Saturday November 3, 2007
The Star By SHANNEN WONG
PETALING JAYA: Glomac Bhd’s joint venture (JV) company Glomac Al Batha Sdn Bhd received an attractive offer price of RM577mil for its 40-storey Glomac Tower next to Petronas Twin Towers, said AmResearch.
“An earnest deposit of 2% of the purchase consideration has been paid by Prestige Scale Sdn Bhd,” it said, adding that the company’s details were not disclosed. The building, on which construction will start next year, sits on a 57,025 sq ft piece of land Glomac bought in November last year for RM1,000 per sq ft (psf), it said. According to the report, the plot ratio obtained by Glomac was 12 times, hence using an efficiency ratio of 75%, the average selling price for Glomac Tower worked out to be circa RM1,120 psf, noting that this was a new benchmark for office space. Analysts believe that the sale would have a positive impact on Glomac, seeing that it would free some working capital for Glomac, given the potentially high development cost, and the attractive selling price of around RM1,000 psf when there is no guarantee that the buoyant office cycle would hold up when the building is completed by 2011. Assuming the rental cycle for prime office space in Golden Triangle holds at RM7 psf and a service charge of RM1.50 psf, the capital rate is circa 7%, said AmResearch. Glomac Al Batha Sdn Bhd is a 51%: 49% JV between Glomac and Al Batha Group from United Arab Emirates. It was set up to jointly develop Glomac Tower, AmResearch said. However, the research house is retaining its “hold” recommendation on Glomac with an unchanged target price of RM1.46, based on 15% discount to its net asset value estimates. Meanwhile, another research house said the sale of Glomac Tower at RM577mil, which would be completed by year-end, is 15% higher than the research house’s projected gross development value (GDV) of RM500mil, although it was 4% lower than the management’s target GDV of RM600mil. It added that the variance was largely due to the research house’s conservative assumptions on the project’s plot ratio of 10, compared with Glomac’s targeted 13.
The research house is maintaining its market perform rating on the stock. Based on Bloomberg consensus, TA Securities Holdings Bhd and ECM Libra Avenue Bhd have a “buy” call on the counter, with a target price of RM2.10 and RM2.00 respectively.
