Where else can one buy freehold property in KL at 40% discount book value?
Let's look at the properties: 1) Menara HLA: right inside KL golden triangle, just infront of KL Convention Centre/aquaria. 2) Menara Hp: 2 minute walk to the upcoming MRT 'Semantan' station, also connected directly to SPRINT highway (linked to NKVE, federal, LDP, etc.)
Oversupply of office space in these hot areas are just temporary. Sooner or later, demand will pickup and may eventually exceed supply (at which rental can be hiked). I'm just gonna keep collecting the generous dividend while waiting for the seed to sprout.
"Be fearful when others are greedy, be greedy when others are fearful" - Warren Buffet
I hold the Reit for several years. I did some study and follow up from time to time.
TWreit has very good asset, NTA is far higher than share price. The issue is their property unable to rent out. If I am not wrong could be less than 70% currently rented (I don't have latest figure bcos I sold all some time ago). Base on my evaluation (or impression) the management team do not care too much on this business. They could have other 'more important' task to do under the group!! Maybe some of them are part time taking care of TWREIT...
KUALA LUMPUR (Sept 5): Tower Real Estate Investment Trust (REIT) has appointed Chua Song Yong @ Eusoffe Chua as its chief executive officer effective today.
The CEO post was left vacant for more than a year. Chua is replacing Teo Juhn How, who resigned on June 8, 2016 to pursue other professional interests.
In a filing with Bursa Malaysia today, Tower REIT said Chua, 39, was previously TA Global’s head of group sales and marketing and head of group leasing and property management.
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This is a positive development for TWRREIT. Imagine sailing without a 'captain' for over a year! Autopilot may be fine during good times, but we're in shaky territories these days, and a ship needs a steady pair of hands!
Remember, TWRREIT currently only has 2 commercial office properties, and practically ZERO borrowings. Lots of room for growth and improvements! The question is, where will the next asset injection come from? (TAGB or Hong Leong Group)
Tower reit should just disposed off both the buildings and distribute the proceed. The reit is not doing anything as a business and it is a waste of management time and monies having it listed.
Net intrinsic value does not equate to net asset value. Intrinsic value depends on how much returns can you get from your net assets over a period of years + net assets.
This is an interim dividend, only the 2nd quarter. TWRREIT needs to make sure that it fulfills the 90% requirement for the full year, or else be liable to 24% corporate tax.
Loss QR is because of deferred tax due to RPGT disposal >5 years tax rate changed. If the REIT does not intend to dispose, then this should be a non-issue. On the flip side, the figure you should be focusing should be the revenue which has actually gone up.
Discounted Properties. Chance to own office properties at a discounted price at RM343 psf =rm.090 (current price) X 280,500,000 (number of shares) / 735,017 (Net Lettable Area )
err... meaning 300,000 shares would be entitled to 780 square feet of space at a cost of less than RM 270,000. Would be great if those spaces are distributed then, haha... an apartment for RM 270,000 at prime area.
The innovation centre is expected to occupy 250,000 sq ft or about 65% of the total 385,215 sq ft net lettable area in Menara HLA.
Chua is optimistic that 250,000 sq ft of space to be offered by the innovation centre will be fully occupied by tenants after renovation works are completed by end-2020.
Currently, about 100,000 sq ft have been taken up by six tenants including local training academy KCOM Group and a co-working space operator.
KUALA LUMPUR (March 2): GuocoLand (Malaysia) Bhd is selling Menara Guoco in Damansara Heights here to Tower Real Estate Investment Trust (Tower REIT) for RM242.1 million cash, in a related party transaction (RPT).
Menara Guoco is a 19-storey office building which forms part of an integrated commercial development known as Damansara City, comprising another office building, a hotel, a retail mall, serviced apartments and car parks.
As at Feb 6, 2020, the building has an occupancy rate of about 97.1% and is expected to increase Tower REIT's pro forma occupancy rate for its portfolio to 59.8% from 48.1%.
Upon completion of the proposed acquisition, Tower REIT's consolidated asset base is expected to increase about 42.3% to RM814.3 million and the average building age of its property portfolio is expected to decrease to 18 years from 23.
The proposed disposal is expected to be completed by the third quarter of 2020.
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The rental market for commercial office space has been facing a glut for years now. Yield on this property is under 5% p.a.with 97.1% occupancy and they're estimating 100% loan @4.3% p.a.
I don't expect DPU to improve too much in the short-term, but it will probably help to stabilize the dividend as the other two office buildings currently have less than 50% occupancy! If you look at their last quarterly result, yields have possibly fallen below 2.5%! Menara HLA is still under renovation!
Who else wins? 1. Guocoland, as they cash-out a relatively low yield asset and lower their borrowings. 2. Hong Leong Bank, as they will probably issue the RM242m loan themselves @4.3% p.a. 3. GLM REIT Management, the REIT management company, since their earnings depend on the NAV of the properties.
Thanks for the summary and analysis @investfuture and @reitpulse. At this point, it feels like it will take a massive economic growth in Malaysia in order to for demand in office space to cover the supply. In that sense, I am not so optimistic about tower reit's immediate prospects. Maybe within another 10 years before the reit shows any improvement in its occupancy rates. Just my 2 cents.
They recently coved in Guoco tower into Tower REIT, Interesting when Damansara Pavilion completes. Will this place appreciate in value? There is an MRT connected and highways to this place. could this be the next Mid Valley ? I think they should introduce more F&B space for the offices towers. So that staff can easily eat and work. now all back to office
This book is the result of the author's many years of experience and observation throughout his 26 years in the stockbroking industry. It was written for general public to learn to invest based on facts and not on fantasies or hearsay....
tarmizixx
53 posts
Posted by tarmizixx > 2016-11-20 23:04 | Report Abuse
Where else can one buy freehold property in KL at 40% discount book value?
Let's look at the properties:
1) Menara HLA: right inside KL golden triangle, just infront of KL Convention Centre/aquaria.
2) Menara Hp: 2 minute walk to the upcoming MRT 'Semantan' station, also connected directly to SPRINT highway (linked to NKVE, federal, LDP, etc.)
Oversupply of office space in these hot areas are just temporary. Sooner or later, demand will pickup and may eventually exceed supply (at which rental can be hiked). I'm just gonna keep collecting the generous dividend while waiting for the seed to sprout.
"Be fearful when others are greedy, be greedy when others are fearful" - Warren Buffet