A restructuring deal struck by KLCC Property Holdings Bhd would transform Malaysia's Petronas Towers into the country's largest real estate investment trust. Sources informed Reuters that the trust would be three times bigger than the closest Malaysian REIT but will not raise any new funds for the property.
A REIT is a security that is traded similar to a share of stock but the investment is done on the real estate subject of the trust. In this case, the REIT would be the investment agent for investments done with the purchase of the shares of both the REIT and the property.
The plan to restructure was announced back in November 2012 through the creation of a stapled REIT. This is done by bundling of existing shares owned by KLCC Property and the units of the KLCC REIT. The bundling is designed to entice investors to high yield returns. Furthermore, the restructuring would help increase profits as Malaysia's property laws provide REITs with income tax exemptions.
Join the Conversation