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Saturday, January 19, 2008

YNH plans more land buys with tower sale proceeds

KUALA LUMPUR: YNH Property Bhd will use the RM920 million proceeds from selling 50% of the upcoming Menara YNH in Kuala Lumpur to buy more prime Klang Valley sites, a move which may see the Perak-based developer incur more borrowings.

YNH head of corporate services Daniel Chan said the firm planned to buy more land along Jalan Sultan Ismail, Jalan Bukit Bintang and within the Mont’ Kiara enclave. “We are eyeing these areas, and talks are on-going. We will borrow if neccessary,” he told the The Edge Financial Daily yesterday.

YNH’s land bank in Malaysia includes 13.2ha in the Klang Valley, and 440ha in Perak’s Manjung district where the developer’s RM3.12 billion Bandar Manjung Point township sits.

The company announced on Tuesday that Kuwait Finance House (Malaysia) Bhd (KFHMB) is purchasing the 50% interest of the 45-storey Menara YNH, located on a 1.2ha feeehold tract along Jalan Sultan Ismail.

At RM920 million, the sale involving an area of 750,000 sq ft works out to some RM1,230 per sq ft. The price is about 10% above the RM1,120 per sq ft KFHMB and local property investor Prestige Scale Sdn Bhd paid for the 36-storey Glomac Tower in the Kuala Lumpur City Centre.

The remaining 50% of the tower will also be sold to foreign buyers, Chan added, without eloborating. Upon finalising the sale of the entire building, YNH stands to rake in some RM1.84 billion, he said.

“Menara YNH’s selling price is a new high, and a major catalyst for YNH’s future earnings” said an analyst. But the sale proceeds should first be channelled to the development of Menara YNH, and subsequently for YNH’s future land purchases, he added.

It is learnt that YNH may rope in a partner to build Menara YNH from which the developer is targeting a 15% operating profit margin, based on the RM920 million price tag.

In December 2006, YNH and Singapore’s CapitaLand Ltd had signed a memorandum of understanding (MoU) to jointly build Menara YNH on a 60:40 shareholding basis.

Construction of the building, initially valued at around RM800 million, was originally planned to begin in mid-2007 and scheduled for completion by end-2011.

However, the YNH-Capitaland collaboration was terminated in June 2007 as certain conditions under the MoU could not be fulfilled, resulting in YHH undertaking the task on its own.

YNH’s net profit for the nine months to Sept 30, 2007 rose 25% to RM66.3 million from RM52.9 million a year ago. However, revenue declined 2% to RM181.6 million from RM184.4 million.

Shares of YNH dipped 10 sen to close at RM2.75 yesterday with some 4.9 million shares traded.

By The EDGE MALAYSIA - (The Edge Financial Daily) -

YNH Property sees RM2b from tower sale

Kuwait Finance House pays record RM1,230 per square foot

DEVELOPER YNH Property Bhd expects to reap as much as RM2 billion from the sale of an office tower to foreigners, the biggest commercial property transaction in Kuala Lumpur.

YNH agreed on Tuesday to sell half of the 45-storey development to Kuwait Finance House (Malaysia) Bhd for RM920 million and is in talks to sell the rest to two foreigners at a 20 per cent premium in the next one to two months, chairman Datuk Yu Kuan Chon said.

ARTIST'S IMPRESSION OF MENARA YNH: The developer is in talks with potential buyers for the other half of the project

"There is a shortage of office space ... multinational companies, foreign banks want space" for their operations, Yu said in a phone interview late yesterday. YNH is attracting buyers because prices in Malaysia are "20 per cent that of" neighbouring Singapore, he added.

Foreign investors including Kuwait Finance and Germany's Union Investment Real Estate AG are buying commercial buildings in Malaysia amid a resurgence in demand. Kuala Lumpur's office rents have risen 12 per cent in the past year, and are ranked the sixth cheapest in the world, according to DTZ Research's Global Office Occupancy Costs Survey 2008.

Incoming supply of office space rose 19 per cent in the first half of 2007, rebounding from a 16 per cent decline in the same period a year earlier, government data showed. Occupancy rates climbed to 84.9 per cent at end-June 2007 from 84.4 per cent the year before.

On Bursa Malaysia, YNH shares rose nine sen, or 3.3 per cent, to RM2.84 at the close yesterday. The stock has risen 50 per cent in the past year, compared with the 28 per cent gain in the Malaysian benchmark index.

Perak-based YNH sold half of the development, called Menara YNH, to Kuwait Finance at about RM1,230 per square foot, a record for prime space in the capital, Yu said. It's in talks with buyers from Singapore and Hong Kong for the remaining 50 per cent of the project located next to the Shangri-La hotel, he said.

The pricing is "about 32 per cent higher than my estimates and slightly higher" than the recently transacted price in Glomac Tower within the same area of RM1,154 per square foot, said Mervin Chow Yan Hoong, an analyst at OSK Research Sdn.

The sale also "adds more certainty" to the project and will accelerate YNH's search for foreign partners to help fund the construction, Yu said. It will take about three to four years to build the project, he said.

YNH, which counts United Overseas Bank Ltd, Henderson Global Investors Ltd and Fidelity Investments among its biggest shareholders, reported a 30 per cent jump in profit to a record RM69.5 million in 2006 from a year earlier.

By Bloomberg

RM12m facelift for Grand Continental hotels

STAYING COMPETITIVE: The hotels will be installed with new upholstery, paintings and wi-fi services, among others

GRAND Hotels International Asia Pacific, which operates the Grand Continental chain of hotels in Malaysia, is spending close to RM12 million in a refurbishment exercise.

Work to install new upholstery, paintings, and lobby refurbishment at all nine of its hotels throughout the country is expected to start next month and will be completed in six months.

The group operates hotels in Kuala Lumpur, Kuching, Kuala Terengganu, Penang, Kuantan, Malacca, Alor Star, Langkawi and Kuantan.

Hotel Grand Continental Penang manager Dennis Cheng said the refurbishment exercise was to enhance its competitiveness and corporate image.

"The hotel industry is very competitive, so we need to better our image to remain competitive," he said yesterday after announcing that every Grand Continental Hotel in the country now had wireless-fidelity (wi-fi) service for guests.

Cheng said about RM1 million had been spent to install the infrastructure needed for the service. Work to install the equipment started in August last year and was completed in five months.

"Guests can now have access to the Internet anywhere within the hotel," he said, adding that the fee was RM10 per hour.

On the occupancy rate, Cheng said Grand Continental hotels nationwide enjoyed an average of 80 per cent occupancy rate last year, up from 60 to 70 per cent in 2006.

"We expect to maintain the current occupancy rate of 80 per cent this year," he said.

By New Straits Times (by Aaron Ngui)

RM300m commercial centre to enliven Lahad Datu

A RM300 million commercial centre, called Palm City Centre, will be built on 23.5ha just outside the Lahad Datu town centre in Sabah.

It is a joint venture between the Sabah Housing and Town Development Authority and Renofajar Sdn Bhd.

Renofajar managing director Chris Pang said the project will complement Lahad Datu's image as a rising economic region once the state's Palm Oil Industrial Cluster (POIC) is fully operational.

He said Lahad Datu was still underdeveloped commercially, with only two major supermarkets located in different parts of the town.

At a press conference recently, Pang said the project will include an eight-storey shopping complex, hotels, 350 retail shops and a two-storey wet and dry market.

The centre is adjacent to the Lahad Datu Sports Complex and in the middle of the Sandakan-Tawau road. The first phase will be completed within two-and-a-half years.

By New Straits Times (by Julia Chan)

Meda to sell The Summit Subang for RM260m

MAJORITY shareholders of property developer Meda Inc Bhd bulldozed their way for the sale of its well-performing mixed commercial complex at the company's extraordinary general meeting (EGM) yesterday.

The Summit Subang USJ in Subang Jaya will be sold to AmFirst Real Estate Investment Trust for RM260 million after majority votes approved the sale.

However, some minority shareholders met by reporters outside the EGM held at The Summit Hotel said they had voted against the sale of the commercial complex because the asset provided value to the company.

With current occupancy of the office tower at 100 per cent, the hotel at 64 per cent, and the retail complex at 93 per cent, the complex generates a gross annual income of RM36.12 million.

These shareholders also voiced their desire for dividend payments, which the company has not declared since 2003.

The company posted net losses of RM85.7 million against revenue of RM47.1 million for the nine-month period ended September 2007 due to soft property development activities for financial year ended December 31, 2007.

For FY06, Meda's net profit was RM15.65 million against revenue of RM153.57 million.

Meda aims to use the sales proceed of Summit Subang USJ to help retire bank borrowings of RM179.85 million while the balance will be used to grow its core business of property development.

The property, comprising the 15-storey Menara Summit office tower block, the 17-storey The Summit Hotel with 2,125 car-parking bays and a six-storey retail podium, carries a net book value of RM339.6 million as at December 31, 2006.

When met by reporters, company secretary Tai Siew May said the motion was carried through with 97 per cent of the votes, but declined to elaborate.

The board of directors also evaded questions posed by the press, who waited for them outside the EGM venue.

Some shareholders had disagreed with the method of voting, saying Meda could have opted for a show of hands instead of use a ballot.

However, when contacted later by Business Times, Tai said the Meda chairman had decided to have a poll because it was an important transaction that needed to be counted correctly. She would not comment further.

By New Straits Times (by Jeeva Arulapalam)

EPU to call for special meeting with steel millers

PETALING JAYA: The Economic Planning Unit (EPU) is believed to have called for a special committee meeting with steel millers and its end users next Tuesday to discuss potential liberalisation of the domestic steel market.

A source told StarBiz the meeting, the first between industry players and the EPU, reflected the Government's seriousness in resolving pressing problems pertaining to escalating production and operational costs among steel millers.

It would also address the issue of supply shortages and high steel prices affecting construction companies and builders.

Patrick Wong

He said: “Issues for serious consideration and implementation include the total abolishment of price control on billets and steel bars, the automatic pricing mechanism (APM) for steel, and removing import and export restrictions on steel bars and billets.”

Early last month, the Government raised the ceiling price of steel bars and billets, which are price-controlled items, by 12%. This caused an uproar among the construction and building fraternity while steel millers said the price hike was inevitable, given their extremely high costs.

Master Builders Association Malaysia president Patrick Wong said: “Further liberalisation in the domestic steel price is good for the builders, given the current steel supply shortage in Malaysia.

“We want the Government to remove protectionism in the steel industry by opening the market and allowing market forces to decide on steel prices instead of considering an APM,” Wong said.

Real Estate and Housing Developers Association Malaysia president Ng Seing Liong concurred that the Government must allow contractors and builders to import steel from Thailand, China and the Philippines, which were 10% to 15% cheaper than domestic steel.

He claimed that despite the recent 12% hike in the price-controlled items, builders and contractors still needed to pay RM250 to RM300 above the new control price for steel bars at RM2,400 to RM2,500 per tonne, given the shortage.

Ann Joo Resources Bhd managing director Datuk Lim Hong Thye said steel millers were looking at APM as an effective measure to ensure fair steel prices, which closely track international prices. He said there was an immediate need to further liberalise the local steel sector, especially with the rolling out of big projects under the Ninth Malaysia Plan.

By The Star - StarBiz (by Hanim Adnan)

Putrajaya Perdana order book set to rise sharply

PETALING JAYA: Putrajaya Perdana Bhd, which has signed a memorandum of understanding (MoU) with Abu Dhabi-based Aldar Properties PJSC to undertake the construction, design and consultancy works of node 1 of the Iskandar Development Region (IDR), is set to see its order book rise substantially from March should the development take off then.

Aldar is the master development manager for node 1 of the IDR, where three Middle Eastern consortiaMubadala Development Co, Kuwait Finance House and Mellenium Development International Co – have committed a total investment of US$1.2bil.

In a research note, Aseambankers said the draft master plan for node 1 would be submitted for government approval by the end of the first quarter.

“Once this receives the go-ahead, we understand that development works could kick off almost immediately, with the finalisation of the MoU between Putrajaya Perdana and Aldar,” it said.

The research outfit said it had yet to incorporate the IDR developments in its earnings forecast. “We expect a substantial enhancement to the company’s order book from this,” it added.

Aseambankers said Putrajaya Perdana had also been awarded a RM49.9mil building contract to construct a two-storey information and communications technology complex in the first phase of the Cyberjaya Flagship Zone.

“This development is within our expectations for Putrajaya Perdana to clinch a series of projects worth at least RM500mil per annum,” it said, adding that this was a conservative estimate given that the company secured more than RM1bil for the financial year ended March 31, 2007 (FY07).

Aseambankers said it was looking at core earnings growth of 17% in FY08 and 22% in FY09, with further upside potential.

“It has good potential to clinch new IDR and Middle East contracts given its proven track record and niche in energy-efficient buildings, with strong backing from its new shareholders,” it added.

By The Star