Oxley Holdings is selling an office tower in Kuala Lumpur to Alliance Bank Malaysia for RM 406 million ($86 million) as the Singapore developer fights sliding revenue and higher debt costs.
Oxley has agreed to sell the Grade A office component of its RM 3.5-billion Oxley Towers KLCC flagship project to Alliance Bank, together with four strata-title retail units on the ground floor. The bank plans to relocate its headquarters to the 24-storey building when it is completed.
The disposal comes shortly after the Singapore-listed developer booked a net loss of S$85 million ($62 million) for the fiscal year ended 30 June, with the company attributing the slide from its S$7.3 million net profit a year earlier, to a 31 percent decline in revenue and a 28 percent surge in borrowing costs.
“We are honored that a prestigious bank will be acquiring our office tower and shifting their corporate office to Oxley Towers KLCC,” Oxley executive chairman and chief executive officer Ching Chiat Kwong said in a statement on Monday. “This not only demonstrates the value and desirability of our properties but also reflects our commitment to delivering highly sought after real estate opportunities to our clients.”
Flight to Quality
The strata-titled office property spans 315,711 square feet (29,330 square metres) from the sixth to 29 floors, and forms part of the Oxley Towers KLCC development, alongside two additional towers hosting a luxury hotel and upscale residences. All three buildings sit on top of a two-storey retail podium.
Including the 9,569 square feet of retail space, Alliance Bank is paying less than RM 1,250 ($264) per square foot of built area for its new HQ, which is located about two kilometres (1.2 miles) from its existing office at the 1994-vintage Menara Multi-Purpose building along Jalan Munshi Abdullah.
Oxley Towers KLCC is situated near two train stations, within a few blocks of the city’s famed Petronas Twin Towers. The project is also about eight minutes’ away from the KL Sentral transport hub and will feature a direct link to the 50-acre KLCC Park.
The entire development measures 1.9 million square feet in total and its 78-storey hotel tower, which topped out last month, will be the city’s fourth-tallest building. Construction on the complex is set to be completed next year.
Oxley said moving closer to the master-planned Kuala Lumpur City Centre, a 100-acre (40-hectare) commercial district, will help to boost the bank’s visibility. The developer also pointed to the building’s certification under Singapore’s BCA GreenMark regime for green buildings as aligning with the financial institution’s sustainability goals.
Moving to KLCC will also put Alliance Bank in close proximity to other banking giants headquartered along Jalan Ampang Road, including US lender Citi as well as Malaysia’s third-largest lender, Public Bank.
$1B in Debt
Oxley announced the sale three days after releasing its 2022 annual report, which show the company’s top line dropping to S$640 million in the 12 months ending 30 June from S$926 million a year ago, due to lower revenue recognised for its development projects in Singapore, which are all set to be completed this year, according to its latest financial statement reported in August.
Higher interest rates on its bank loans pulled down the company’s bottom line further, with finance costs rising 28 percent from a year ago to S$149 million for fiscal year 2023.
Oxley trimmed its outstanding debt to S$1.5 billion as of end-June – down S$614 million from a year earlier, while the group had S$125 million in cash and cash equivalents at the close of its financial year.
While Oxley expects hotel revenues to rebound in its home city, the firm is now doubling down on overseas development projects to bolster revenue growth.
In Malaysia, it has sold nearly half of the 857 homes at its Oxley Towers KLCC project while its Trinity Wellnessa mass market residential project just outside of Kuala Lumpur was 76 percent pre-sold as of 30 June.
“Oxley’s focus will be on overseas projects, with all of our Singapore development projects completed by 2023,” Ching said in an August statement. “Barring any unforeseen circumstances, the group is cautiously optimistic of the year ahead.”
The S$450-million property developer has built, acquired or invested in 51 projects across Singapore, Malaysia, China, Cambodia, the UK and Ireland.
This includes the 1,472-unit Riverfront Residences project in Singapore’s Hougang district, which it completed in May together with local partners KSH Development, SLB development, and Apricot Capital.