Tower REIT Looking For More Office Buildings
GLM Reit Management Bhd’s REIT, called the Tower REIT, will be listing on April 12. The company is a subsidiary of GuocoLand (Malaysia) Bhd is currently looking for more office buildings.
According to a report in the local papers:
- They are in negotiations with several third-party office building owners in the Kuala Lumpur, Petaling Jaya and Damansara areas to acquire their properties. These buildings are worth not less than RM50 million each.
- as part of their strategy for the next two to three years, the company will be focussing on the properties in these three commercial districts.
- The prospectus for Tower Reit, which will cover two commercial buildings in Kuala Lumpur - Menara HLA and HP Towers - is expected to be issued on March 22.
- The company expects a return of of 6% to 7% annually for Tower REIT.
- Proceeds from Tower Reit would be used to repay the purchase of the buildings and also for working capital.
- Menara HLA is a 32-storey office building located in Jalan Kia Peng, while HP Towers is a commercial building with a nine-storey annexe and 21-storey tower at Damansara Heights.
- Tan said the two properties with a total market value of RM362 million, valued by global real estate advisor Knight Frank, were purchased for a total of RM351 million recently.
- HP Towers with a total lettable space of 350,056 sq feet is 88% occupied with Hewlett Packard as the anchor tenant while Menara HLA with 396,820 sq ft lettable space is 85% occupied with Hong Leong Assurance Bhd and HLG Securities Sdn Bhd as the anchor tenants.
- They are confident that the properties would see 20% to 30% increase in rentals starting this year.
- According to the management, the going market rate for commercial properties in the Golden Triangle area should be about RM4.50 per sq foot (psf) to RM5 psf for Menara HLA from RM3.50 in 2003 and RM3.50 psf from RM2.50 for HP Towers. The demand and supply band for the office sector in the Klang Valley is narrowing with the average occupancy rate reaching 83% last year from 75% in 2000 and 95% in 1997.
They also believe that rental has yet to reach its peak of RM5.60 psf in the Golden Triangle and RM5 in Damansara Heights. - The management added that GLM Reit would sell the properties for capital gains at the right price.
For the full article you can check it out here.
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Comment by Sidi — May 31, 2007 @ 9:59 am