This is from an old newspaper clipping in year 2017.
Many have asked why would Tan Sri Koo
spend such a hugh sum of RM480M to buy
Wisma Selangor Dredging ?
Today's post is to share with you how to analyse
deal-making from the perspective of the Big Boys.
Tan Sri Koo is more well-known in China
( for his healthcare & food products )
and is considered one of the pioneers from
Malaysia who managed to penetrate the
China market.
Locally, he is known for his O2 project in south
Puchong via his Perfect Eagle Group
As an astute businessman, it does not make
sense for him to spend such a hugh sum just
for investment purpose like a REIT for a small
Triple Net Yield ... thus the Investment Theory
is out.
Next -- the buildings are 30 years old.
If you have passed your Building Technology
subject in your Real Estate Negotiator &
Probationary Estate Agent classes, you may
have been told that a building has 2 Types of
lifespan i.e Economic and Physical
The Economic lifespan is about 30 years,
while the Physical lifespan is about 60 years
For example the building elements with the
shortest life span are the interior finishes which
last only the span of the lease, typically 5-10 years.
The roof and the mechanical systems are next
which typically last about 20 years. The windows,
wall cladding, paving surfaces and electrical
systems will typically last about 30 years.
The building structure and the floor slabs will
last as long as the are protected from the weather.
The foundations, for all intents and purposes
will last forever.
As Wisma Selangor Dredging is now 30 years,
it is more likely Tan Sri Koo plans to demolish it,
and redevelop .... after all, the Plot Ratio there
is now about 1:14 compared to 30 years ago .
( at the time of writing, the plot ratio allowed
by DBKL is only 10 )
