KLCCP: OPR cut to benefit REITs

03 Apr 2019 / 15:25 H.

KUALA LUMPUR: Any rate cuts in the Overnight Policy Rate (OPR) are positive for the real estate investment trusts (REITs) industry due to the possible widening spread between the sector’s yields against the risk-free Malaysia Government Securities (MGS), according to KLCCP Stapled Group.

KLCCP Stapled Group, Malaysia’s largest self-managed stapled security, comprises KLCC REIT and KLCC Property Holdings Bhd (KLCCP).

“(OPR cut) is not only a good news to us, but (also) to the (Reit) industry, as any lowering of OPR would give a better spread to the yield,” the group’s CEO Datuk Hashim Wahir (pix) said at a media briefing here today.

“In terms of our distribution (yield) from the market is about 4.7%, and that is a very small spread to MGS,” he added.

MGS is a typical benchmark that investors use to compare REITs, which are seen as a comparatively riskier investment.

Meanwhile, Hashim said the group’s office segment will continue to be the main revenue driver moving forward, supported by long-term tenancies in particular with Petronas for the Petronas Twin Towers.

“All of our office spaces are fully tenanted and leased mainly by Petronas. Last year we just had a rental revision for the Twin Towers,” he added.

Last year, he said the office segment contributed 43% to the group’s overall revenue.

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