This article first appeared in The Edge Malaysia Weekly on October 16, 2017 - October 22, 2017

MALAYSIA’S state-owned trustee company Amanah Raya Bhd (AmanahRaya) has put several of its assets in the Klang Valley and Penang up for sale as part of its plan to dispose of non-strategic and ageing assets.

Comprising office buildings and shopoffices, the assets have a total estimated value of RM109.3 million, AmanahRaya says when contacted.

It confirms that it is disposing of three adjacent office buildings in Kuala Lumpur, one office building in Petaling Jaya, Selangor, nine shopoffices in Kuala Lumpur and 15 shopoffices in Kepala Batas, Penang.

“These are old buildings and are surplus assets in our portfolio, which need to be redeveloped. [However,] AmanahRaya is not into property development, thus the reason for divesting,” AmanahRaya group managing director Adenan Md Yusof tells The Edge in an email.

The assets have a total net lettable area (NLA) of 275,301 sq ft.

“Our strategy moving forward is to focus on investment of properties via AmanahRaya Real Estate Investment Trust (ARREIT),” says Adenan.

The Minister of Finance Inc (MoF Inc) owns all but one share in AmanahRaya. The one share is owned by the Federal Lands Commission (Inc). AmanahRaya, together with KDA Capital Malaysia Sdn Bhd, manages ARREIT via AmanahRaya-Kenedix REIT Managers Sdn Bhd.

When asked why the assets marked for sale were not considered for ARREIT, Adenan says it is because they do not meet the requirements of the trust.

“We prefer Class A office buildings,” he remarks. Following ARREIT’s recent acquisition of the Vista Tower office building at The Intermark in Kuala Lumpur, the trust’s total asset value stands at RM1.56 billion.

AmanahRaya is conducting the sale via a tender and has hired real estate agency Jones Lang Wootton as its exclusive marketing agent to conduct the exercise.

According to AmanahRaya, the buildings that have been put up for sale are owned by the company and its wholly-owned subsidiary, AmanahRaya Development Sdn Bhd.

Of these, the asset that has been identified as the most valuable is Block D at Kelana Centre Point in Petaling Jaya. It is a 13-storey purpose-built office building with a two-storey office podium and 641 parking bays. The leasehold property’s major tenants are Pejabat Pendidikan Daerah Petaling Utama and Fujitsu (M) Sdn Bhd, which together occupy 28.62% of the building. It offers an NLA of 115,000 sq ft and its lease expires in 2094.

Based on reports, Kelana Centre Point — located within Kompleks Kelana Centre Point — was developed by Glomac Bhd. In 2009, the building was sold to Perbadanan Nasional Bhd for RM50 million. PNS is also a government-owned company under MoF Inc. It is unclear when the asset changed hands from PNS to AmanahRaya.

In the capital, three adjacent buildings — namely No 17, 19 and 21 at Jalan Melaka — have also been identified for sale. All three are located opposite Bank Muamalat Malaysia Bhd’s headquarters and along the Klang River, where the River of Life project is ongoing.

 No 17, which is Bangunan MOCCIS, is an 11-storey shopoffice with an NLA of 19,970 sq ft. Sitting on 3,966 sq ft of land, the building is 100% tenanted and has 49 years remaining on its lease.

No 19 is an 8½-storey purpose-built office building with two levels of basement parking. It has an NLA of 11,925 sq ft and is 17% occupied. The freehold property sits on 4,008 sq ft of land.

No 21, which is Wisma AmanahRaya II, is a 13-storey building with an NLA of 52,741 sq ft. It occupies two lots with leases expiring in 2061 and 2066 respectively. It is 69% tenanted, with AmanahRaya’s subsidiary taking up a good portion of the space. The building itself sits on 9,910 sq ft of land.

Real estate agents tell The Edge that the new owner could refurbish and upgrade these three assets and retain their original purpose. Alternatively, they could be converted into a boutique hotel.

Another suggestion given by a valuer-cum-real estate agent is to completely redevelop the property. “This location within the old central business district is very established, with easy access to the LRT (light rail transit) line. It is overdue for a redevelopment. If the land parcels are amalgamated, it will allow for a more sizeable iconic landmark building to be constructed, with higher returns.”

In Kuala Lumpur, AmanahRaya is also divesting a property located at Pekeliling Business Centre. It is currently fully tenanted and comprises nine shopoffices — seven four-storey and two three-storey buildings.

Meanwhile, in Kepala Batas, the company is looking to sell 15 interconnected shopoffices. It says these units have been extensively renovated and was formerly the academic campus of Allianze University College of Medical Sciences. The freehold property is currently vacant.

ARREIT is a diversified REIT that manages properties in the office, educational, industrial, hospitality and retail segments. Apart from Vista Tower, its office assets include Blocks A and B of South City Plaza in Seri Kembangan and Dana 13 in Petaling Jaya. Its educational assets are SEGi College Subang Jaya and SEGi University Kota Damansara while its sole retail asset is Selayang Mall, all of which are in Selangor.

Industrial assets owned by the REIT include the Silver Bird factory, AIC factory and Wisma Comcorp in Shah Alam, Selangor, the Deluge factory in Johor and Contraves Advanced Devices Sdn Bhd’s office building in Cyberjaya.

ARREIT’s hospitality assets are located in Kedah, namely Holiday Villa Alor Setar and Holiday Villa Langkawi. Following the acquisition of Vista Tower last month for RM455 million, the 65-storey building is now the REIT’s largest asset under its management.

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