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Monday, November 2, 2009

Ireka studying growth options, not ruling out REIT

IREKA Corp Bhd’s growth driver may come from either a real estate investment trust (REIT) or expansion of its development management services to other property markets.

Until it finalises its options, the construction group is now on an asset-light operations mode, keeping its balance sheet lean, its executive director Lai Voon Hon told Business Times recently.

Incorporated in 1967 by Lai Siew Wah, Lai’s father, Ireka’s core businesses are construction, property development, hospitality & leisure and information technology.

It is not looking for new business opportunities for now but does not discount the possibility of launching a REIT when the time is right.

Its current asset-light business model was adopted when Ireka was restructured to cut its gearing after the 1997 financial crisis.

It shed its weight among others by listing in London Aseana Properties Ltd where it holds a 23 per cent stake.
It also sold The Westin Kuala Lumpur to an international investment firm and its entire property portfolio to Aseana to focus on construction.

The de-gearing move was also to diversify risks, Lai said.
Under the asset-light model, Ireka, through its wholly-owned unit Ireka Development Management (IDM) Sdn Bhd, is responsible for implementing the real estate investment strategy for Aseana.

IDM’s role as a development manager includes engaging, managing and coordinating third parties in relation to the development or management of properties and leading the negotiation for the acquisition, disposal or financing of real estate assets.

On plans to go international, Lai said Ireka will remain focused on Malaysia and Vietnam, where it is exploring infrastructure-related projects.
According to Lai, there is still a lack of high quality housing, offices, shopping malls, hospitals and hotels in Vietnam.

Lai said he believes Vietnam will remain a high growth market post the global financial crisis.

“All the positive economic fundamentals, which had attracted foreign investors to Vietnam in the past, remain intact and will be the foundation for future growth once the global economy recover,” he said.

Lai, however, did not rule out the possibility of looking into other Asian countries in the future.

By Business Times (by Sharen Kaur)

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