CIMB Group Holdings Bhd plans to buy Menara CIMB in KL Sentral from CIMB-Mapletree Real Estate Fund 1 (CMREF1) for more than RM600 million. The building currently houses the group’s investment banking division.
Sources say the two parties are close to sealing the deal and the sale and purchase agreement is expected to be signed soon.
Currently, CIMB Investment Bank Bhd is the anchor tenant of the Grade A office block, occupying 20 floors or 70% of the 56,578 sq m in net lettable area (NLA).
CIMB Group Holdings did not respond to The Edge’s queries to confirm the deal.
It was learnt that expressions of interest (EOIs) were sought to ensure that the deal remains transparent. The EOIs were understood to have attracted interest from both local and foreign funds. An estate agent contacted by The Edge says, presumably, CIMB Group Holdings’ offer is higher than those received from the other interested parties.
The Edge understands that the contract may be sealed for between RM600 million and RM700 million.
Menara CIMB is jointly owned by CMREF1 and Singapore-based Mapletree Investments Pte Ltd, which hold 60% and 40% equity interests respectively.
CIMB Group Holdings has an indirect stake in the property through CIMB Real Estate Sdn Bhd and CIMB-Principal Asset Management Sdn Bhd. CIMB Real Estate holds a 25.24% stake in CMREF1 while CIMB-Principal has 1.7%.
All in, CIMB Group Holdings indirectly owns less than a fifth of the asset.
The deal has dragged on for the longest time. The fund had in mid-2013 hired real estate consultant Rahim & Co to seek EOIs for the property. The closing date for the EOIs, which are informal offers to gauge interest and the price willing to be paid by an interested party, was Sept 19, 2013. Typically, a due diligence exercise takes up to two months to be completed.
Menara CIMB is a 41-storey freehold office building. It was designed to meet the standards of Singapore’s BCA Green Mark Gold and Malaysia’s Green Building Index. According to Mapletree Investments’ annual report for FY2013/14, the building was completed in January 2013 and is enjoying a high occupancy rate of 87%.
Apart from CIMB Investment Bank, the other tenants include Regus’ serviced offices and the American Malaysian Chamber of Commerce. The building is able to command rentals of between RM8 per sq ft and RM8.50 psf, including service charge.
CMREF1, set up in 2005, is a closed-end private fund focusing on real estate in Malaysia. The fund’s major shareholders include Mapletree Dextra Pte Ltd (25.24%), CIMB Real Estate (25.24%), HIP Co Ltd (18.61%), the Employees Provident Fund (12.17%) and Kumpulan Wang Amanah Pencen (12.17%).
|Menara CIMB is jointly owned by CMREF1 and Mapletree Investments|
In July 2007, CMREF1 acquired — through Lot A Sentral Sdn Bhd — a parcel in KL Sentral known as Lot A, measuring 81,787 sq ft, from Malaysian Resources Corp Bhd for an estimated RM404 million.
The fund’s tenure expired in December 2013 but was extended for another two years to December 2015 following its investors’ approval. CMREF1 is currently in its divestment phase.
Its investment assets include Patimas Technology Centre, a leasehold property within Technology Park Malaysia. Patimas Technology Centre is a data centre with office and recreational space, comprising a 2½-storey office building and 163 parking lots. Previously fully leased by Patimas Computers Bhd, 70% of the NLA is now leased to FTMS Consultants (M) Sdn Bhd as a higher education campus while the rest is used by Patimas Computers for data centre operations.
The fund also owns the now redeveloped Jaya Shopping Centre in Petaling Jaya, a seven-storey suburban mall with a total NLA of 23,600 sq m.
Another retail store owned by the fund is Giant Seberang Perai, a hypermarket sitting on a 14,656 sq m freehold parcel in Taman Perai Utama. Completed in 2007, the single-storey building has a built-up area of 10,598 sq m, with 9,051 sq m dedicated to retail and 1,537 sq m for offices. The site includes 400 open-air parking bays, which are leased to GCH Retail (M) Sdn Bhd.
Meanwhile, CIMB Group Holdings has two other major property assets in Malaysia — Menara BHL Bank in Jalan Sultan Ahmad Shah, Penang, and Bangunan CIMB in Jalan Semantan, Damansara Heights, Kuala Lumpur.
This article first appeared in The Edge Malaysia Weekly, on September 22-28, 2014.