KUALA LUMPUR: The entire Menara TM development in Lembah Pantai here is up for sale at a price tag of about RM700 million.
The development consists of the 55-storey Menara TM with helipad, an adjacent office building, a 92,431 sq ft convention centre, a multi-purpose hall, a sports complex, clinics and land.
A notice was put up recently stating that Menara TM was for sale by expression of interest (EOI).
The closing date for the first stage of the sale is March 18 at 12 noon.
"Upon receiving proposals from interested parties in the first stage, there will be a due diligence and background check on the companies," said a source with knowledge on the matter.
The notice placed in a local English daily stated that the exclusive marketing agent for the sale of Menara TM is CBRE/WTW and it will be sold with 100 per cent occupancy.
Shaped to represent a sprouting "bamboo shoot", Menara TM is located along the Federal Highway, Sprint Expressway and Jalan Pantai Baharu.
The building was designed by Hijjas Kasturi Associates for Telekom Malaysia Bhd and was constructed between 1998 and 2001 by Deawoo Construction.
It was officially opened by the country's fourth prime minister Tun Dr. Mahathir Mohamad on February 11, 2003.
The building resembles the Bitexco Financial Tower of Ho Chi Minh City and the Telecommunications Tower in Montevideo.
In 2008, Telekom Malaysia sold Menara TM and it has been occupying the building on leasing arrangement since then.
The telco had entered into a conditional sale and purchase agreement and master ijarah agreement with Menara ABS Bhd (MAB) on January 2, 2008 to sell Menara TM, Wisma TM Taman Desa, Cyberjaya Complex and Menara Celcom that involved the issuance of RM1 billion of Islamic asset-backed sukuk Ijarah.
MAB is a trust-owned special purpose entity sponsored by Telekom Malaysia to facilitate the securitisation of the four properties, via a sale and leaseback or master Ijarah arrangement.
It issued three classes of sukuk namely Class A totalled RM345 million, Class B RM155 million and Class C totalled RM500 million.
Under the master Ijarah agreement, Telekom Malaysia would continue to occupy, maintain and manage the properties under a 15-year lease arrangement with MAB.
It was reported early last year that MAB was in discussion with Telekom Malaysia to buy back or lease selected properties in the portfolio for a refinancing.
However, the Covid-19 pandemic and lacklustre office market conditions had posed challenges in negotiating lease renewal and/or the disposal of the properties in the open market.
Last July, RAM Rating Services Bhd downgraded the ratings of the RM345 million Tranche A1 to A4 sukuk under MAB's RM1 billion sukuk Ijarah to "negative" from "stable".
This was due to short-term concerns in reaching a resolution on lease negotiations and disposal of the underlying properties by the legal maturity of the sukuk.
The Tranche A1 to A4 sukuk, collectively known as Tranche A sukuk, will be maturing in January 2023.
RAM Ratings said in its report that it had no concerns over Telekom Malaysia's ability to fulfil its remaining lease obligations, which would be sufficient to meet the remaining periodic distributions of Tranche A up to legal maturity.
Pursuant to Telekom Malaysia's decision to not exercise its rights to buy back unsold properties Menara TM, TM Semarak and TM Taman Desa, MAB had on behalf of the sukuk holders, in June 2021 appointed WTW Real Estate Sdn Bhd (CBRE) to plan and drive asset leasing to dispose of the unsold properties in the open market.
On May 31, 2021 the sukuk holders approved an extension of the window for Tranche C sukuk holders to exercise the option to provide special funding to MAB to fully redeem Tranche A sukuk, which was originally applicable only upon expected maturity.
RAM Ratings said assuming CBRE and MAB concluded their plans within two months from the July deadline, MAB would be left with only up to 16 months to complete the disposal of the properties.