This article first appeared in The Edge Malaysia Weekly on November 11, 2019 - November 17, 2019

THE owner of KL33 — the office building formerly known as Menara Prudential — in Jalan Sultan Ismail, located directly opposite Shangri-La Kuala Lumpur, is looking for a buyer now that the property has been upgraded. KL33 Properties Sdn Bhd hopes to sell KL33 for 70% more than what it paid for it about three years ago.

The property investment and holding company acquired the 25-storey office block with seven levels of basement parking and 164,706 sq ft of net lettable area (NLA) in February 2017 from OCBC Properties (M) Sdn Bhd for RM125 million or RM759 per sq ft. The building has since undergone an asset enhancement exercise, including the addition of 13,237 sq ft, raising the total NLA by close to 20% to 195,943 sq ft.

The Edge has learnt that KL33 Properties is now seeking up to RM1,100 psf, which is a 45% premium over the RM759 psf it paid in 2017. If it succeeds, it would net RM215.5 million, or 72% more than it originally paid.

KL33 Properties is controlled by Che King Tow — the developer behind the Bukit Rimau development in Shah Alam, which was sold to Malton Bhd in 2002, as well as Jaya 33 in Petaling Jaya.

Che has appointed real estate agents CBRE | WTW and JLL Malaysia as joint exclusive agents to seek expressions of interest for KL33. The closing date is Dec 4.

KL33 has a two-tiered auditorium that can accommodate 160 people and has 215 parking bays.

CBRE | WTW managing director Foo Gee Jen tells The Edge KL33 has undergone a substantial refurbishment, including a new façade and entrance. “The main lobby and upper lobby were retrofitted and modernised.”

The machinery and equipment has been upgraded, lifts have been modernised and a new building access management system has been installed.

Asked why the owner is looking to divest the property less than three years after purchasing it, Foo says Che had purchased the building knowing that Prudential Assurance Malaysia was moving out. He says Che is an investor who specialises in asset enhancement and turnaround before selling.

Foo points to Jaya 33 — now renamed PJ 33 — as an example. Originally an old factory building, the Malaysian Feedmill plant, occupied the land. Che’s company, Jaya 33 Sdn Bhd, bought the building, redeveloped and tenanted it and then sold it to Pelaburan Hartanah Bhd for RM324 million in 2013. Che also redeveloped the old Sissons paint factory next door and opened Plaza 33.

At present, KL33 is less than 15% occupied as its previous anchor tenant, Prudential Assurance, relocated to Tun Razak Exchange in July.

How does KL33 expect to attract buyers in a market that is experiencing an office space oversupply and that, too, an office building with very low tenancy? Foo says the building is being marketed as an opportunity for a single owner or tenant to use as a headquarters or, alternatively, it can be retrofitted to other commercially viable options. “It is in a prime location in Jalan Sultan Ismail. The address, 10 Jalan Sultan Ismail, is an attractive one. The building is an ideal size as it not huge. Moreover, the monorail, LRT and MRT stations are all within walking distance.”

Over two decades old, Menara Prudential was built to accommodate the headquarters of The Pacific Bank Bhd. However, its banking business was sold to Malayan Banking Bhd and its name was changed to PacificMas Bhd. The building then housed PacificMas and its subsidiaries, The Pacific Insurance Bhd, Pac Lease Sdn Bhd and PB Pacific Sdn Bhd and its associate company Malaysian Trustee Bhd.

When the building became the headquarters of Prudential Assurance, as the anchor tenant, it was given naming rights.

In December 2011, PacificMas entered into a deal with OCBC Capital to dispose of its entire stake in PB Pacific and three other companies — Pac Lease, PacificMas Fidelity Sdn Bhd and PacificMas Capital Sdn Bhd — as well as 85% equity interest in Pacific Mutual Fund Bhd, for RM450 million.

Following the takeover and restructuring exercise of OCBC Group, PB Pacific was renamed OCBC Properties. OCBC Properties is in turn owned by OCBC Capital (M) Sdn Bhd. OCBC Capital and OCBC Bank (M) Bhd are subsidiaries of OCBC Group.

OCBC Properties put the property on the market in 2014 but it only found a buyer in 2017.

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