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Wednesday, May 14, 2008

Quill boosts REIT portfolio with Tesco Penang buy

QUILL Capita Trust (QCT), a real estate investment trust (REIT), expects the acquisition of Tesco Penang to increase its real estate portfolio to RM796 million from RM662 million as at March 31, 2008.

Chan Say Yeong, chief executive officer of Quill Capital Managment Sdn Bhd which manages QCT, said it had surpassed its asset size target of RM750 million for the current financial year.

QCT acquired the Tesco building located on freehold land in Jelutong, Penang, for RM132 million from IJM Properties Sdn Bhd.

“This yield accretive acquisition is expected to provide an initial net property yield of 6.3 per cent when the acquisition is completed,” Chan said.

The acquisition is expected to be completed by the fourth quarter of this year, he told reporters after signing the sale and purchase agreement with IJM Properties in Kuala Lumpur today.

Also present at the event were IJM Corporation Bhd’s chief executive officer and managing director Datuk Krishnan Tan and IJM Properties’ managing director Teh Kean Ming.

Chan said the purchase of Tesco is expected to be funded by a combination of internally generated funds and debts.

If funded 100 per cent by debt, current gearing is expected to increase to about 38 per cent from 25 per cent, he said.

“With our gearing still below the 50 per cent threshold allowed for REITs, QCT is still able to grow via debt financing, which enables us to react faster when acquisition opportunities come by,” he added.

QCT acquired Wisma Technip and part of Plaza Mont’ Kiara last year for RM215 million and subsequently in the first quarter of this year, it bought three additional properties for RM94.5 million.

On further asset acquisitions the year, Chan said QCT would explore the possibility of more REITs in the future.

He said it would also continue to diversify into other states like Johor as it had already expanded into Penang, Cyberjaya and the Klang Valley.

By Bernama

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