KLCC (5235SS) : KLCC Property Holdings - Touring around Menara ExxonMobil and Menara 3
Target RM6.90 (Stock Rating: HOLD)
During our recent tour of some of KLCCP's assets, we were pleasantly surprised that Menara ExxonMobil still looks relatively new despite being almost 18 years old. This gives us confidence that it will not face issues extending its tenancy when it expires in 2017. We were also impressed by Menara 3, which was more recently built (in 2011) and houses Petronas's offices and other O&G companies. While the offices were impressive, we understand that KLCCP's acquisition pipeline remain scarce in the next 1-2 years. We maintain our Hold call and DDM-based target price of RM6.90. For exposure to M-REITs, we prefer Axis REIT.
What Happened
KLCC Property organised a visit to two of the buildings in its portfolio, Menara ExxonMobil and Menara 3. Both buildings are located in the vicinity of Kuala Lumpur City Centre. After the tour of the offices, the company hosted a lunch session at Mandarin Oriental Hotel where we had the opportunity to discuss with management the outlook for the company. The visit gave us an opportunity to see the interior of the two office buildings while KLCCP’s management gave us insights into the general operations of the buildings.
What We Think
We were pleasantly surprised that the Menara ExxonMobil building still looks relatively new and well maintained despite being almost 20 years old. The building, which is fully tenanted by ExxonMobil, was built in 1996. The tenancy will be expiring in 2017. We understand that negotiations on the next term of tenancy have already started between the two parties. From our discussions with management, we believe that the new agreement is likely to be a long-term agreement as well. During our tour of the Menara 3 building, we noted the modern interior of the building which was completed in 2011.
What You Should Do
We maintain our Hold call on KLCCP although we note that in the current market conditions, REITs could provide a safe haven for capital preservation given its stable dividend yields. Our DDM-based target price is maintained at RM6.90.
Source: CIMB Daybreak - 16 December 2014
http://cimbresearchklse.blogspot.com
Target RM6.90 (Stock Rating: HOLD)
During our recent tour of some of KLCCP's assets, we were pleasantly surprised that Menara ExxonMobil still looks relatively new despite being almost 18 years old. This gives us confidence that it will not face issues extending its tenancy when it expires in 2017. We were also impressed by Menara 3, which was more recently built (in 2011) and houses Petronas's offices and other O&G companies. While the offices were impressive, we understand that KLCCP's acquisition pipeline remain scarce in the next 1-2 years. We maintain our Hold call and DDM-based target price of RM6.90. For exposure to M-REITs, we prefer Axis REIT.
What Happened
KLCC Property organised a visit to two of the buildings in its portfolio, Menara ExxonMobil and Menara 3. Both buildings are located in the vicinity of Kuala Lumpur City Centre. After the tour of the offices, the company hosted a lunch session at Mandarin Oriental Hotel where we had the opportunity to discuss with management the outlook for the company. The visit gave us an opportunity to see the interior of the two office buildings while KLCCP’s management gave us insights into the general operations of the buildings.
What We Think
We were pleasantly surprised that the Menara ExxonMobil building still looks relatively new and well maintained despite being almost 20 years old. The building, which is fully tenanted by ExxonMobil, was built in 1996. The tenancy will be expiring in 2017. We understand that negotiations on the next term of tenancy have already started between the two parties. From our discussions with management, we believe that the new agreement is likely to be a long-term agreement as well. During our tour of the Menara 3 building, we noted the modern interior of the building which was completed in 2011.
What You Should Do
We maintain our Hold call on KLCCP although we note that in the current market conditions, REITs could provide a safe haven for capital preservation given its stable dividend yields. Our DDM-based target price is maintained at RM6.90.
Source: CIMB Daybreak - 16 December 2014
http://cimbresearchklse.blogspot.com
