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Friday, March 18, 2011

SP Setia net profit jumps on property projects

PETALING JAYA: SP Setia Bhd’s earnings rose 62.41% to RM62.03mil for the quarter ended Jan 31 versus a year earlier, on property development activities in the Klang Valley, Johor Baru and Penang.

The company’s revenue climbed 42.59% to RM518.88mil.

SP Setia told Bursa Malaysia that the current period’s proft after-tax was arrived at after expensing approximately RM6mil for employees share options for the scheme launched in May 2009 with a further RM16mil for the cost of financial incentives pursuant to the successful 5/95, Best for the Best and Invest Setiahomes campaigns.

By The Star

Abandoned RM600m Klang project gets white knight

The RM600 million Intania commercial project abandoned three years ago in Klang, Selangor, will be revived this month.

The project, now called 1Gateway Klang, will be developed by turnkey contractor Erajuta Sdn Bhd, a unit of Sagajuta (Sabah) Sdn Bhd.

Port Klang Authority, the land owner, has approved and endorsed Erajuta as the white knight in December 2010, to complete the development.

Intania, a joint venture between Port Klang Authority and Dermaga Suasa Sdn Bhd, controlled by Tan Sri Megat Najmuddin Megat Khas, stopped in 2006 following a dispute between both parties on privatisation matters.

The project was awarded to Dermaga Suasa in 1999 by the Economic Planning Unit through a privatisation agreement with the Port Klang Authority.

When the project stalled, only 13 units of four to six storey shoplots were sold and built while 16 units of 3-storey shoplots were left half way during construction.

"There were some impairs in terms of settlement and that has been resolved.

"We will submit all relevant documents and plans to the authorities soon," said Sagajuta managing director and executive chairman Datuk Raymond Chan.

Chan told reporters in Klang yesterday that the concept for the project will change to be market driven.

Previously, the project was to feature medium to high-end apartments, serviced apartment, shoplots and an office tower.

The new plans will comprise the 4-star Novotel hotel, a 31-storey office tower, a hypermarket, duplex shops, shoplots, a 3,000-bay carpark and a food hub.

By Business Times

Karambunai unit inks agreement with China Central Asia

PETALING JAYA: Karambunai Corp Bhd's wholly-owned subsidiary, Karambunai Resorts Sdn Bhd, has signed a joint venture agreement with China Central Asia Group Co Ltd (CCAG) to develop the RM1bil first phase of the Karambunai Integrated Resort City (KIRC) in Kota Kinabalu.

Karambunai Corp told Bursa Malaysia yesterday that CCAG would inject a seed capital of US$100mil as a revolving fund to develop about 3,000 units of low and medium high rise residential buildings. The fund also covers the development of a commercial beachfront centre on 75 acres owned by Karambunai Resorts.

A subsidiary to be incorporated later by Karambunai Resorts will be entitled to 50% of the net profit while CCAG will take the rest.

KIRC, which will include tourism, health and eco-nature edu-tainment recreation facilities, is to be developed over eight years starting from next year.

By The Star

EPF buys third London property for £148mil

PETALING JAYA: The Employees Provident Fund (EPF) has bought a commercial building in central London from Union Investment for £148mil. It marks the EPF’s third property investment there since announcing an allocation of £1bil for British property purchases, Savills Rahim & Co said.

EPF confirmed the deal.

Union Investment, a Germany-based fund, is one of Europe’s leading asset managers for private and institutional clients.

EPF, in just seven months of unveiling the buy-British plans in August, has spent £485mil of the £1bil allocation.

The central London and international team of London-based property consultancy Savills handled the sale of the 225,000-sq-ft office building, Whitefriars.

The building is located at 65, Fleet Street, London EC4. It is currently used by law firm Freshfields Bruckhaus Deringer as its headquarters until 2021. It has a yield of 5.75%.

EPF’s other two property purchases are One Sheldon Square in Paddington Central, which was bought for £156mil, and 40 Portman Square near Oxford Street which was acquired for £180mil. The two properties have yields of 5.75% and 5.55% respectively.

Notable buildings close to Whitefriars include Goldman Sachs’ campus HQ (Peterborough Court & River Court), Deloitte’s headquarters, Land Securities’ development at New Street Square and the Royal Courts of Justice.

Whitefriars was developed by Kumagai Gumi and completed in November 1989. It provides approximately 232,825 sq ft of net internal air-conditioned office, retail and public house accommodation in two office buildings, as well as 24-car parking spaces.

The space benefits from excellent natural light and the upper floors overlooking central London, River Thames, the London Eye and the Houses of Parliament. In property jargon, it was developed to Grade A specification.

The purchase is part of EPF’s strategy to diversify its portfolio of income-generating assets and to increase its exposure to the property sector.

So far, equities have been its largest contributor, representing 45.45% of the fund’s total gross investment income.

Last year, EPF’s gross investment income reached a historial high of RM24bil, of which RM11bil was earned from equities, and RM103mil from property and miscellaneous income.

On the possibility of buying properties in Australia, a source close to EPF said this “may be in the pipeline in the future. But we are focused on UK right now.”

The prime central London market has been recovering strongly since the first quarter of 2009. Prime yields are currently around 4% in the West End and 5.25% in the City, compared with about 3.5% and 4.25% respectively prior to the crash in 2007.

Said a Savills source: “With greater demand than supply, we anticipate that prime yields may be sustained, if not compress slightly more.

“Demand for assets is being driven largely by overseas investors attracted to the UK due to the high-quality assets, tenants, long leases, landlord bias legal structure and upward only rent reviews, as well as, historically low interest rates, weak pound sterling and strong rental growth projections over the short to medium term.

“In terms of the prime markets outside London, the recovery is slower while the secondary/tertiary markets remain volatile,” the source said.

By The Star