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Saturday, January 19, 2008

YNH Property sees RM2b from tower sale

Kuwait Finance House pays record RM1,230 per square foot

DEVELOPER YNH Property Bhd expects to reap as much as RM2 billion from the sale of an office tower to foreigners, the biggest commercial property transaction in Kuala Lumpur.

YNH agreed on Tuesday to sell half of the 45-storey development to Kuwait Finance House (Malaysia) Bhd for RM920 million and is in talks to sell the rest to two foreigners at a 20 per cent premium in the next one to two months, chairman Datuk Yu Kuan Chon said.

ARTIST'S IMPRESSION OF MENARA YNH: The developer is in talks with potential buyers for the other half of the project

"There is a shortage of office space ... multinational companies, foreign banks want space" for their operations, Yu said in a phone interview late yesterday. YNH is attracting buyers because prices in Malaysia are "20 per cent that of" neighbouring Singapore, he added.

Foreign investors including Kuwait Finance and Germany's Union Investment Real Estate AG are buying commercial buildings in Malaysia amid a resurgence in demand. Kuala Lumpur's office rents have risen 12 per cent in the past year, and are ranked the sixth cheapest in the world, according to DTZ Research's Global Office Occupancy Costs Survey 2008.

Incoming supply of office space rose 19 per cent in the first half of 2007, rebounding from a 16 per cent decline in the same period a year earlier, government data showed. Occupancy rates climbed to 84.9 per cent at end-June 2007 from 84.4 per cent the year before.

On Bursa Malaysia, YNH shares rose nine sen, or 3.3 per cent, to RM2.84 at the close yesterday. The stock has risen 50 per cent in the past year, compared with the 28 per cent gain in the Malaysian benchmark index.

Perak-based YNH sold half of the development, called Menara YNH, to Kuwait Finance at about RM1,230 per square foot, a record for prime space in the capital, Yu said. It's in talks with buyers from Singapore and Hong Kong for the remaining 50 per cent of the project located next to the Shangri-La hotel, he said.

The pricing is "about 32 per cent higher than my estimates and slightly higher" than the recently transacted price in Glomac Tower within the same area of RM1,154 per square foot, said Mervin Chow Yan Hoong, an analyst at OSK Research Sdn.

The sale also "adds more certainty" to the project and will accelerate YNH's search for foreign partners to help fund the construction, Yu said. It will take about three to four years to build the project, he said.

YNH, which counts United Overseas Bank Ltd, Henderson Global Investors Ltd and Fidelity Investments among its biggest shareholders, reported a 30 per cent jump in profit to a record RM69.5 million in 2006 from a year earlier.

By Bloomberg

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