Group President and CEO of Maybank Dato’ Khairussaleh Ramli (left) and PNB President and Group Chief Executive Ahmad Zulqarnain Onn at the signing ceremony.
KUALA LUMPUR: Malayan Banking Bhd
(Maybank) will move its corporate head office from Menara Maybank in Jalan Tun Perak to Menara Merdeka 118 in stages starting from the first quarter of 2025.
Maybank, South-East Asia’s fourth-largest bank by assets, signed a tenancy agreement with Permodalan Nasional Bhd (PNB) for an initial three years and renewal for a further six terms of three years per term, totalling 21 years, in the second-tallest building in the world and the tallest in South-East Asia.
As the anchor tenant of Menara Merdeka 118, Maybank has been offered naming and signage rights over the building.
According to Maybank group president and chief executive officer Datuk Khairussaleh Ramli, the group has not decided on the name of the new headquarters.
“We have to go through the process of seeking approval from the regulatory authorities, as well as other authorities to get the name approved later,” he said at a media briefing after the tenancy agreement signing ceremony with PNB president and group chief executive Ahmad Zulqarnain Onn at Menara Maybank yesterday.
Also present were PNB group chairman Tun Arifin Zakaria and Maybank chairman Tan Sri Zamzamzairani Mohd Isa.
Maybank will occupy 33 floors and is expected to house 5,900 employees in Menara Merdeka 118.
It is worth noting that Maybank’s total occupancy of 650,000 sq ft at Menara Merdeka 118 will be less than its current net lettable area of 1.09 million sq ft at Menara Maybank, in line with the group’s strategy to use workspace optimally, given its adoption of new age work practices of remote working.
“We will continue to have people working from home, as a new normal. In fact, now we only have about 80% of people back in the office.
“When we go to Menara Merdeka 118, we will have a smaller space compared to here. That means, we will continue to have people working from home,” said Khairussaleh.
Meanwhile, Maybank stated that for the first six years, the tenancy agreement translated to an effective monthly rental rate of RM8.92 per sq ft, which is lower than the gross rent (RM10.60 per sq ft) and within the fair market rates of RM8.48 and RM8.93 per sq ft as assessed by the independent valuers.
Based on this, Maybank’s effective annual rental cost would be an estimated RM69.58mil.
“We believe the amount (estimated annual rental cost) is manageable. Based on this number (estimated), it’s going to be less than 1% (of Maybank’s RM8.1bil net profit in 2021). But the goodwill that we will gain from this move will be quite sizeable, and in fact, immeasurable,” said Khairussaleh.
“We aspire to be a leading company from a sustainability point of view.
“We believe that this kind of goodwill can be reflected in our valuation, for example,” he added.
Khairussaleh pointed out that Maybank’s evaluation not only consisted of rigorous internal assessments, reviews and deliberations, which were taken to the highest levels, namely, the audit committee of the board, but also included the views from two independent international property valuers – Savills and Knight Frank.
Khairussaleh noted that since Maybank was not in the business of property development, the group saw it prudent to pursue the tenancy option while evaluating the best options for its current head office, Menara Maybank, which it owns and will become largely vacant with the move to Menara Merdeka 118.
As a result, both Maybank and PNB have signed a 10-year lease deal on a triple net basis for Menara Maybank, concurrently with the tenancy agreement for Menara Merdeka 118.
The lease deal for Menara Maybank will start in the last quarter of 2025.
Under the triple net basis agreement, PNB will be the master lessor of Menara Maybank and bear all expenses related to the building including maintenance, insurance and taxes.
Khairussaleh pointed out that the lease agreement allowed Maybank to realise rental income while deferring the disposal of Menara Maybank to a later date when the real estate market further recovered.
The agreement includes an option to sell Menara Maybank, should it add value to both parties.
“We don’t have any urgency to sell, to start with. What is important for us is to make sure that when we leave this building, there will be people who will rent this place,” said Khairussaleh.
In a statement, Khairussaleh said that as part of the evaluation for a new head office that began in 2019, the group considered several options including refurbishing the 35-year-old Menara Maybank, constructing a new head office or renting office space from a new building that already met its future operational requirements.
“We considered the cost-benefit of upgrading Menara Maybank. To do so would incur significant investments, not to mention the maintenance costs and the need to temporarily relocate our offices and employees into various locations within the Klang Valley. In addition, there would be various operational risks and business disruption to our customers,” he said.
Ahmad Zulqarnain said the leasing of Menara Maybank was a win-win solution for both parties.
“Maybank is able to transition from an owner-occupied property and relocate to Merdeka 118, while PNB will be asset managing Menara Maybank as part of its domestic core property portfolio, currently totalling 40 assets in Malaysia and 13 assets internationally,” he said.
Ahmad Zulqarnain added that PNB will leverage its expertise to manage Menara Maybank as well as source for new tenants, ensuring the building continued to generate revenue after the relocation of Maybank’s operations.
Regarding the progress in talks with Menara Merdeka 118’s prospective tenants, Ahmad Zulqarnain said, “Based on the signing today and also with other tenants where we are in advanced discussions, we expect that we are at 73% in terms of occupancy rate for the tower.”
Meanwhile, in a statement, Khairussaleh said the strategic decision to relocate Maybank’s head office was made following careful and robust deliberations of its future operational requirements.
“As we progressively embrace hybrid work arrangements and virtual office setups, we consciously want to occupy optimal workspaces in buildings that are supported by modern technology infrastructure and
environmentally progressive, in line with new global standards of sustainability in buildings,” he said.
He added that Menara Merdeka 118 was the best fit for these considerations, especially given its Multimedia Super Corridor (MSC) status and aspirations to achieve Platinum Sustainability standards.
Ahmad Zulqarnain said Menara Merdeka 118, which is due for completion by mid-2023, will set a new industry benchmark as the first building in Malaysia targeting to achieve triple green platinum certifications in Leadership in Energy and Environmental Design (LEED), Green Building Index (GBI) and Green Real Estate (GreenRE).
“With the triple green platinum certifications, Menara Merdeka 118 will be the foremost green building in Malaysia and the industry leader in sustainability in design, architecture and build.
“Our history as an independent nation began here. Merdeka 118 will honour our history by integrating culture, history, community and business in and around the precinct,” said Ahmad Zulqarnain.
