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IOI buying 101? STOP.

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A few days ago, it was reported that IOI Properties Group is looking to buy Taipei’s 101 Tower. A little too coincidental? IOI and 101? Haha. Actually, some of us might have even mistaken them to be the same word. The stake is worth RM2.74 Billion and it will allow it (IOI Properties) to own a 37% stake. The buyer is Taipei Financial Center Corp. Reason was buying it is because IOI Properties hopes that the tower would give it a stable rental income. Besides that, due to the location the potential capital appreciation is also high too. Taipei 101’s tenants include Google Taiwan, Taiwan Stock Exchange, KPMG and BNP Paribas. At one time, it was the world’s tallest tower. (Petronas Twin Towers remain the tallest twin-tower in the world today for many more years to come). The acquisition is expected to complete by first quarter of next year and IOI properties would finance it with ban borrowings and / or internally generated funds.

Property company buying a piece of real estate for stable income outside Malaysia so that it can have recurring rental income and potential capital appreciation. Besides the seller is willing to sell too. Should be straightforward? Not really. Reported in the radio, Melody FM this morning, the Taiwanese government would be stopping this sale as it involves a strategic asset of the nation. Thus, it would not allow any foreign company to own it. Imagine how would the Taiwan people react when told that their pride is actually a foreign owned building? Anyway, this is what the government said. I think there are some truths to it. Makes sense too because what if someone bought 101 and decided to turn it into a 3 star hotel instead? Can the government say no in the future if the tower already have a new owner? 🙂 Taiwan’s Finance Minister Chang Sheng-ford told parliament on Monday that the center should not be controlled by foreigners as it is a national landmark.

Personally, I would also not want foreigners to own Petronas Twin Towers. If you think otherwise, be reminded that even when Citibank was having huge issues, it remain in the hands of US because it is deemed a ‘national’ asset. So was General Motors, which faced bankruptcy and was saved a few times. So was Japanese Airlines. Every country should have their own rights to protect their own interests and I think if they insist, IOI may be forced to abort this acquisition. Taking a lower stake may not be a good option because if it’s too low, the rental income is unlikely to be big enough to contribute significantly to IOI Properties here in Malaysia. We will see how this story ends within the next few weeks. I do think IOI may get that stake they want though.

written on 9th Dec 2014

Next suggested article: Property Melaka – Today, Tomorrow and Beyond (For Investment)

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