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Wednesday, July 1, 2009

KLCC Property expects office rental income to boost profit

KLCC Property Holdings Bhd expects gains from office rental space to boost its profit this year, particularly the renewal of three-year leases at the Petronas Twin Towers and Menara ExxonMobil in Kuala Lumpur.

"The group's office properties are expected to remain stable as the majority of our leases are long term and we have a good tenant mix with sound credit standing. In addition, KLCC is a premier address," chief executive officer Hashim Wahir told a media briefing after the group's annual general meeting in Kuala Lumpur yesterday.

KLCC Property's revenue grew 2 per cent to RM861 million for the year ended March 31 2009, from RM843 million a year ago, driven mainly by higher occupancy levels and rentals of office and retail properties.

"On the retail side, we expect performance to remain sustainable, benefiting from the high traffic volume in the KLCC precinct and a good tenant mix. There is also interest from new brands wanting to come to Suria KLCC. Our focus is on innovation to sustain performance," Hashim said.
Leasing of office space contributed 45 per cent to overall revenue in 2009, followed by retail (30 per cent), hotel operations (19 per cent ) and management services (6 per cent). Hashim said the group remains positive about its investment properties under the KLCC integrated development.

The latest addition is Lot C, where a 59-storey development will house 840,000 net lettable sq ft of Prime A office space and just over 140,000 net lettable sq ft. The project schedule expects Lot C to be delivered in October 2011 with retail operations in the podium operational a year earlier than expected.

"Within the KLCC area, we have developed 12 million sq ft of commercial space for leases. I believe there is a capacity to double that in the next five to 10 years," he added.

Meanwhile, hotel operations of Mandarin Oriental Kuala Lumpur will continue to face pressure in line with the downward trend of occupancy in the Klang Valley in the current environment of slower tourist arrivals.

The board is recommending a 5.5 per cent per share dividend for the year ended March 31 2009.

By Business Times (by Rupa Damodaran)

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