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Friday, August 22, 2008

IOI Corp wins bid for Menara Citibank?

KUALA LUMPUR: IOI Corporation Bhd is believed to have succeeded in its bid to purchase Menara Citibank from Citigroup-associated Inverfin Sdn Bhd. Sources said IOI Corp would buy the building for RM800 million after outbidding two others.

While details weren't available at press time on the identity of the other two bidders, a local media report last week said they included a "private equity fund and a Korean fund". The building would likely fetch between RM1,000 and RM1,200 per sq ft, the news report said.

Inverfin's major shareholders are Citigroup's unit Menara Citi Holding Company Sdn Bhd (50% stake), Singapore property developer CapitaLand Ltd (30%) and Amsteel Sdn Bhd (20%).

The CapitaLand website stated that the 50-storey freehold Menara Citibank had a net lettable area of 69,379 square metres (746,789 sq ft) as at Dec 31 last year.

According to Malaysian Rating Corporation Bhd's (MARC) Structured Finance Quarterly Ratings Actions, Reviews and Outlooks - 3Q07, Menara Citibank was at that time 99% occupied with average occupancy rates in excess of 90% since 2002.

Using a discounted cash flow valuation approach, MARC said its assessed capital value for the property was RM398.7 million, a 13% downward adjustment from its market value.

"The strong occupancy levels and increases in rental rates are reflected in the property's average operating profit of about RM28.1 million per annum over the past five years," MARC said in the report.

The ratings agency also said in its report that Citibank Bhd was occupying 42.7% of the total net lettable area of the building. It is understood that Citigroup will retain its Malaysian branch offices at Menara Citibank and will lease the space from the new owner.

Inverfin's principle activities are limited to property investment and office management of its sole property Menara Citibank, according to the MARC report.

By The EDGE Malaysia (by Sharmila Ganapathy)

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