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Thursday, July 24, 2008

BLand gets offers for Seychelles hotels

BERJAYA Land Bhd (BLand) has received offers to buy both its hotels in Seychelles for US$62 million (RM201 million), its resort and hotel division head Foo Toon Kee said.

They are the four-star 232-room Beau Vallon Bay Beach Resort & Casino on Mahe Island and the three-star 80-room Seychelles Berjaya Praslin Beach Resort Seychelles.

"We have been operating there for over 10 years. We might consider the sale. We are still contemplating whether to sell or redevelop the place," Foo, the acting head of Berjaya Hotels and Resorts, told Business Times in an interview.

Should Berjaya decide to sell the property, it would be in line with its future plans to focus on five-star hotels and resorts.

Berjaya has had a presence on the popular island resort for over a decade.

When asked what would be a comfortable sale number for the hotels, Foo said: "They could fetch US$70 million (RM227 million) ... but I am not saying that we will definitely sell.

Yet another property it may consider selling if the price is to its satisfaction is the three-star Berjaya Georgetown Hotel in Penang. The 323-room hotel has a book value of about RM80 million.

The hotel produces a lower profit margin than its five-star hotels. It has an earnings before interest, taxes, depreciation and amortisation margin of about 20 per cent versus 45 per cent for the five-star properties.

In the event that the hotel is not sold, Foo said, the group may consider rebranding it to better distinguish the various star categories of the hotels under Berjaya.

By New Straits Times - Business Times - (by Vasantha Ganesan)

GuocoLand to triple investment in China

BEIJING: GuocoLand is aiming to triple its investment in China in the next three years, from US$3 billion now, a senior official with the Singapore luxury home builder said yesterday.

Against a backdrop of slowing domestic sales, GuocoLand is increasingly shifting its attention to other Asian countries, especially China.

“The broad investment climate in China is sound, and our board of directors is confident about the outlook here,” said Violet Lee, managing director of GuocoLand (China) Ltd, a wholly owned subsidiary of Singapore-listed GuocoLand.

Since it entered the Chinese real estate market in 1984, GuocoLand has developed 8 sites in Beijing, Shanghai, Tianjin and Nanjing.

GuocoLand’s most recent project is the Guoson Centre in Beijing, which includes a five-star hotel, offices, a shopping mall, apartments and a transport interchange that is the downtown terminus for the capital’s newly built airport rail link.

The hub was completed and handed over to the local government this month in time for the Olympics starting on August. 8.

The overall US$1.5 billion project is expected to be completed by late 2009.

China now accounts for 20 to 30 per cent of GuocoLand’s total revenues, a figure that is likely to rise as the company expands, Lee said.

GuocoLand’s landbank in China is expected to increase to 5 million square metres within three years from 2 million sq m now, she added.

“The focus of our development will be high-end multi-functional business properties in major cities, as we did in the past,” said Lee.

The developer, controlled by Malaysian tycoon Quek Leng Chan, is also looking to diversify its investments in China by expanding into sectors such as health and education, Lee said.

She did not elaborate.

Lee said GuocoLand’s profits in China would be hurt by Beijing’s drive to cool the real estate market as well as by soaring raw material and labour costs.

But she said the firm would broadly stick to its China growth strategy.

“We wish to hold our assets for a long time, at least 10 to 20 years,” said Lee, who won the Miss Singapore crown in 1984.

By Reuters

SunCity: REIT listing later this year

KUALA LUMPUR: Sunway City Bhd is evaluating various proposals for the listing of its real estate investment trust (REIT) in view of the overall bearish mood in the markets, its executive director Datuk Jeffrey Ng said.

Ng said that the property developer would continue with the listing of SunCity REIT in the second half of this year. However, he did not elaborate if the REIT listing would be delayed until market conditions improved. SunCity REIT has assets worth RM3.7billion.

Upon listing, the SunCity REIT was touted to be the largest in the country, with a property portfolio comprising three segments — retail, hotel and commercial.

Among the properties that would be injected include the Sunway Pyramid Mall which has a market value of RM1.63 billion, Carnival Shopping Mall in Penang, Monash University campus, Sunway University College and Menara Sunway.

Other properties included in the REIT would be the Sunway Resort Hotel & Spa and Pyramid Hotel.

“With the various properties involved, there would be fair bit of work to do as we recognise that the market is soft,” Ng told The Edge Financial Daily.

However, he declined to elaborate whether the company would opt to list in Singapore.

Compared with Malaysia, Singapore offers attractive incentives in REIT investments as investors are exempted from withholding tax.

According to the Singapore Exchange Ltd, foreign institutional investors and corporations are subjected to a 10% withholding tax up to February 2010. For REIT investment in Malaysia, a withholding tax of 28% is imposed on foreign institutional holders while individual investors are taxed 26%.

Analysts said the real estate investment industry in Malaysia (M-REITs) would be headed for tougher times as a result of the negative sentiment in the property sector due to rising construction costs and a decline in the housing take up rates.

JP Morgan said the growth of M-REITs was unlikely to outperform the property sector. It said the overall weak consumer and business sentiment arising from higher costs could lead to a slowdown in rental revisions.

The research firm said there was a lack of liquidity in the stocks. In a recent report, JP Morgan downgraded SunwayCity to a neutral stance as there was a possibility of the property developer delaying its REIT listing.

“Despite the strong asset base of properties to be injected into the REIT, we fear that the listing may be delayed given the lack of appetite for new equity and the recent de-rating of REITS overall,” property analyst Simone Yeoh said in the report.

JP Morgan revised the SunCity target price to RM2.16 from RM2.50 previously. It had also reduced the property developer’s earnings by 6% for FY08 and 13% for 2009 to account for softer residential property sales.

“Sunway City is evaluating proposals in the REIT structuring to make this listing successful. It is a matter of pricing and packaging the assets given the current market situation that we are in,” Ng said.

By The EDGE Malaysia (by Lim Shie-Lynn)