Wed, 21 Jun 2000

BCA building and other prime assets for sale

JAKARTA (JP): The Indonesian Bank Restructuring Agency (IBRA) will sell the prime Bank Central Asia (BCA) office building next month in its first attempt to dispose of the property assets surrendered by former bank owners, according to an agency official.

IBRA property specialist Bayu Utomo said on Tuesday that the BCA building, located in Jakarta's primary business district on the Sudirman thoroughfare, was one of the best property assets held by the agency.

"We will start selling an office building next month located on Jl. Sudirman and (previously) owned by the Salim Group," Bayu told a news conference.

The BCA building is one of the property assets surrendered by the Salim Group, the former owner of Bank BCA, to repay its debt to the government.

Bayu said that IBRA had to carefully select which property assets were to be sold because of the current weak property market.

He said that the sale of the BCA building was also aimed at "testing" the property market.

"We have to carefully select which property assets are to be sold. If it's not attractive it (the sale) will not be successful. We picked the BCA building because it's a good asset," he said, pointing out that the building had a high occupancy rate of about 90 percent and quality tenants.

"We want to know the response of investors," he added.

Bayu declined to disclose the offering price, saying it would be disclosed after the completion of the transaction, expected to be sometime between August and September.

Bayu said that IBRA currently controlled some Rp 112 trillion worth of various fixed assets surrendered by former bank owners.

He said that approximately 24 percent of the portfolio was in the form of stake ownership in property companies or ownership in real property.

He said that 80 percent of IBRA's property assets came from the Salim Group.

Bayu said that the disposal of the BCA building was crucial to ensure success in the selling of the agency's other property assets in the future.

He explained that for other less attractive property assets IBRA would consider combining similar property assets prior to their disposal to make them more appealing to investors.

"Property investors prefer specific kinds of assets," he said.

He said that the other strategies included a gradual disposal strategy to avoid overcrowding the market, and initial public offerings.

"In addition, IBRA will invite as many investors as possible in order to maximize competition and to attain optimal value," he said.

Bayu said that 51 percent of the property assets in the hands of the agency was in the form of township development projects.

He said the remainder included hotels/resorts, office buildings, residential estates, mixed use buildings and apartments.

He said that only the retail or shopping center subsector had started to recover from the current downturn in the property sector

But he added that there would be a strong demand for office buildings with high occupancy rates.

Bayu said that his division was expected to raise about Rp 500 billion this year to help the agency meet its target to raise Rp 18.9 trillion for the state budget.

Meanwhile, Godlip Pasaribu, IBRA official in charge of recovering housing loans transferred to the agency from closed down banks, said that the sale of the housing loans was so far successful.

Godlip said that during the first two auctions (out of seven batches for this year) the agency had raised about Rp 258.84 billion, compared to the initial target of Rp 375 billion.

He said that because of the success, the agency had raised the target for this year to more than Rp 1 trillion.

Godlip added that the sale of the third batch of some 109 units, worth about Rp 150 billion, would begin on Thursday. (rei)