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Tuesday, August 5, 2008

Axis REIT eyes properties worth RM566m

AXIS REIT Managers Bhd, which manages the Axis Real Estate Investment Trust (Axis-REIT), is looking to buy properties worth about RM566 million, its chief operating officer and executive director Stewart LaBrooy said today.

“Our focus is in three regions — the Klang Valley, Johor Baru and Penang. We have properties in Penang and are looking to add one to two more good quality industrial assets,” he said.

Of the total, the company hopes to complete RM180 million worth of properties by June 2009, he said.

The company is negotiating for third-party assets worth about RM240 million and looking at several potential properties in the pipeline from private equity, LaBrooy said.

“The purchase of RM180 million worth of properties will be financed by the proposed placement of up to 120 million new units representing approximately 46.9 per cent of the existing units in Axis-REIT,” he told reporters after presenting the company’s first-half results ended June 30, 2008.

The exercise will increase the existing fund size of Axis-REIT from 255.901 million units to about a maximum of 375.901 million units.

The exercise will be in two tranches of 60 million each to match the acquisition timelines. The first tranche will be placed out in the fourth quarter while the second tranche in the second quarter of next year.

According to LaBrooy, the placement will be used to pare down borrowings, freeing up cash to enable the company to purchase the assets that are being lined up.

“At the current pricing, we are looking at raising up to RM200 million for both tranches. The placement strategy will also enable us to cross the RM1.0 billion asset under management for Axis-REIT,” he said.

By Bernama

Malaysian developers to build fewer houses

The government is expecting a 20 to 30 per cent reduction in the number of low medium-cost houses built this year as developers struggle with higher development cost.

Deputy Minister of Housing and Local Government Datuk Hamzah Zainudin said the country's housing sector is showing signs of slowing down as material costs have gone up by almost 30 per cent.

HAMZAH: The housing sector is showing signs of slowing down

"I feel that the number of properties will reduce substantially this year especially in the low medium- and low-cost sector," he told reporters after launching Raine, Horne and Zaki Property Management Sdn Bhd's 24 hour customer care centre in Kuala Lumpur yesterday.

The care centre, the first of its kind in Malaysia, is a 24-hour call and emergency assistance for residential property owners.

Hamzah said amid the current soaring prices, the government is unlikely to meet its target to build 50,000 to 80,000 low medium-cost houses this year.

He said "quite a number" of private developers have indicated to the government that they are unable to sell such houses at a fixed price of RM42,000 each.

The ministry is keeping the ceiling price of low medium-cost houses at RM42,000 each but is studying to see if the price can be increased.

"The Minister of Housing and Local Government will make an announcement very soon," he added.

To date, Hamzah said, only 20,000 to 30,000 of the low medium-cost houses are in progress.

On fears of stalled or abandoned housing projects, he advised developers that have just started or are within six months into a project to re-look at their cash flow and to launch projects by phases.

By New Straits Times (by Rupinder Singh)

More REITs can give trading a leg up

CAPITALAND Ltd’s plans to list a RM2bil pure-play retail real estate investment trust (REIT) on Bursa Malaysia later this year will add more depth to and attract greater trading interest in the local market, say industry observers.

Interest in REITs and equities has taken a beating as a result of rising inflationary pressures and uncertainties in the global and regional economies.

An analyst with a foreign brokerage said although there was still much liquidity in the local market, investors were keeping to the sidelines due to the poor market sentiment and lack of fresh leads.

“Local REITs generally lack liquidity as they are perceived to be too small in their issue and capital base, and REITs with larger asset size like CapitaLand’s will be able to attract greater trading interest,” she said.

Axis REIT Bhd executive director Stewart Labrooy said the market could do with more REITs to inject greater trading dimension and yield potential for investors.

There were currently 11 REITs listed on Bursa Malaysia, he said, adding that the participation of more players would contribute towards rebuilding Kuala Lumpur’s skyline and enhance professionalism among industry players.

“There is still much untapped potential in the local market and the onus is on industry players to harness their accretive yields potential by building their assets base through both organic and acquisition growth,” he told StarBiz.

CapitaLand’s announcement that it was on track to list its REIT in Malaysia by year-end will see the country’s first foreign-sponsored REIT on Bursa Malaysia.

“The market certainly needs more diversified types of REITs and, given its reputation in turning around slow-performing malls into profitable entities, CapitaLand’s debut will inject more exciting changes to the local retail market,” he added.

The Singapore-based developer is one of the largest retail real estate owners and managers in the region with more than 115 malls in Singapore, China, India, Malaysia and Japan.

CapitaLand has been eyeing a presence in Malaysia’s retail market for a while now and started building its asset portfolio last year.

The company had last August paid RM770mil to buy Gurney Plaza in Penang and RM435mil for the Mines Shopping Fair in Seri Kembangan, Selangor. Its latest acquisition was a 61.9% stake in Sungei Wang Plaza for RM595mil in June.

Enhancement works are ongoing to spruce up the facilities and add new space to the shopping malls.

CapitaLand has four listed trusts – CapitaMall Trust, CapitaCommercial Trust, CapitaRetail China Trust and Ascott Residences Trust – on the Singapore Exchange.

By The Star (by Angie Ng)

Fuel least of builders’ worries

Last week’s announcement of a monthly review of petrol prices may not be very helpful to the housing and construction industries.

The Government’s move is aimed at helping ease inflationary pressures in the economy although critics feel that the 41% jump in petrol prices and 63% hike in diesel prices in June had set in motion an unprecedented inflationary trend.

Indeed, inflation hit 7.7% in June, the highest in 26 years

In less than two months prices of almost everything from a bowl of noodles, cooking gas, public transportation, hire purchase rates and electricity tariffs to raw materials for the construction industry increased sharply.

Many people are sceptical about the 7.7% figure as they think prices of most products and services have gone up 30% or more.

While industry players generally welcomed a possible downward revision of petrol and diesel prices, it may be a case of “a bit too little and too late.” Some wonder what real good it can bring when much of the construction industry’s woes like high steel bar and cement prices and shortage of essential building materials are still unresolved.

The housing industry, too, has been hit by threats of contractors walking off their jobs. Some have surrendered their projects while others have refused to even tender for new jobs for fear of further jumps in construction costs.

The low and medium housing sectors have reported even more sluggish sales and many of these projects can be expected to take longer to complete, or even stall/abandoned.

Although high-end projects are deemed more resilient, partly because of a higher mark-up and less likely to be badly affected by profit margin erosion, there is still a possibility that some of them might also be stalled or left uncompleted if the economic slowdown worsens.

While a downward revision of petrol and diesel prices might be a short-term relief, many fear that it could create even more uncertainties especially if prices fluctuate with each month’s review.

“It’s going to cause more confusion. I don’t see how it can help, like the Government giving RM625 to owners of vehicles of less than 2,000cc and spending so much of taxpayers’ money,” said a developer, adding that the lack of transparency and reports of wastage in government projects should be also addressed.

Another main worry, especially for those servicing housing loans, is whether the mortgage rates would inevitably go up as well. Fixed deposit rates have crept up slowly, and so will lending rates eventually.

Although Bank Negara has refrained from increasing interest rates, some banks have increased their rates for hire-purchase.

Domestic Trade and Consumer Affairs Minister Datuk Shahrir Abdul Samad had said at the Master Builders Association Malaysia 54th anniversary dinner on Aug 1 that his ministry would continue to identify and remove problems that had contributed to the cost of doing business.

“We hope to institute necessary measures and initiatives to help reduce costs and enhance efficiency and competitiveness of the construction industry,” he said, adding that the Government would strive to provide excellent service delivery to facilitate the construction business community.

At a press conference later, he said the Government would also look at improving the distribution system of goods as a way to cut costs. As an example, he said, the distribution of bread was a very effective way as there were only two levels from the bakery to the shopkeeper.

Judging from the recent case over the alleged high maintenance of government cars, it may also be timely to ensure that such costs are kept reasonably low.

By The Star (by S.C.Cheah)

Penang appeals for funds to conserve buildings

PENANG: The state government is appealing to parties interested to carry out heritage conservation to come forward to help restore more than 510 buildings following Penang’s listing as a World Heritage site by Unesco.

Out of this number, 141 buildings are in the core zone of George Town’s heritage enclave, 82 within the buffer zone and another 287 buildings outside the buffer zone and core area.

The core areas encompass the historical sites of George Town, including the Lebuh Acheh historical enclave and sites such as the Lebuh Acheh Malay Mosque, Jalan Mesjid Kapitan Kling Mosque, the Goddess of Mercy Temple, Sri Mariamman Temple, Khoo Kongsi, St George’s Church, Assumption Church, St Xavier’s Institution, Convent Light Street, Little India, the museum and court building, the commercial area of Beach Street, Fort Cornwallis, Esplanade, City Hall, the Clan Jetties and the port areas.

“While we have appealed to the federal government for a RM200 million soft loan to help in our conservation efforts, we would also like to welcome those who are interested and have the necessary expertise to help restore these buildings, many of which are in a state of disrepair,” Chief Minister Lim Guan Eng said.

“We would like to call on private organisations who are interested to revive these buildings to come talk to us so we can restore them to their former glory,” he said.

“The Penang Island Municipal Council (MPPP) has sent notices to the building owners to restore their premises and those that are owned by certain agencies have been restored,” said Lim.

“However, most of the owners can ill afford to carry out restoration works as it is an expensive undertaking, while some of the owners could not be traced,” Lim said.

MPPP president Datuk Zainal Rahim Seman said the council was also looking at various incentives to encourage owners to carry out restoration works.

Lim said that if the RM200 million soft loan was not granted by the federal government and there were no takers to help restore these buildings, the state government will have to make alternative efforts to ensure their conservation.

The list of the buildings which need restoration is available at the MPPP office.

By The EDGE Malaysia (by Regina William)

UEM yet to hear from govt on Penang Bridge

PETALING JAYA: UEM Builders Bhd is awaiting word from the government on the developments pertaining to the Second Penang Bridge, said UEM Group chief executive Datuk Ahmad Pardas Senin.

“We are unable to make any comments now. We are still waiting for statements from the government,” he told The Edge Financial Daily.

He was asked to respond to questions on the possibility of the government forming a special purpose vehicle to take over the bridge project and UEM Builder’s contract sum being slashed by RM900 million.

Last Saturday, The Edge weekly reported that the government has formed a special purpose vehicle, Jambatan Kedua Pulau Pinang Sdn Bhd (JKPP) to undertake the project as UEM Builders and China Harbour Engineering Co (CHEC) — the two main contractors for the job — have so far failed to firm up their shareholders agreement.

It was reported that JKPP had also awarded CHEC a contract of about RM2.3 billion and UEM Builder another contract worth RM1.3 billion.

Affin Investment Research said if the news was true, it would have negative impact on UEM Builders, especially when the project comes with a materials costs fluctuation clause to protect UEM Builders’ construction margin.

“On a broader perspective, the loss of contracts to well-connected companies, if true, might cast more negative light on GLCs (government-linked companies),” it added.

Meanwhile, Regina William reports that the state government was in the dark over the latest developments for the Second Penang Bridge project.

“We are not aware of what is happening and what we know is through the report,” said Chief Minister Lim Guan Eng. “Since this is federal government project, it is up to the federal government to decide on the mechanism. But if there is a request, we will assist in coordinating and cooperating with the relevant agencies to speed up whatever needs to be implemented.”

By The EDGE Malaysia