Friday 29 Mar 2024
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This article first appeared in The Edge Malaysia Weekly on September 28, 2020 - October 4, 2020

THE commercial assets and land parcels in Damansara Heights owned by Selangor Properties Bhd (SPB) — Menara Milenium and Plaza Batai in particular — are believed to have drawn the interest of potential investors keen to acquire premium assets at more favourable prices due to the economic downturn.

However, sources say the property developer will only entertain offers above market value for its prized investment assets.

“The assets are not officially on the market, but if the right offers come along, the board of directors will consider [a sale],” a source says of the office building and retail block.

Vendors do not always hire an exclusive agent to market an asset and are often open to unsolicited offers.

Another source tells The Edge that SPB had carried out a valuation of certain assets after receiving offers for them and may want to dispose of some surplus land parcels.

SPB chief operating officer Chong Koon San, when asked for comment, says there is “no deal on the table”. He also dismisses talk in real estate circles that government-linked companies have been approached to purchase Menara Milenium.

One estate agent had described SPB as a developer that would seek a “post Covid-19 price and 20% premium over it” should it consider a sale. But this is not surprising as the group is cash rich, and the investment assets have been contributing a substantial portion to its bottom line.

For the financial year ended Oct 31, 2018 — the last available financials — SPB’s retained earnings amounted to RM1.86 billion against total liabilities of RM468.39 million, of which RM122.18 million were current. Total assets stood at RM2.93 billion.

The developer suffered a net loss of RM2.09 million on the back of RM153.28 million in revenue. However, the group’s property investment assets — Menara Milenium, Kompleks Pejabat Damansara, Plaza Batai and Taman Tunku Apartments — contributed 67% to group pre-tax profit.

Taken private in June 2019, SPB is said to be among the largest private landowners in the affluent Damansara Heights area in Kuala Lumpur. It also owns assets in the neighbouring high-end suburb of Bukit Tunku.

According to Chong, the focus for the next couple of years will be on AIRA Residences — a project with a gross development value of RM1 billion that will be completed and handed over next year.

The freehold luxury condominium is spread over three acres in Jalan Batai and offers 169 units over two towers.

SPB is currently focused on the refurbishment of the low-density Taman Tunku Apartments, which will be renamed The Stories of Taman Tunku when work is completed in November. It will spend RM25 million on the upgrade, which will see 85 apartments and nine retail lots turned into 19 exclusive retail lots, 40 residential apartments and 26 units for business use.

Also undergoing an upgrade is Kompleks Pejabat Damansara, a former government office complex. Renamed The Five@KPD, SPB will spend some RM10 million on the makeover of the investment asset that is expected to be completed by the first quarter of 2021.

SPB does not plan to launch any new projects in the medium term because of the slow property market and is also not looking for land bank. Apart from Damansara Heights, the group has land assets in Gombak, Selayang and Ulu Langat, and derives recurring income from its retail investment assets in Perth, Australia.

Menara Milenium, which was completed in 2000, is a Grade A, 25-storey office building with 555,000 sq ft in net lettable area (NLA) on a 163,579 sq ft plot. Tenants include Ernst & Young, Zico Law and a HSBC Bank Malaysia Bhd branch.

A source says the building had previously been put up for sale and estimates its value at RM800 psf or RM444 million, although SPB’s FY2018 annual report pegs its net book value at RM341.84 million.

As for Plaza Batai, it is a boutique commercial centre comprising 16 units of two-storey terraced shoplots along Jalan Batai. The units have 21,760 sq ft of NLA on the ground level and 25,400 sq ft on the first floor.

One of SPB’s more prominent deals in the area in recent years was the sale of a freehold land parcel, measuring 25,686 sq m, in Pusat Bandar Damansara.

In 2015, the parcel was sold to Jendela Mayang Sdn Bhd, a company linked to tycoon Tan Sri Desmond Lim Siew Choon, for RM450 million. SPB had purchased the land two decades earlier for RM106.6 million.

 

 

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