This article first appeared in The Edge Malaysia Weekly on October 23, 2017 - October 29, 2017

PELABURAN Hartanah Bhd (PHB), which has close to RM6 billion worth of commercial assets and land, has decided to sell its 39-storey Menara Bumiputra-Commerce in Jalan Raja Laut in Kuala Lumpur for as much as RM560 million, sources say.

If sold, the 10-year-old building could be the real estate investment firm-cum-property developer’s first asset sale.

PHB group managing director Datuk Kamalul Arifin Othman declined to comment when contacted by The Edge to confirm whether the asset had been placed on the market.

Although rumours have been circulating for many months now that the building has been put up for sale, it is understood that an agency was hired only recently to seek a purchaser. The Edge understands that PHB has hired real estate agency Rahim & Co to conduct the sale. However, the latter’s director, Robert Ang, declined to comment on the matter as well.

The Edge also understands that PHB may have commenced negotiations with interested parties.

PHB had purchased Menara Bumiputra-Commerce for RM460 million from CIMB Group through a sale and leaseback arrangement in December 2007. CIMB, which wanted to house its then scattered retail banking operation at one location, leased the building for an initial 10 years. The building was ready in early 2009.

Kamalul was then quoted as saying that the purchase assured PHB of steady rental income from CIMB and would allow it to enjoy potential capital appreciation from being the owner of the office tower.

According to PHB’s website, the building has five levels of basement parking, offering 1,122 bays. The total net lettable area of the building is 626,672 sq ft. Based on the NLA, PHB paid about RM730 psf.

Valuers contacted by The Edge say the valuation of Menara Bumiputra-Commerce could be between RM850 psf and RM900 psf, which works out to between RM532 million and RM564 million. Other factors that could determine the pricing are the number of parking bays, if there is a long-term tenancy and recent transactions in the area.

Last month, AmanahRaya Real Estate Investment Trust (ARREIT) purchased the Grade A Vista Tower (with an NLA of 551,875 sq ft) at The Intermark in Jalan Ampang from BlackRock Inc. Based on the purchase consideration of RM430 million, the tower was sold for RM779 psf.

A year ago, Kumpulan Wang Persaraan (Diperbadankan) (KWAP) purchased Menara AIA Cap Square Tower in Jalan Mushi Abdullah — located just 3km from Menara Bumiputra-Commerce — for a reported RM511 million or RM849 psf. This Grade A office building with 461 parking bays was bought from Union Investment Real Estate GmbH. The building has an NLA of 601,796 sq ft.

It is unclear why PHB has decided to sell the building. Sources suggest that the move may be prompted by CIMB’s 10-year lease coming to an end. It is not known if CIMB will be renewing the lease and if so, for how long, and if it will take up less space. “Perhaps PHB feels the time is ripe to recoup its investment,” an industry player says.

PHB may want to use the proceeds from the sale as capital for its planned property development projects. In Kuala Lumpur alone — in Jalan Bangsar and Jalan Conlay — PHB has commenced two major property developments.

According to PHB’s website, it is planning a “sizeable dynamic mixed-use development” in Lot 20001, which is the former Unilever land in Bangsar. The development on the 19.6-acre parcel will be undertaken by PHB’s wholly-owned subsidiary, Bangsar 61 Sdn Bhd.

The Edge had previously reported that the GDV of the project on this piece of land located at the intersection of Jalan Bangsar and Jalan Maarof could be over RM5 billion. A visit to the site shows some activity and land clearing work has commenced.

In Jalan Conlay, PHB is planning an integrated commercial development on a 6.8-acre parcel located near Jalan Bukit Bintang, where the former office of the Kuala Lumpur Regional Centre for Arbitration was located. Industry estimates put the GDV of this project at RM3.8 billion.

In Terengganu, meanwhile, PHB is building a mixed-use development with an estimated GDV of RM700 million.

It is noteworthy that a year ago, PHB hired global real estate service provider Savills (M) Sdn Bhd to look for purchasers for a 790-acre tract it owns in Ulu Bernam, Selangor. The value of the land, located 18km south of Proton City in Tanjung Malim, was estimated at RM206 million or RM6 psf. The Edge understands that this land has not been sold. Moreover, PHB’s website states that it owns land in Tanjung Malim.

The company also has land in Cyberjaya, Petaling Jaya, Klang and Kuala Terengganu.

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