The price of Genting Malaysia’s acquisitions from parent seen to be reasonable

KUALA LUMPUR: Genting Malaysia Bhd’s proposed acquisition of Wisma Genting (picture) along Jalan Sultan Ismail and two adjoining pieces of leasehold development lands in Segambut, Kuala Lumpur for RM259.6 million and RM24.6 million respectively, from its parent company, Genting Bhd, is considered reasonable, said investment analysts and property consultants.

In Genting Malaysia’s announcement on Dec 8, 2009, it was stated that Wisma Genting, with a total net lettable are (NLA) of 409,033 sq ft, was valued at RM277 million last month while Segambut Land, with a total NLA of 360,369 sq ft was valued at RM25.8 million.

A CIMB Research report on Dec 9 said the total consideration of RM259.6 million for Wisma Genting, or RM635 psf seemed fair taking into consideration the building is 24 years old, located on the fringe of the KLCC area and at a marginal discount to the property’s appraised market value of RM265.5 million.

New office spaces within the KLCC area are going for around RM950 to RM1,200 psf. Wisma Genting, with an occupancy rate of 92% is said to fetch rental yields of 6% per year.

CIMB Research however, said the Segambut land acquisition comprising two adjoining lands for RM15.9 million, or RM65 psf, looked cheap compared with the recent valuation of RM236 psf for a 13.9-acre freehold land fronting Jalan Segambut owned by Goh Ban Huat Bhd. In comparison, the Segambut land is a leasehold plot and situated in the inner roads of Segambut’s commercial and industrial area.

KGV-Lambert Smith Hampton (M) Sdn Bhd’a director Anthony Chua told both acquisitions seemed fair. “Sixty-five ringgit psf for an industrial land that is not fronting any major road is a fair price for the area.

“Wisma Genting, on the other hand, is on a very strategic location and the building is well maintained despite it being 24 years old. I would consider it a good buy,” he said.

VPC Alliance (M) Sdn Bhd’s managing director James Wong also agreed that Wisma Genting’s acquisition price was considered fair market value compared with the refurbished Menara Standard Chartered located just across Wisma Genting, which was sold to ING Insurance Bhd in 3Q2008 for an estimated RM953 psf.

Genting Malaysia presently occupies eight floors and two basement levels with a total annual rental value of approximately RM3 million. It expects to earn an annual rental income of approximately RM17.3 million from other tenants, providing a source of recurring income and long-term value for the property.

Genting Malaysia said the acquisition of the Segambut land complements the company’s current business activities, as they are the sole tenant renting a portion of the land as a storage and depot for its buses and limousines, integral components in its transport-related services to and from Resorts World Genting. The site is said to have the potential to be developed in future.


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