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Tuesday, December 4, 2007

BCHB in leaseback deal

PHBB to buy Menara Bumiputra-Commerce for RM460million

KUALA LUMPUR: Bumiputra-Commerce Holdings Bhd (BCHB) has entered into an agreement for the sale and leaseback of Menara Bumiputra-Commerce, the group's new 39-storey retail banking headquarters being built along Jalan Raja Laut here, to Pelaburan Hartanah Bumiputera Bhd (PHBB).

The building, scheduled to be completed in August, is being sold for RM460mil, or RM730 per sq ft, to PHBB.

BCHB expects cost savings of RM7.5mil per annum in part from the use of the new building.

From left: BCHB chairman Tan Sri Md Nor Md Yusof, Kamalul Arifin, Second Finance Minister Tan Sri Nor Mohamed Yakcop, CIMB group chief executive Datuk Nazir Razak. At the back is BCHB executive director Tunku Datuk Ahmad Burhanuddin

BCHB executive director Datuk Mohd Shukri Hussin said the cost savings would come from CIMB Bank, the group's banking arm, moving its operations from areas of high rental costs to its new building.

“Together with our building to be built in KL Sentral, CIMB group will in future be able to conduct our business from two major locations to increase efficiency and lower costs,” Shukri said at the signing of the agreement yesterday.

The sale would also allow CIMB Bank to write an additional RM3.6bil in new loans, he added.

In his speech, Shukri said the group decided to build Menara Bumiputra-Commerce three years ago to house its scattered retail banking operations in one location.

BCHB's strategy going forward was to be asset light and employ its capital efficiently towards the core business of banking, he said.

CIMB Bank was also pleased to have PHBB as a partner as it could be expected to be a “buy and hold investor” for the building, with a long-term commitment as landlord to CIMB.

“This is also an opportunity for CIMB to form a long-term relationship with PHBB, and to explore areas in which we can create synergies through working with each other,” Shukri said.

PHBB managing director and chief executive officer Kamalul Arifin Othman said: “This represents a sound investment for PHBB. For one, we are assured of a steady rental income from CIMB Bank, a tenant with strong credentials and solid financials.”

In the deal, CIMB Bank would lease the building for an initial 10 years with options for another five years plus five after that.

PHBB, wholly-owned by Yayasan Amanah Hartanah Bumiputera, was incorporated in May 2006 by the government to encourage bumiputra ownership of commercial properties in prime locations in major cities in Malaysia.

Set up just over a year ago, PHBB's landbank stood at almost 1,300 acres in the Klang Valley and Penang with a market value of about RM1.5bil, including yesterday's purchase, Kamalul Arifin said.

The agency would be expanding into Malacca and Johor Baru, he said, adding: “We still have some substantial amount of money to invest.”

By The Star

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