REAL ESTATE agents appear to be actively seeking potential buyers for Goldis Bhd’s nine-year-old GTower, located at the intersection of Jalan Tun Razak and Jalan Ampang,  and have placed a price tag of RM1.2 billion on the office and hotel building.

Located on a two-acre freehold parcel next to the Tabung Haji building, GTower is an integrated building with 1.4 million sq ft in gross built-up and 820,000 sq ft of net lettable area (NLA).

An advertisement on website www.malaysiarealestate2u.com displays photographs of the building’s  exterior and interior, with a sign, “GTower For Sale”, printed across them. Another website, www.buildings4sale-malaysia.com, states that an office building in Jalan Tun Razak is up for sale. Both quote an asking price of RM1.2 billion.

The CEO of Goldis (fundamental: 0.5; valuation: 1.2), Tan Lei Cheng, when contacted, says: “GTower is not on the market per se but if there is a good offer, say RM1.3 billion, we will let go. Everything is for sale at the right price.” She is quick to add that Goldis has not called for bids for GTower.

A valuer contacted by The Edge notes that that the difference in the asking price may be the result of the implementation of the Goods and Services Tax (GST) as any commercial property transaction after April 1 would have to factor in the tax.

Interestingly, at least two real estate agents contacted by The Edge have indicated that they have clients who may be interested in purchasing the MSC Malaysia-status Grade A++ office building and hotel.

GTower is Malaysia’s first green commercial building and was awarded Singapore’s BCA (Building and Construction Authority) Green Mark Gold standard certification. The 32-storey building has 530,000 sq ft in NLA (said to be over 90% occupied), a 180-room boutique hotel, as well as 1,300 car parking bays.

Last Wednesday, Kumpulan Wang Persaraan (Diperbadankan) announced that it had purchased Integra Tower, also located in Jalan Tun Razak, from Blackrock Inc. Integra Tower — a component of  The Intermark integrated development —  is also a Grade A green building. KWAP paid RM1.065 billion for the office, which has 760,715 sq ft in NLA and 850 car parking bays. That works out to RM1,400 psf.

At RM1,400 psf, the office space alone in GTower alone would be able to fetch RM742 million.

It was reported in 2006 that the entire GTower project was built at a cost of RM500 million.

A valuer tells The Edge that GTower may be able to command a higher price because it is located on a freehold parcel and has a single title. “The advantage of buying this building is that in 20 or 30 years, it can be easily redeveloped.”

The Intermark, in comparison, has been developed on a strata basis and is likely to have several owners. The other components of Intermark — retail, Vista Tower and DoubleTree by Hilton — are all up for sale and likely to be owned by different parties.

Tan did not address the question of whether Goldis would consider injecting GTower into IGB REIT. Goldis owned 73.32% of IGB Corp Bhd (fundamental: 1.2; valuation: 2.2) as at April 2. The latter, in turn, owned 50.2% of IGB REIT (fundamental: 2.8; valuation: 0.5). It is noteworthy that IGB REIT currently only focuses on retail assets Mid Valley Megamall and The Gardens Mall.

Meanwhile, a search with the Companies Commission of Malaysia shows that in the financial year ended Dec 31, 2013, GTower Sdn Bhd, which owns the building assets, posted RM65.83 million in revenue and RM36.74 million in profit before tax. Total liabilities as at end-2013 were RM265.11 million, RM136.89 million of which were current liabilities. It also had an accumulated profit of RM527.59 million.

Goldis owns 80% of GTower Sdn Bhd and the remaining 20% is held by 19 other individuals and private entities.

Goldis has investments in China and in Malaysia. In the financial year ended Dec 31, 2014, the group posted revenue of RM1.29 billion, up from RM1.11 billion in 2013. Profit after tax for the full year was RM102.17 million from RM101.24 million in 2013. As at Dec 31, 2014, total liabilities amounted to RM4.79 billion, of which current liabilities amounted to RM2.87 billion. As at end-2014, it had retained earnings of RM1.24 billion.

Note: The Edge Research’s fundamental score reflects a company’s profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuations. Visit www.theedgemarkets.com for more details on a company’s financial dashboard.

This article first appeared in The Edge Malaysia Weekly, on April 6 - 12, 2015.

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