The entire Menara TM development in Lembah Pantai is up for sale at a price tag of about RM700 million. The development consists of the 55-storey Menara TM with helipad, an adjacent office building, a 92,431 sq ft convention centre, a multi-purpose hall, a sports complex, clinics and land. The closing date for the first stage of the sale is March 18 at 12 noon.
Source: https://en.wikipedia.org
Shaped to represent a sprouting "bamboo shoot", Menara TM is located along the Federal Highway, Sprint Expressway and Jalan Pantai Baharu. The building was designed by Hijjas Kasturi Associates for Telekom Malaysia Bhd and was constructed between 1998 and 2001 by Daewoo Construction. It was officially opened by Tun Dr. Mahathir Mohamad on February 11, 2003.
In 2008, Telekom Malaysia sold Menara TM and it has been occupying the building on a lease arrangement since then. The telco had entered into a conditional sale and purchase agreement and master ijarah agreement with Menara ABS Bhd (MAB) on January 2, 2008 to sell Menara TM, Wisma TM Taman Desa, Cyberjaya Complex and Menara Celcom that involved the issuance of RM1 billion of Islamic asset-backed sukuk Ijarah.
MAB is a trust-owned special purpose entity sponsored by Telekom Malaysia to facilitate the securitisation of the four properties, via a sale and leaseback or master Ijarah arrangement.
It issued three classes of sukuk namely Class A totalled RM345 million, Class B RM155 million and Class C totalled RM500 million.
Media reports had said that institutional investors like the EPF, KWAP and TH were asked to
support the sukuk sale. Under the deal, the iconic Menara TM and three other buildings were used as a “security” for the debt that was raised. Fast forward 13 years later, who would have known that COVID-19 would rear its ugly head. Covid made matters worse to a property industry that is already grappling with an oversupply situation.
TM is the main anchor tenant of Menara TM, occupying 70 percent of the 92,000 sq feet of space spanning 55 floors. It would be able to save on rental costs if it moved out of its own landmark building. It swiftly confirmed this in its statement; it is moving employees to other TM-owned buildings as part of an optimisation programme. Naturally, the institutional investors are unhappy as TM has decided not to re-acquire Menara TM, which is an option under the securitisation deal. This leaves EPF, KWAP and TH in a bind as they need to recover their investment.
It is understood that the EPF, which had over 50% or majority voting rights among the sukukholders, pushed for the sale of Menara TM. However, TH was still trying to convince TM to remain as the anchor tenant and negotiations are still ongoing.
In years gone by, the investors rallied to TM’s call in its time of need, but the favour was not returned. And now, after two years of lockdown and the new normal of Work-From-Home, Menara TM faces the unenviable task of finding new tenants.
The priority for the EPF, KWAP and TH, which have forked out RM1 billion, is to recoup their investment as it is dutybound to do so to protect its members and depositors.
It is understood that there are already 5 bidders for the landmark with a price tag of RM700
million.
The question is should the properties be sold? Invariably TM will build another HQ in due course with shareholders’ funds or debt. What’s the purpose? Synergy or bringing everyone under “one roof”. It is best for TM to stay and settle outstanding bonds/acquire the building. But will it do that? Not on present sentiments.
References:
Menara TM & nearby assets for sale at RM700m? Shareen Kaur, New Straits Times, Feb 10, 2022 (https://www.nst.com.my)
Menara TM: The real story behind the sale of a landmark building, Zaidi Isham Ismail, DagangNews.com
Trust-owned Menara TM is up for sale, Sulhi Khalid, TheEdgeMarkets, Feb 9, 2022
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