Country Heights mulls setting up REIT

COUNTRY Heights Holdings Bhd (CHHB), which announced the sale of three properties worth RM800 million to pare debts, is looking at setting up a real estate investment trust (REIT) to include one of the unsold components - the Mines Waterfront Business Park.

The developer plans to set up a REIT comprising commercial properties with an asset value of at least RM500 million, either on its own or on a joint venture basis.

In June, CHHB had identified the Mines Shopping Fair, Malaysia International Exhibition and Convention Centre (MIECC) and the Mines Waterfront Business Park for sale to wipe out its debt.

In August, the company announced the proposed sale of Mines Shopping Fair to Singapore's CapitaLand Ltd for RM432 million. Yesterday, CHHB obtained shareholder approval for the sale.

"We have had a lot of interests and enquiries for the the other two (unsold) properties especially the office space. We have the option to dispose of the business park if the price is right or we may consider setting up a REIT," CHHB managing director Tan Sri Lee Kim Yew said.

"We would like to do the REIT either on our own or with partners. We are looking at a minimum of RM500 million asset in the REIT," he said following the company extraordinary general meeting yesterday.

"We have been approached by others for the reit joint venture," he added.

According to Lee, the earliest possible date when the REIT may be set up is at the end-2008.

Apart from injecting its existing or phase 1 of the business park valued at about RM130 million, CHHB is also looking at adding its second phase of business park when it is ready at the end of next year.

At RM600 per sq ft, the second phase with 350,000 sq ft of nett lettable area is valued at RM210 million.

The rental income from the first phase is about RM650,000 a month or about RM7.8 million annually.

As for the MIECC, Lee said that if CHHB is unable to fetch at least RM250 million, which is the cost price, it will continue to keep the property but add value to enhance it.

"We would like to dispose of the exhibition centre at cost or RM250 million, otherwise we will turn it around by converting the hall and adding value to it," Lee said, adding that the ground floor has been converted to accommodate retail and office space.

Meanwhile, the sale of the shopping complex will provide CHHB with an estimated gain of RM102 million.

This single sale has helped improve gearing to 0.6 times from 1.4 times and reduced interest rate on loans by half from RM50 million per year.

By New Straits Times (By Vasantha Ganesan)