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Tuesday, December 30, 2008

YTL awaits to launch second big REIT

YTL Corp Bhd , which has said it is buying into a Macquarie-led real estate investment trust (REIT) listed in Singapore, intends to launch a second REIT in Malaysia with assets worth more than RM1 billion when the market improves.

The proposed REIT, which is still in the early stages of planning, will be a collection of luxury hotels and resorts under the YTL stable, executive director Datuk Mark Yeoh Seok Kah said.

"We are looking at a hospitality REIT. The equity market now is going through a shake-up. We are studying the proposal and opportunities. We will consolidate our properties before planning the REIT," he told Business Times in an interview in Kuala Lumpur.

Yeoh did not indicate when the REIT might be launched, but ruled out next year.

The REIT, to comprise more than three assets, will be bigger than the Starhill REIT, launched in 2005 and the biggest of its kind in the country then.
Starhill REIT comprises the Starhill Gallery, Lot 10 Shopping Centre and JW Marriot Kuala Lumpur in the prime Bukit Bintang area. It raised RM523.4 million from the listing exercise.

The country's biggest builder, through its hospitality arm YTL Hotels & Properties (YTLHP) Sdn Bhd, is involved in both ownership and management of properties that are a stellar collection of internationally renowned, award-winning resorts, hotels and spas.

Its 100 per cent-owned properties are the Cameron Highlands Resort; JW Marriot; Spa Village Resort Tembok Bali in Indonesia; Villa Tassana in Phuket, Thailand; and Bray House, Berkshire in the UK.

YTLHP has stakes in the Majestic Malacca; The Chedi in Phuket; Vistana Hotel in Kuala Lumpur, Penang and Kuantan; Tanjong Jara Resort in Terengganu; and Eastern and Oriental Express luxury train.

"Most of our hotels and resorts have been paid off, or are in the process of being paid off. They have been refurbished, so we have a total portfolio of new hotels and resorts which are good to be REIT-ed.

"We will continue to build YTL," Yeoh said.

YTL is planning to acquire hotels and resorts from next year, which it may include in the REIT, he added.

In October, YTL announced that it was buying a 26 per cent stake in the Singapore-listed Macquarie Prime REIT (MP REIT) and 50 per cent of Prime REIT Management Holdings Pte Ltd from Macquarie Bank Ltd for S$285 million (RM686 million).

MP REIT, which will be rebranded as Starhill Global REIT when the acquisition is completed early next year, has a market capitalisation of S$516 million (RM1.2 billion) and owns more than RM5.2 billion worth of prime retail and office properties in Singapore, Japan and China.

By Business Times (by Sharen Kaur)

Two YTL Corp resorts, hotel set for launch

YTL Corp Bhd is set to launch two resorts off the coast of Sabah, and a hotel in the Klang Valley for RM200 million by early next year.

"We will launch from February next year, pending local authorities' approval," executive director Datuk Mark Yeoh Seok Kah said.

While the hotel will be called Majestic Kuala Lumpur, the names of the resorts have yet to be finalised, he said.

Yeoh said the resorts are exquisite as each will be located on Pulau Gaya, which is the largest island in Tunku Abdul Rahman Marine Park and the closest to downtown Kota Kinabalu, and Pulau Tiga, which has been dubbed Survivor Island due to the popular television show.
"Despite the current financial turmoil, we are optimistic the properties will perform well. We launched Spa Village Resort Tembok Bali in 2007 and Majestic Malacca this year. And, both have done well," Yeoh told Business Times in an interview.

Yeoh said the idea to launch the properties is to grow the sales and assets of its hospitality arm, YTL Hotels & Properties (YTLHP) Sdn Bhd.

He said the three new properties will be parked under YTLHP, which wholly owns five properties in Malaysia, Bali, Phuket and the UK.

YTLHP has also stakes in seven other properties, a bulk of which are located on Malaysian land.

The company manages all the 12 properties, including Pangkor Laut Resort in Perak and The Ritz-Carlton KL, which are majority-owned by the Yeoh family.

Last year, YTLHP made RM150 million in sales.

It expects revenue to be flat this year due to the effects from a global financial meltdown, said Yeoh, who is also YTLHP executive director.

"Earnings were affected but we had a positive effect from what took place in Mumbai, and in Thailand. The pick-up has been strong but next year is a very difficult year to predict. The booking pattern has shifted to last-minute confirmation," he said.

Yeoh said YTLHP's net profit and revenue have been growing steadily by 20 per cent year-on-year and it will aim for growth again next year.

"We are anticipating some downturn in 2009 but if flights and accessibility can increase, there will be a chance for us to grow our fair share. Whatever happens next year, YTLHP will not lower room rates as it will take time to bring the rates back upwards," he said.

Yeoh said the company will do some yield management and cost enhancement to improve profitability. The biggest cost in the last two years, he said, had been energy and fuel.

YTLHP, which employs over 2,000 people, will not be hiring next year.

By Business Times

Year of reckoning for luxury condos

There is recent evidence that higher-end landed properties in well-established locations could potentially outperform the overall property cycle in times of adversity, says OSK Research.

“This 'hedging' opportunity, stems from the hypothesis that the fast-rising 'baby boomers' of the 50s, who tend to be more affluent but risk-averse, are likely to hedge their wealth in mid- to high-end landed properties during uncertain times,” the research house said in its daily report today.

“Given that households are still flush with liquidity, this age group is unlikely to plough all the wealth back into the banking system given the low deposit rates amid the high inflationary environment,” it added.

Nonetheless, as all the market players are still trying to assess the severity of the potential collateral damage from the global financial crisis on Malaysia’s real economy, it said most home buyers are likely to stay on the sidelines for a while and may not return until the second half of next year.
OSK Research said 2009 will be a year of reckoning for luxury condos.

It has estimated that more than 5,000 units of luxury condos priced more than RM400 per square feet would come on stream in the Klang Valley by late 2008 and another wave of more than 5,000 units is expected to hit the market in 2009 before easing slightly to more than 2,000 units in 2010.

“Notwithstanding the risk of diminishing demand, these waves of incoming supply at about the same time, will severely depress rental yield by late 2008 and going into 2009/2010,” it explained.

By Bernama