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Monday, January 25, 2010

Kuwait Finance eyes more high-end KL properties

Kuwait Finance House (Malaysia) Bhd (KFHMB) is looking to buy Grade A commercial buildings and residential towers in Kuala Lumpur.

"KFHMB prefer properties in the KLCC area. There are a few going below market value. Any transactions by KFHMB will be done outside of the bank's balance sheet," a source said.

He said KFHMB will set up a special real estate fund or entity to invest here, similar to what it did when it bought Glomac Tower and The Pearl @ KLCC.

KFHMB has a proprietary equity interest in KFH Reetaj Sdn Bhd, the holding company of Prestige Scale Sdn Bhd, which bought Glomac Tower in late 2007 from Glomac Bhd, for RM577 million.

Reetaj is 81 per cent and 19 per cent held by its parent KFH and KFHMB, respectively.
The Pearl, a 41-storey condominium, was bought by Flora Bliss Development Sdn Bhd, a consortium led by KFHMB for RM550 million in 2008, from Ceramic Home Tiles Sdn Bhd, linked to Malton Bhd.

On KFHMB's move to not proceed with the purchase of half of YNH Tower on Jalan Sultan Ismail for RM920 million, the source said the plan was aborted as the parameters had changed along the way.

"From day one that we looked into the deal until now, there were a lot of variation. There were certain conditions that we stipulated, which were not met within the transaction," he said.

The source said KFHMB intends to continue to participate in property development in Malaysia through various means.

KFHMB may buy shares in the property development company, or provide financing for the construction of the project. It may also provide Mudharabah and Musyarakah, akin to the underwriting of sale, or buy the building like it did for Glomac Tower and be a master lessor.

Besides Glomac Tower and The Pearl, KFHMB has invested in Pavilion KL, Avare and The Oval in Kuala Lumpur, Sunway South Quay in Bandar Sunway and The Sanctuary Penang.

KFHMB had entered into a Musyarakah agreement with a fund to underwrite/purchase two residential blocks at Pavilion KL.

The developer, Kuala Lumpur Pavilion Sdn Bhd, a unit of Malton Bhd, was paid according to the progress of the project during construction. The condominiums were later sold for capital gains.

According to KFHMB director for real estate advisory, Siti Mariam Mohd Desa, there are no plans to sell Glomac Tower.

"We are going to lease the building to multinational companies. We want a good range of tenants but it will all depend on the market," she told Business Times in a telephone interview.

On talks that Glomac Tower will be renamed Kuwait Finance Tower, she said it has not been decided.

By Business Times (by Sharen Kaur)

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