Hap Seng: Tower sale not ruled out

by **hlk** Wed 29 Jun 2011, 08:00

Kuala Lumpur: Hap Seng Consolidated Bhd is open to selling its half of Menara Citibank located on Jalan Ampang in Kuala Lumpur, but is not aggressively scouting for a buyer, its top official said.

"If we receive a good offer, we will have to go to the board to get approval to sell it," managing director Datuk Edward Lee Ming Foo said.

Business Times contacted Lee following talk that the 50-storey tower was back on the market barely two years after the plantations and property group completed the purchase in October 2009.

According to Lee, Hap Seng, which also owns Menara Hap Seng, regularly receives offers to buy its building. However, it boils down to whether it wants to sell or not.

"Menara Citibank is not back on the market as we are now happy with our returns following a low-entry cost," he said. Nevertheless, if there is a good buyer, Hap Seng would consider it, Lee added.

Since Hap Seng bought the building at over RM800 per sq ft (psf), Lee said a reasonable exit price would be in the range of RM1,000 psf.

According to Lee, Hap Seng also has a first right of refusal should US lender Citigroup decide to sell its half of the stake in the building.

In October 2009, Hap Seng paid RM243.52 million for 49.99 per cent held by CapitaLand Ltd and Amsteel Corp Bhd in Inverfin Sdn Bhd.

Menara Citibank sits on a parcel of freehold land measuring 136,637 sq ft and has a net lettable area of 733,634 sq ft.

In August 2008, IOI Corp Bhd announced that it had won the bid for the sale of the entire property and had agreed to pay RM586.7 million for Menara Citibank. Inverfin Sdn Bhd, the holding company of the said property, also had a net debt of RM160 million at the time.

However, three months later, the deal was aborted. IOI cited concerns over the economy and its RM73.36 million of its initial payment was forfeited.

The Lion Group built the property in 1994. To pare down debts, it sold half of the building to Citigroup for RM75.36 million or RM543 psf.

Hap Seng, in its recent annual report, said that the building has an occupancy of 84 per cent and contributed some RM12 million to its property division.