financial Daily that the explosions occurred at two F&B outlets, Chili’s Grill & Bar on the ground floor and McDonald’s on the lower-ground level.

“Further investigations are being carried out by Bomba and relevant authorities, and we will work closely with them on this matter,” the spokesman added.

When asked about compensation, the spokesman said Mid Valley Megamall will work with the affected tenants on restitution for the incident.

“Our current priority is the well-being of the staff who are being treated and monitored,” the spokesman added.

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This article first appeared in The Edge Financial Daily, on April 6, 2016. Subscribe to The Edge Financial Daily here.

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