Petronas Plans Property Trust for Malaysian 88-Floor Twin Towers

Petroliam Nasional Bhd., Malaysia’s state oil and gas company, said it plans to combine all its stakes in Kuala Lumpur’s 88-floor Petronas Twin Towers into a real estate investment trust to be formed by KLCC Property Holdings Bhd.

KLCC Property will buy the remaining 49.5 percent stake in the towers it doesn’t already own from Petroliam Nasional, also known as Petronas, for 2.86 billion ringgit ($938 million), according to a Kuala Lumpur stock exchange filing today. The developer then plans to fold the office and shopping complex and two other Kuala Lumpur buildings into a trust called KLCC REIT, it said.

This would be the country’s first so-called stapled trust. Units in the REIT would be distributed to KLCC Property’s shareholders on a one-for-one basis. The shares and units would then trade as a single listed entity on Kuala Lumpur’s main stock market as KLCCP Stapled Securities, holding combined assets of more than 15 billion ringgit, the filing showed.

The restructuring will “maximize shareholder value,” Hashim Wahir, KLCC Property’s chief executive officer, said in the statement. “The structure will also allow our investors to continue to benefit from the upside from our future developments,” he said.

KLCC Property, which owns more than 7 million square feet of office, shopping malls and hotels in Malaysia’s capital, is 52.6 percent owned by Petronas, according to data compiled Bloomberg. It will issue new shares to its parent to pay for the remaining twin towers stake, today’s filing showed.

Principal Advisors

The other two buildings that will be included in KLCC REIT are Menara 3 Petronas and Menara ExxonMobil, it said.

CIMB Investment Bank Bhd. and CitiGroup Global Markets Ltd. were the principal advisors on the restructuring, according to the statement.

KLCC Property, which has surged 77 percent this year in Kuala Lumpur, will resume trading tomorrow after suspending its shares this afternoon for the announcement.

The developer today reported net income of 1.17 billion ringgit for the three months ended Sept. 30, up from 71 million ringgit a year earlier, according to a separate exchange filing today. The company proposed a dividend of 4 sen per share.

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