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Wednesday, May 28, 2008

KrisAssets eyes foreign properties

KRISASSETS Holdings Bhd, the owner and operator of Mid Valley Megamall in Kuala Lumpur, may inject foreign retail and commercial assets into the company.

Depending on the location and value of the assets, KrisAssets may buy the properties on its own or with a partner.

"We are always looking for opportunities to acquire. We are in negotiations with foreign parties in China, India and Vietnam. They came to us and asked us to do a joint venture," group managing director Robert Tan Chung Meng said.

TAN: We are in negotiations with parties in China, India and Vietnam

"We are able to explore opportunities in the US because of the subprime issues. Otherwise, the US was not in our radar. We are looking at completed retail and commercial properties there," he said.

Speaking to reporters after the company's annual general meeting yesterday, Tan said the company was also in negotiations with parties from Europe and the UK.

Tan is also looking at property development opportunities in these countries for IGB Corp Bhd. IGB owns 74.9 per cent of KrisAssets.

Tan added that the recently opened high-end retail component The Gardens Mall, with a net book value of RM442.37 million, will be injected into KrisAssets when it achieves profitability. The Gardens in now owned by IGB.

"The Gardens is showing a 10 to 15 per cent improvement month-on-month. This is still not to our mark, but when we are in the high-end business it will take time to grow the business ... but it will come," Tan said.

Tan who described The Gardens' occupancy as "not bad" at 90 to 95 per cent, however, said that the mall needed higher visitation and higher spending. "There is a shortfall in our targets," he said.

A bigger budget has been set aside this year to help improve The Gardens' performance and results are expected within the next two to three years.

The existing components within Mid Valley City and the addition of five-star The Gardens Hotel and two office blocks with an anticipated 30,000 to 40,000 occupants will lend support towards the performance of the mall.

According to Tan, KrisAssets takes the form of a real estate investment trust. As such, it will look at injecting The Gardens within two to three years when it achieves earnings before interest, taxes, depreciation and amortisation.

On plans to inject commercial properties, Tan said: "There are a few possibilities. We may keep KrisAssets purely as retail or we could add offices as well."

Another company may be set up to spin off the commercial properties, which could happen in 2009 or 2010.

Meanwhile, based on the current status of the Malaysian economy, Tan expects the commodity market to have a positive impact on the performance of Mid Valley Megamall.

The RM1.75 billion mall receives between 30 million and 35 million visitors annually. The company hopes to outdo the internal target set for itself.

In the financial year ended December 31 2007, KrisAssets posted a net profit of RM122.74 million on the back of RM207.09 million in revenue.

By New Straits Times (by Vasantha Ganesan)

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