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MRCB to book RM240m gain from QCT deal

KUALA LUMPUR: Malaysian Resources Corp Bhd (MRCB) will book a RM240 million gain, translating into 15 sen per share, for the current financial year ending Dec 31, 2014 following the divestment of Platinum Sentral to Quill Capita Trust (QCT).

MRCB via its wholly-owned unit MRCB Sentral Properties Sdn Bhd (MSP) yesterday signed a sale and purchase agreement (SPA) with Bursa Malaysia-listed QCT for the disposal of Platinum Sentral, an office block located in KL Sentral, for RM750 million to be settled in cash and new units in the real estate investment trust (REIT).

“Monetising asset value and reinvestment into QCT will enable MRCB to pare down its borrowings by approximately RM380 million, and enable the company to focus on property development while retaining control of its investment properties via a REIT (QCT).

“We will use QCT as a platform for further injection of other prime assets in the pipeline,” said MRCB group managing director Datuk Mohamed Salim Fateh Din in a statement.

The divestment of Platinum Sentral will be satisfied with MRCB receiving RM486 million cash plus 206.5 million new units in QCT at an issue price of RM1.28 per unit, which is a 15.3% premium to QCT’s closing price of RM1.11 yesterday.

The new units that MRCB will receive translate into 31% equity interest in the enlarged QCT, hence enabling the property developer to reap dividend income from the REIT.

Meanwhile, MRCB has inked definitive share sale agreements with CapitaLand RECM Pte Ltd (CRPL) and Coast Capital Sdn Bhd (CCSB) to acquire 40% and 1% of their equity interest respectively in Quill Capita Management (QCM), the management company of QCT, for a total cash consideration of about RM6 million.

This will result in MRCB becoming one of the largest shareholders in QCM, giving it a “sustained influence” in the operations of Platinum Sentral as well as other property assets under QCT. With the inclusion of Platinum Sentral, QCT’s total asset value will increase to about RM1.61 billion.

Mohamed Salim said the exercise marks a new beginning in MRCB’s relationship with QCT and QCM, both of which will continue to contribute to the group’s earnings and recurring income. The exercise is advised by CIMB Investment Bank (CIMB IB), Hong Leong Investment Bank and Astramina Advisory.

Commenting on the deal, CIMB IB deputy chief executive officer Kong Sooi Lin said: “This transaction represents a strong strategic move by MRCB to unlock value and at the same time obtain exposure to an established REIT on an accelerated basis. It is a move that will position MRCB well for the future.”

Trading at RM1.11 yesterday, QCT had an income yield of 7.55%.


This article first appeared in The Edge Financial Daily, on Aprill 11, 2014.

 

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