Malaysian ex-servicemen should be happy to know that their retirement funds are being turned into very productive strategic investments, which would generate very healthy returns.
1MDB just announced that Affin Bank, a subsidiary of Armed Forces Fund Board (LTAT), has acquired a parcel with a very sweet deal in Kuala Lumpur International Financial District (KLFID). It is part of the Tun Razak Exchange (TRX) development.
Affin Bank buys TRX land for new HQ
10 AUGUST 2015 @ 6:53 PM
KUALA LUMPUR: 1Malaysia Development Bhd Real Estate (1MDB RE) has inked a deal with Affin Bank Bhd today to acquire a plot of land measuring 823,439 sq ft in the Tun Razak Exchange (TRX) to develop its new headquarters (HQ) for RM255 million.
The plot, earmarked for a 35-storey Prime Grade A office block, will bring the Affin Group’s financial services entities to co-locate under one roof and cater for the Group’s future expansion plans.
Affin Bank’s new head office would be part of TRX’s financial quarter, essentially the Central Business District of TRX that occupies the most visible corner of the site, fronting both Jalan Tun Razak and Jalan Sultan Ismail.
“We are pleased with the progress we are making in our negotiations with local and international parties, and we are happy to have Affin Bank with us as we continue to realise our aspirations to create a world-class financial district,” said 1MDB RE CEO Datuk Azmar Talib in a statement.
The Sale and Purchase agreement was signed following extensive negotiations that began in 2012, and it covers the development rights to build a commercial tower for a consideration of RM255 million.
The development will have a Gross Floor Area (GFA) of 823,439 sq ft, with the price per sq ft GFA of approximately RM310. Affin Bank’s new head office has an attractive plot ratio of 15.2, while the entire TRX district – which will boast an urban central park and amenities such as on-site water treatment system and district cooling plant – has a plot ratio of 6.8.
At a separate press conference, meanwhile, Affin Bank managing director and chief executive officer (CEO) Kamarul Ariffin Mohd Jamil said:
“We have been sourcing for a suitable location that meets our requirement, with the right price. There was a need as the bank, together with other entities within Affin Group, has been growing and we need more space for everyone under one roof.”
He added that the land has been independently valued at RM261 million.
Kamarul Ariffin said Affin will pay 10 per cent deposit for the acquisition and the remaining 90 per cent upon presentation of the registration title.
Read More : http://www.nst.com.my/node/95573
The parcel came with a planning and development order of 15 times plot ratio, easily double the average plot ratio usually granted for land deals being flipped in the city. Affin’s plot ratio translates to the gross buildable area of 823,000ft. That should arrive to a net lettable area of 576,000 sq. ft.
At the expected average rental rate of RM10.00 psf/month four years from now, the property should realise a revenue in the neighbourhood of RM70 million per annum. That is effective 12% return on investment.
Considering that presumably the property would remain in the hands of the LTAT and an annual growth of 10% per annum in rental income and appreciated value, LTAT would tend to aggregate the absolute and paper gain in the neighbourhood of RM8.2billion within half a century.
That could be pro-rated to RM164million per annum.
This investment would definite add on top of the RM1billion profits that LTAT is making per annum, lately. The value of LTAT assets would definitely increase too, adding to the RM9.4billion which stands at the moment.
At the moment, each contributor to LTAT earns 15% dividend and 7% in bonus, plus another 1% bonus and 7% special bonus in the form of unit trusts to active members.
This is befitting to the call for those in the army to soldier on, “Biar putih tulang, jangan putih mata!“. It very much translate to ‘Who dares, win’.
Definitely the BoD of Affin Bank and LTAT did dare to commit into this strategic investment and not be clouded with anything else but to focus on the business at hand.
Affin Bank did get a sweeter deal as compared to Tabung Haji, which was more focused on developing a totally syariah compliant investment.
There is no reason for servicemen and ex-servicemen to doubt their welfare post-retirement from active service. This sweet deal is the Malaysian Government’s way of expressing a nation’s debt of gratitude to their sacrifice.