Here’s How to Own One of The Most Valuable Pieces of Land in Malaysia

The PETRONAS Twin Towers is probably one of the most iconic buildings in Malaysia. But there’s so much more when it comes to the area surrounding the two skyscrapers.

The area, known as Kuala Lumpur City Centre (KLCC), is a massive integrated development with office towers, hotels, and shopping malls.

KLCC can be considered as one of the most valuable pieces of land in the whole of Malaysia. And, the largest landlord of the area happens to be a public listed entity:  The KLCCP Stapled Group (KLSE:5235SS.KL), which  consists of KLCC Property Holdings Berhad and KLCC Real Estate Investment Trust.

It is the owner of the PETRONAS Twin Towers, Menara ExxonMobil, Menara 3 PETRONAS, Suria KLCC, and Mandarin Oriental Kuala Lumpur. In addition, it has a 33% stake in Menara Maxis. All of them are located within the KLCC compound.

The KLCCP Stapled Group has a unique structure as it is made up of a company that’s “stapled” with a real estate investment trust. Such a structure might allow its unitholders to enjoy the tax benefits of a REIT and yet give the group the financial flexibility to operate with a company structure.

For investors who want exposure to prime real estate in Malaysia, KLCCP Stapled Group might be one entity to look at. But, investors have to understand that the value of properties are still affected by supply and demand dynamics, regardless of how premium the properties are.

According to the KLCCP Stapled Group’s recent presentation, the office and retail market in Kuala Lumpur are facing headwinds. This is due to the huge supply of office space coming up in the Greater Kuala Lumpur area and increasing competition in the retail mall sector.

At the moment, the KLCCP Stapled Group is trading at 1.05 times its net asset value and offers a 4.7% distribution yield based on its annual distribution in 2015. The stapled group is also majority owned (a 75% stake) by PETRONAS, the national oil company of Malaysia.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore writer Stanley Lim doesn’t own shares in any companies mentioned.