This article first appeared in The Edge Malaysia Weekly on March 7, 2022 - March 13, 2022
SAPURA Mines, the commercial building located at Mines Resort City in Seri Kembangan, Selangor, is said to be up for sale, according to a source close to the matter. The building houses the offices of the Sapura Group of Companies, including Sapura Energy Bhd and Sapura Resources Bhd.
“It is unclear at this point how much the asking price is for the building. However, the interested parties said to be looking at it are the Social Security Organisation (Socso) and Maju Institute of Educational Development (MIED), an institution under the purview of the Malaysian Indian Congress (MIC),” the source tells The Edge.
Socso, which is under the Ministry of Human Resources, currently has its headquarters in Jalan Ampang, Kuala Lumpur.
MIED is a private non-profit organisation that owns the Asian Institute of Medicine, Science and Technology (AIMST University) in Kedah. It is unclear whether MIED is scouting for a building to set up a new university.
A Sapura Resources’ official whom The Edge contacted did not respond to a request for comment.
Another source tells The Edge that Sapura Resources has plans to move some of its offices to Permata Sapura Tower, a 52-storey skyscraper in the KL city centre area, which is a commercial space developed by Impian Bebas Sdn Bhd, a 50:50 joint venture between Sapura Resources and KLCC Holdings Sdn Bhd.
“We heard that most of the tenants of the Sapura Group will be moving to Permata Sapura,” says the source.
However, it is unclear whether Sapura Energy, which is 40% owned by Permodalan Nasional Bhd (PNB) would opt for the move to Permata Sapura or to the PNB-owned Merdeka PNB 118 tower, the world’s second tallest building, which reportedly will be ready for tenancy in the second half of this year.
Sapura Mines is owned by Sapura Resources, which is the property investment and aviation services arm of the Sapura Group of Companies. According to Sapura Resources’ annual report for the financial year ended Jan 31, 2021 (FY2021), Sapura Mines is a 10-storey office building with a net lettable area (NLA) of 260,000 sq ft. The building, which faces the lakeside and is crowned with an onion dome and clad with natural granite, was acquired in 1999.
As at FY2021, the building had a net book value of RM115.92 million, which is more than double Sapura Resources’ market capitalisation of RM48.86 million. Accounting-wise, the building is an investment property on Sapura Resources’ balance sheet, together with other properties such as warehouses with an NLA of 165,000 sq ft in Jalan Tandang, Petaling Jaya, and a commercial showroom building with an NLA of 46,000 sq ft in Jalan 219, Petaling Jaya.
The market value of the group’s investment properties, as valued by KGV International Property Consultants (M) Sdn Bhd, stood at RM189.42 million in 2021, which was 7.5% lower than a 2020 valuation of RM204.86 million.
Given the glut of offices in the country, the value of the properties is expected to decline further this year.
In response to The Edge’s questions, VPC Alliance (Malaysia) Sdn Bhd managing director James Wong says the market value of Sapura Mines is estimated to be between RM104 million and RM117 million. “Given the prevalent oversupply of offices in the market, its age and its leasehold tenure, our opinion of the market value of Sapura Mines office tower is in the range of RM400 to RM450 psf, or RM104 million to RM117 million.
“There have been no recent transactions of office buildings in the area. However, the Mines 2 exhibition, events and education centre — which comprises two blocks, one with six storeys and the other seven — has been on the market for a while, with an asking price of RM250 million.”
According to Sapura Resources’ FY2021 annual report, its largest shareholders are brothers Tan Sri Shahril Shamsuddin and Datuk Shahriman Shamsuddin with a combined stake of 51.8%, which is held via their equity interest in Sapura Holdings Sdn Bhd. Shahriman is managing director of Sapura Resources while Shahril is a non-executive director of the company.
Sapura Resources reported a wider net loss of RM160.59 million for the nine months ended Oct 31, 2021 (9MFY2022), compared with a net loss of RM17.23 million a year earlier, mainly due to an impairment for a right-of-use asset amounting to RM118 million. Revenue was relatively unchanged at RM34.27 million, compared with RM34.59 million in the previous corresponding period.
As at October last year, Sapura Resources had cash and cash equivalents of RM12.5 million, against total borrowings of RM10.8 million. Its share price had declined 30% year on year to close at 35 sen last Friday, which translates into a market capitalisation of RM48.86 million for the group.
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