By NST Property/ Kathy B. - September 11, 2023
KUALA LUMPUR: Perak-based affordable housing developer Lagenda Properties Bhd said that the purchase of 3 Damansara office tower in Petaling Jaya, Selangor, is part of the company's broader corporate objective to increase recurring income from its investment portfolio.
Datuk Jimmy Doh, the company's managing director, said that the building has three other income streams besides renting.
These include advertising revenue from the front of the building, revenue from the lease of rooftop space to telecommunications providers, and revenue from the provision of utilities to tenants.
"We have done a stress test and are confident that the transaction will be a positive addition to Lagenda by way of an additional income stream," he told NST Property.
Doh said that Lagenda has not changed its direction or strategy and that the company is fully devoted to and focused on the building of entirely affordable housing.
"Our dedication to affordable housing remains unwavering and is central to Lagenda's mission. We feel we are just getting started on an exciting path, given the significant lack of affordable housing in most states, which will continue to generate strong demand in the foreseeable future. Our goal is to become the country's preferred developer for affordable housing," he said.
Lagenda had planned to offer about 7,000 houses across Perak, Kedah, and Johor this year, a major increase from the 4,800 homes launched in 2022.
The company's net profit for the six-month period ended June 30, 2023, was RM72.52 million, compared to RM97.39 million in the previous similar period, while revenue was RM377.34 million, compared to RM451.30 million earlier.
Lagenda is paying RM52 million to CapitaLand M Trust (CLMT) for the office tower, a four per cent premium over its end-of-July assessment of RM50 million.
The proposed transaction is expected to close in the first quarter of 2024.
Doh said that the current market value of the building, as estimated by an independent valuer for this transaction, is RM55 million.
"In fact, the purchase consideration is at a five per cent discount to the valuation. In comparison to other buildings in the area that are currently for sale, 3Damansara was the lowest in terms of price on a per-square-foot basis. As such, we are confident that the acquisition is a positive one for the future of Lagenda," he said.
Doh said based on the feedback received from independent experts during a technical due diligence exercise that was carried out pre-acquisition, the building is currently deemed to be in good condition.
He said that the vendor (CLMT) has agreed to provide rectification for items raised during the technical due diligence process.
Doh did not rule out the potential of a future transformation project.
He said that the company's current key focus is on optimising the building's occupancy and realising its full potential.
Doh expects to achieve an occupancy rate of at least 80 per cent within a year of completing the transaction.
Negotiations with many additional potential tenants for space in the building are ongoing.
"The building serves a dual purpose of providing a central headquarters for the company's growing workforce and sales gallery needs," he explained.
Doh said that the office tower's position is vital, as it is located between the company's key projects in Kedah and Perak, as well as upcoming large projects in Johor.
The office skyscraper is strategically located at the intersection of the SPRINT and LDP motorways. This improves Lagenda's brand awareness and repute, positions the company favourably for attracting top talent, and considerably increases foot traffic to the new Lagenda sales gallery.
"We are growing and have increased our headcount. Ultimately, in order to continue offering affordable homes to the underserved market, we must attract qualified industry expertise.
"A centralised location will enable us to accomplish this while also fostering a sense of unity among our employees and stakeholders," he said.
Source: https://www.nst.com.my/property/2023/09/953861/doh-3-damansara-office-tower-strategic-investment-build-recurring-income
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