PETALING JAYA: Analysts are positive on Sime Darby Property Bhd
’s (SimeProp) proposed acquisition of Wisma Universiti Tun Abdul Razak (Wisma UniRazak).
They said the deal gave the developer a rare freehold redevelopment opportunity within the Kuala Lumpur City Centre (KLCC) corridor at a reasonable entry price.
They also said the acquisition supported SimeProp’s strategy of expanding beyond township developments into higher-value urban redevelopment projects, while strengthening its presence in one of the capital city’s most land-constrained locations.
To note, earlier this week, SimeProp accepted a binding letter of offer from its controlling shareholder, Permodalan Nasional Bhd, to acquire Wisma UniRazak for RM160mil.
The asset, sitting on a 1.46-acre freehold site along Jalan Tun Razak, comprises a 15-storey office building with one level of basement car park.
Subject to approvals, SimeProp intends to redevelop the site into a premium mixed-use development with an estimated gross development value (GDV) of RM900mil.
BIMB Research described the acquisition price as “fair”, noting that the RM160mil consideration was about 3.5% below the independent market valuation of RM165.75mil.
It added that the purchase translated into a land cost equivalent of about 17.8% of the project’s estimated GDV, which it considered reasonable for a freehold redevelopment site within the land-scarce KLCC corridor.
“We are positive on the deal as it gives SimeProp a rare freehold redevelopment site within the Jalan Tun Razak-KLCC corridor with strong connectivity,” it said.
TA Research echoed the positive view, saying the acquisition implied a land cost of about RM2,516 per sq ft.
It noted that this was higher than Paramount Corp Bhd’s recent acquisition of land off Jalan Ampang/U-Thant at about RM1,600 per sq ft, but lower than Mah Sing Group Bhd’s Corus KLCC acquisition at about RM4,019 per sq ft.
On a land cost-to-GDV basis, however, TA Research said SimeProp’s ratio of about 18% was broadly reasonable compared with Paramount’s 23% and Mah Sing’s 20%.
Assuming a plot ratio of eight times in line with the Kuala Lumpur Local Plan 2040, TA Research estimated SimeProp’s entry cost at about RM314 per sq ft per plot ratio.
This represents an 18% premium to Paramount’s transaction.
It noted that Paramount’s Jalan Ampang land had an approved plot ratio of six times, implying an entry cost of about RM267 psf per plot ratio.
