KUALA LUMPUR (Sept 12): Malayan Banking Bhd's (Maybank) decision to move its head office to Menara Merdeka 118, which has high sustainability standards, is expected to enhance the bank's brand visibility, said Maybank group president and chief executive officer Datuk Khairussaleh Ramli.
"We went through a very robust process, taking into account options. [At the] end of the day, we have to appreciate that this building is 35 years old," said Khairussaleh, when asked whether the bank's decision to move to Merdeka 118 is to help fill up the tower, given the glut of office space in the Klang Valley.
"Yes, people may say that there is this external constraint. But we [at] Maybank, we have done all the math, and we have looked at how we should protect our interest, in making sure that we have tenants in this building (Menara Maybank) before we move on. That is our commitment and responsibility," he said after signing the tenancy and lease agreement with Permodalan Nasional Bhd (PNB), which owns Merdeka 118.
Under this agreement, Maybank will occupy 33 floors of Merdeka 118, taking up 650,000 square feet for an initial monthly gross rent of RM10.60 per square foot for the first six years with subsequent adjustments for inflationary costs.
This compares to the current net lettable area of 1.09 million square feet at Menara Maybank.
The tenancy agreement will span 21 years, with an initial term of three years and renewals for further six three-year terms.
Meanwhile, Malaysia's largest bank will lease Menara Maybank in Jalan Tun Perak to PNB for a 10-year period, for a minimum annual RM12.1 million on a triple net basis, meaning all expenses of Menara Maybank, including maintenance, insurance and all taxes are to be borne by PNB.
This would translate into a monthly effective rental rate of RM8.92 per square foot for Maybank's new headquarters, or about RM69.58 million a year based on 650,000 square feet in Merdeka 118.
"For us to upgrade this building (Menara Maybank), to make it a platinum building and consistent with our aspiration [towards] sustainability, it is going to cost a lot of money. We have to refurbish this, move out, and then come [back] in, that is one perspective," said Khairussaleh.
Khairussaleh also said the amount of rental is small when it is compared with the group's over RM8 billion annual net profit.
"But we think that it's about the goodwill of having such a high-profile building. It is not just about dollar and cents, it is about profiling Maybank. We are the biggest bank in Malaysia, and No 4 in Asean. We aspire to be a leading company on sustainability point of view," he said.
"We believe that the amount [of rental] is manageable. It is a small portion of our total profit [per] year, but the goodwill that we will gain from this move is quite sizeable and in fact immeasurable," he added.
As Maybank will be the anchor tenant of Merdeka 118, the group is offered naming and signage rights over the world's second tallest building.
PNB president and group CEO Ahmad Zulqarnain Onn, who was present at the signing ceremony, said with Maybank on board, Merdeka 118 will have 70% occupancy once it is completed by the end of this year.
"Globally, high-quality companies are looking to relocate to high-quality buildings that exhibit the highest level of sustainability and ESG (environmental, social and governance) standards. Many large companies embrace net-zero commitments. They need to think about what their office represents as well.
"We see a big trend [in] companies making net-zero commitments, relocating [to] high-quality buildings with high ESG standards. By far, Merdeka 118 represents that. That is one key driver when we look at our portfolio of real estate, that a lot of companies are looking at how sustainable it is for a building, and whether it fulfils their commitments," he said.
For Menara Maybank, Ahmad Zulqarnain said PNB's first objective is to maintain its purpose as an office building while it seeks new tenants or buyers to occupy the 35-year-old property.