- According to news reports, Genting Malaysia Bhd (GenM) is looking for a buyer for its Wisma Genting office in Jalan Sultan Ismail. This is ahead of GenM’s move to a new office in Kampung Attap.

 - GenM is proposing a sale and four-year leaseback of Wisma Genting pending the completion of a new building in Jalan Belfield, Kampung Attap. We believe that the current rental rate of Wisma Genting is between RM4.16/sq ft and RM5.00/sq ft.

 - GenM hopes to sell Wisma Genting for RM500mil or RM1,222/sq ft.

 - We are neutral on this development.

 - We do not know the development cost of the new building in Kampung Attap. But we reckon that part of the proceeds from the disposal of Wisma Genting would be used to finance the construction cost.

 - As at end-September 2013, GenM’s gross cash stood at RM3.2bil while total borrowings were RM1.6bil.

 - In December 2009, GenM bought Wisma Genting from Genting Bhd for RM213mil or about RM520/sq ft. At that time, professional valuers valued Wisma Genting at RM277mil or RM677/sq ft.

 - Wisma Genting has net lettable area of 409,033 sq ft. The building is more than 90% occupied with the Genting Group of companies being the main tenants.

 - Maintain HOLD on GenM with an unchanged fair value of RM4.48/share.

Source: AmeSecurities