MRCB deal injects new life into company

MRCB deal injects new life into company
Q City Mall view from the top, artist impression.

In a lull since 2008, real estate investment trust (REIT) Quill Capita Trust Bhd is being injected with a new lease of life.

This follows the just announced deal that it will acquire Platinum Sentral from Malaysia Resources Corp Bhd (MRCB) in return for cash and shares. As a result, MRCB will become the single largest shareholder in QCT with a 31 per cent stake.

But it's not just the presence of MRCB as its new major shareholder that is noteworthy. Another game changer for QCT could take the form of future deal flows from giant pension fund, the Employees Provident Fund (EPF).

The EPF is the single largest shareholder of MRCB with a 38.87 per cent stake in the company. The second largest shareholder is group managing director Datuk Mohamad Salim Fateh Din, who had assumed control of MRCB back in 2013 via a privatization exercise that saw the pension fund dilute its holdings in MRCB, with Salim the entrepreneur taking up 12.51 per cent following the injection of his privately held assets into MRCB.

With the EPF and Salim firmly entrenched as partners in their ownership of MRCB, and with MRCB now becoming the single largest shareholder of QCT, insiders say EPF may explore the possibility of injecting some of its assets into QCT.

As at Sep 2013, the EPF has real estate and infrastructure investments worth a massive RM14.72 billion (S$5.68 billion).

For some time now, the EPF has been an active investor in the property sector, with one area of focus being tenanted commercial buildings that provide a decent yield.

QCT's ambition is to become one of the biggest REITs in Malaysia in three years with an asset base of some RM5 billion from RM1.6 billion presently.

Further emphasizing the significant changes taking place, QCT will soon be known as MRCB-Quill REIT.

EPF knows Quill

To be sure, the EPF and the Quill group are no strangers themselves.

Last March, the EPF signed a sale and purchase agreement to buy the Quill Group's Quill City Mall in Jalan Sultan Ismail for RM1.2billion or RM1,561 per sq ft. This sale is subject to certain performance targets.

EPF and Quill Retail Malls Sdn Bhd, the unit set up by Quill to undertake the development of Quill City Mall, will also enter into a type of sale and leaseback arrangement that will allow Quill to manage the mall under EPF's ownership. The mall is expected to open this September.

It has also been widely reported that the EPF bought the Quill 7 building, also known as the Axiata building in KL Sentral back in 2011 from the Quill Group.

Quill 7 is a 29-storey office building with a six-storey podium. The building has an estimated value of RM428million or RM1,200 per sq ft at that time.

The building is fully tenanted out and includes tenants from Axiata and Nokia Siemens.

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