Quill Capita REIT Interview
Quill Capita Trust was listed on Bursa Malaysia in 2007. From an initial portfolio of 4 properties in Cyberjaya, it has since added 6 more properties to its portfolio making it one of the more active REITs in Malaysia (in terms of acquisitions).
Currently QCAPITA is the sixth largest REIT on Bursa Malaysia as measured by market capitalization.
| Listing Date | 8-Jan-07 |
| Initial Offer Price | RM0.84 |
| Sector Mandate | Office, Business/Technology Park, Data Processing Centre, Car Park, Retail |
| Seed Portfolio Value | RM280 mllion (Quill Building 1-DHL 1, Quill Building 2-HSBC, Quill Building 3-BMW, Quill Building 4-DHL 2) |
Tenancy Profile by NLA: Quill Capita REIT continues to diversify its asset base. Following its recent acquistion of Tesco Penang, Cyberjaya properties now account for less than 50% of its portfolio (by Valuation).
| Unit Price (as at 1-Jul-09) | RM0.91 |
| 12 month Price Range | RM0.80-1.10 |
| Distribution per unit (FY2008) | 7.51 sen |
| Net Borrowings | RM275 million |
| Interest Cover (FY2008) | 4.9x |
Q&A Session with Quill Capita Trust on 1 July 2009
| 1. | Can you share with us a bit about the Quill Group and Quill Capita Management – your background and how each member of the group fits together? |
| Quill Capita Trust a joint venture between Quill Group and CapitaLand, while Quill Capita Management is the vehicle that manages the trust.Quill Capita Trust is roughly 30% owned by the Quill Group, 30% by CapitaLand and 40% by the general public.Quill Capita Management is 30% owned by the Quill Group, 40% by CapitaLand and 30% by Bumiputras investors. | |
| 2. | Are there any arrangements with Quill Group on acquisition or dealings of properties (eg first right of refusal over properties developed by the group etc)? Do all of Quill Group’s developments go into QCAPITA? |
| Quill Capita Trust has a First Right of Refusal 5 years from the date of listing on properties developed by Quill Group and Capitaland RECEM Pte Ltd. | |
| 3. | What is the current status of Quill 9 In Petaling Jaya – will QCT be acquiring it? |
| Quill 9 is being developed as a private undertaking by Quill Group. This falls under the First Right of Refusal. | |
| 4. | What are the plans for Quill for the near future? Anymore acquisitions under way? Or any strategies to overcome the economic difficulties? |
| QCT is always actively looking for good quality and yield accretive properties. | |
| 5. | Your buildings are mostly single tenant, purpose-built properties. Does this mean that should your tenant vacate, it will be more difficult to get a replacement tenant? |
| Our buildings are generally designed to accommodate commercial office space. | |
| 6. | Is the Cyberjaya commercial property market a specialized one – are there a limited type of tenants who look for such space? |
| The types of tenants who are interested in Cyberjaya are usually those who are looking for a location with MSC status and want tax benefits. Many of such potential tenants also require large floor spaces. | |
| 7. | Has there been any competition from other types of properties with similar status or space, such as in Mid Valley and the Bandar Utama area? |
| Different locations have its’ own benefits and considerations which will meet the needs of different tenants. | |
| 8. | You’ve just secured a RM80 million 5-year financing facility to refinance the Tesco Building. This works out to be around 60% of the building’s Book Value. Are you comfortable with this gearing level or do you have any plans to reduce gearing? |
| QCT’s gearing is 37%. | |
| 9. | What is the yield on the Tesco Building when purchased? |
| Around 6.5%. | |
| 10. | Some of your leases go for 5 or even 7 years (eg Quill 1& Quill 4) – are such leases usually structured with periodical rental reviews/increase? |
| Rentals in our leases are usually fixed, but also include review clauses which vary from tenant to tenant.Period for the review may be annual, two-yearly or three-yearly. And once the lease is up for renewal, we re-negotiate again based on market rate. | |
| 11. | Which of the buildings in your Portfolio are actually developed by the Quill Group? |
| The properties developed by Quill are Quill Building 1-DHL 1, Quill Building 4–DHL 2, Quill Building 2-HSBC, Quill Building 3-BMW, Quill Building 5-IBM, Quill Building 8-DHL (XPJ) and Quill Building 10-HSBC (Section 13). | |
| 12. | The Trust Deed entitles you to management fees of up to 0.4% of GAV + 3% of net investment income. Are you currently charging this amount or a lesser amount? |
| Our management fees are as per Trust Deed. | |
| 13. | Would you consider developing your own properties? |
| The Securities Commission’s REITs Guidelines has certain conditions that apply with regards to the above. We will consider developing our own properties if we can find a project that meets the said criteria. | |
| 14. | Who are the Analysts/Research Houses that cover QCAPITA? |
| RHB Research, Maybank Investment Bank and Hwang DBS |
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| Quill Capita Trust management team headed by CEO Chan Say Yoong |
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| Quill Group Founders Dato Low Moi Ing and Dato Michael Ong |
QCAPITA Financial Overview
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I would normally agree with you but comeon, we are talking about...
July 28th, 2009 at 12:07 pm
Awesome!
July 31st, 2009 at 7:16 pm
Hi Larry,
First of all, good job again!
1. But after reading it, I’m having the feeling that they don’t really answer some of your questions directly. Even some questions were just answered in a single line, quite cold leh!
2. Capitaland -> Is this the company that’s planning for an IPO that place Sungai Wang plaza into REIT?
3. What is First Right of Refusal?
Thx
August 2nd, 2009 at 10:13 pm
Hi Chan, thanks for your feedback. As to your questions:
1. The interview was not as chatty as our previous one with Tower REIT. Quill Capita’s Funds Management side is largely seconded from CapitaLand. They were professional in approach and courteous, although I believe there might have been sensitive information which the team did not feel should be disclosed, for reasons of commercial secrecy, information not generally in the public domain, SC regulations and so on.
2. I believe CapitaLand did acquire some lots in Sungei Wang (around 60% of Sungai Wang’s total retail space) as well as Gurney Plaza in Penang and the Mines Shopping Fair. An earlier proposal by Landmarks to list a Sungei Wang REIT was rejected by the SC. The Capita REIT was supposed to come up late last year but has been deferred, possibly because of market conditions then?
3. First Right of Refusal means that before the developer can sell the building, it has to offer it to Quill Capita first. Possibly the developer would offer it at a certain price and the trust has a right to buy that property before any other third party.
March 22nd, 2010 at 8:54 pm
Hello, im from ipoh and im doing a research on quill capita trust (QCT).
Can i know all the lease terms, expiry dates and any renewal for all 10 properties ?
Thank you very much.