KUALA LUMPUR (April 13): MRCB-Quill Real Estate Investment Trust (MQREIT) does not expect to be significantly affected by the current office space oversupply, as only 7% of its net lettable area (NLA) will be up for renewal in July.

Yong Su-Lin, the chief executive officer of MQREIT’s manager MRCB Quill Management Sdn Bhd, said the remaining portion of its total NLA of about 1.57 million square feet have lock in periods in the rental agreements.  

“There will be only a small fluctuation in our occupancy rates,” she told reporters during MQREIT’s annual general meeting.

As at December last year, the group’s occupancy rates were 97.5%. Of the total NLA, 80% is office space and 20% retail space.

Yong said that properties with rental agreements due for renewal in July, including Quill Building 8 in Shah Alam; and the present tenant — logistics company DHL Express, have shown interest in renewing their tenancy.

Asked to comment on the additional office space coming on stream and prolonging the overhang in Kuala Lumpur and Selangor, Yong said it is unlikely to affect MQREIT, as its offices are mainly purposed-built.

MQREIT’s total assets amount to RM1.57 billion, which will rise to RM2.2 billion upon inclusion of Menara Shell, which is in the process of being acquired.

Yong said the group is still actively looking at acquisitions, but as the group’s gearing level is about 0.43 times, it will seek to achieve its acquisition target by raising funds via equity.

The group’s gearing is considered high, given the 50% cap as per REIT requirements, she said.

She added that the group wants to reduce its gearing while expanding its portfolio, and as such, it is likely to tie in the equity fund raising with acquisition.

In December last year, MQREIT announced the acquisition of Menara Shell from Malaysian Resources Corp Bhd (MRCB) for RM640 million  The group told Bursa Malaysia yesterday (April 12) that the purchase period will be extended to May 30, as the group is in the midst of finalising the strata plan.

Yong declined to give forecasts for Menara Shell, saying it is pre-mature to do so at this stage. – theedgemarkets.com

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