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Wednesday, June 30, 2010

MPHB diversifies into property development for additional income

PETALING JAYA: Multi-Purpose Holdings Bhd (MPHB) will be announcing its joint venture (JV) with a public-listed developer in the next several weeks to mark its entry into the property development sector.

MPHB MD Datuk Lau Kim Khoon pointing the way forward for the company: It is in property development. He says ‘We do not have the expertise but we have the land'. So a joint venture with someone who has the expertise is the answer to increase profit.

MPHB is known for its gaming business from which it generates about half of its profit via 51%-owned Magnum Corp, one of Peninsular Malaysia’s three legal number forecast operators,

Managing director Datuk Lau Kim Khoon @ Surin Upatkoon said the group was entering the property development sector in order to have an additional income stream and “to build a sustainable recurring income model.”

Besides gaming, its other businesses are insurance, stockbroking, property and hospitality.

The group is starting from ground zero in property development as other than its two residential projects which it launched early this year in Penang, it does not derive any revenue from property development.

The group has two office buildings, Menara Multi-Purpose and Plaza Flamingo, and two hotels under the Flamingo brand as investment properties. Menara Multi-Purpose is 98% occupied and Plaza Flamingo, 90%.

“In the past, MPHB has been factoring in the recurring income from these assets but the contribution was not substantial. The current contribution to the group’s revenue from property development comes mainly from two residential developments in Penang which are expected to contribute a total of RM37mil in profit before tax when completed in the next three years,” said Lau.

The Paya Terubong project is a six-acre joint venture comprising 116 units of town houses and 256 apartment units with a gross development value (GDV) of RM72mil. The Minden Heights project is another JV comprising 74 units of terrace houses under phase 1, launched early this year, and 95 units of terrace houses under phase 2, which will be launched at the end of this year. The GDV for this project is RM143mil.

The group is also converting Magnum Plaza into a three-star hotel to be part of its Flamingo chain. This is expected to open next year.

The jewel in the crown, Lau said, would be its RM3bil iconic integrated mixed development project at the junction of Jalan Sultan Ismail and Jalan Imbi near Park Royal Hotel, which is currently in the planning and designing stage.

It was reported last week that MPHB will launch a RM3bil project which will complement the Government’s proposed international financial district and Pasar Rakyat redevelopment in Imbi. The 2.4ha will have a retail podium, a 50-storey luxury condominium, a 35-storey four-star hotel and 30-storey office tower. The entire project will take several years.

“We believe our project in downtown KL is in line with the Government’s vision for KL. For this reason, we view the various ongoing projects by the Government and existing developers to be complimentary to our project, which would in turn strengthen other projects in the area.”

On the occupancy prospects of its KL integrated mixed development in view of the weak global economy and dwindling expatriate community, Lau said MPHB’s projects were not designed exclusively for expatriates but for the working class.

Only a small portion will be condominiums, as such occupancy and oversupply will not be an issue, he said.

“We do not have the expertise but we have the land. So we will work with the parties that have the expertise. It is not necessary to have our own property team to undertake these developments. The objective is to build a sustainable recurring income stream from our investment properties,” he said.

Lau said most of its land were bought and paid for years ago. Over the years, they have appreciated by three- or four-fold.

He said property development and investment is expected to contribute 10% to the group bottomline.

“Revenue from the property sector will contribute between 20% and 25% in about three to four years’ time,” he said.

“We are of the view that the local economy is stable and not directly affected by the fragile global economy. We are also taking a long-term view of the sector and the group will consider the overall economic climate and other factors when deciding on the timing of launches.”

He said the bulk of its landbank, which includes a 4,641-acre oil palm estate in Pengerang, Johor, which is near the third link to Singapore, are generally more suitable for the local market.

By The Star

Tradewinds sees higher rental for refurbished Menara Tun Razak

TRADEWINDS Corp Bhd, which is undertaking the RM450 million refurbishment of the 29-year-old Menara Tun Razak in Jalan Raja Laut, forsees office rental in the building to increase by 40 per cent by 2014.

Chairman Tan Sri Megat Najmuddin Megat Khas said office space in the building was currently rented out between RM3.50 and RM4.50 per sq ft and this would be increased to RM6 per sq ft.

He said the redevelopment activities would result in a temporary decline in the rental income from the group's property division.

"Barring any unforeseen circumstances, we expect to see rental income to decline by RM8 million annually, but we are optimistic that we can recover and improve our profitability when the Menara Tun Razak project is completed in four years' time," Megat Najmuddin told a press conference in Kuala Lumpur yesterday, after the company's annual general meeting.
Tradewinds will also construct a 40-storey office building, next to the Menara Tun Razak, later this year which will be crucial for the company's property development business.

"The development would enhance the area in terms of asethetics and value, increase our profile as a major high-end urban property developer, attract new and reputable clientele as well as create spill-over effects for surronding areas," Megat Najmuddin added.

He also said the company planned to set aside RM70 million to refurbish three other hotels under its wings, PJ Hilton, Hilton Kuching and Pelangi Langkawi.

By Bernama

Tradewinds to refurbish tower and build 40-storey block for RM450mil

PETALING JAYA: Tradewinds Corp Bhd will spend RM450mil to refurbish Menara Tun Razak (MTR) as well as build a brand new 40-storey office block on the existing land just beside MTR.

Tradewinds has just received the approval for the new office block and will start developing the 5-star office building this year. The building is expected to be completed by 2014.

“We are building a commercial building for tomorrow’s standards. The office block fulfils 95% of the checklist of some of the best buildings in Singapore,” said Tradewinds Corp director and advisor Poh Pai Kong.

Currently, MTR is generating net cashflow of RM8mil per annum.

Hence, from now until the refurbishment is completed in 2014, there will be a loss of some RM8mil in cashflow. However Poh said the refurbishment was likely to be completed before 2014.

He also emphasised that the refurbished building would fetch higher rental yield.

The existing rental for MTR is RM3.50 to RM4.50 per sq ft (psf). Once refurbished, MTR will be rented out at RM6 psf.

“The new office block will be rented out at RM6 psf for the first three years before we increase it in the coming years. If you look at Jalan Raja Laut, where MTR is located, it is increasingly becoming a bankers’ street. When you have a 5-star building, you are able to rent it to anyone,” said Poh, after the company AGM.

Tradewinds chairman Tan Sri Megat Najmuddin said property development was a catalyst of growth for Tradewinds, with commercial property as its focus.

Poh added that the refurbishment of MTR was a mere appetiser before the company served its main course.

“We are now looking at all sorts of projects. We are reviewing all our existing assets and developments. The property drive will be the catalyst moving forward for us,” he said.

Megat said that he was optimistic about the property outlook of the country despite many people criticising Malaysia.

Malaysia has a young population and there are only 4 million homes for a population of 28 million, according to Poh. “There is a shortage of homes now. There is a lot of potential for the property market.”

When asked whether Tradewinds would enter the residential property market, Poh said it was something they were looking at. One of the projects Tradewinds is planning for will include service apartments.

Meanwhile, Tradewinds will spend RM70mil over the next two years refurbishing three of its hotels, which are PJ Hilton, Kuching Hilton and Meritus Pelangi Beach Resort & Spa Hotel in Langkawi.

Right now, its gross operating profit for its hotels is around 40%.

By The Star

Sunway confident of record profit this year

Sunway Holdings Bhd expects a record net profit this year, driven by new business and healthier margins from all its five core divisions, managing director Yau Kok Seng said.

These include construction, property development, trading and manufacturing, quarry and building materials.

The construction division, which has RM3 billion worth of jobs in hand, is bidding for more infrastructure and building projects worth RM16 billion in Malaysia, Abu Dhabi, India and Singapore.

"We hope to get minimum RM1 billion worth of new contracts this year, maintaining our order book at RM3 billion," he told reporters yesterday after a shareholders' meeting in Bandar Sunway, Selangor.

Sunway, controlled by founder Tan Sri Jeffrey Cheah, has prequalified for projects like the light rail transit (LRT) line extension in the Klang Valley, the new low-cost carrier terminal in Sepang and the Kelau dam, part of the Pahang-Selangor raw water transfer project.

Yau said Sunway's property development unit, SunwayMas Sdn Bhd, will launch five projects, including one in Singapore, from July to December this year worth RM600 million.

It has six projects worth RM1.1 billion and 182ha of undeveloped land with potential to generate a gross development value of RM3.3 billion.

"With new construction jobs, property launches and unbilled sales of RM515 million, and increasing trading, manufacturing and quarry activities, we hope to exceed last year's earnings," Yau said.

Sunway reported a strong first quarter net profit of RM40 million, which is 2.5 times higher than in the same quarter last year.

"We have very clear strategy on how we want to build our businesses. The geographic diversification has helped us grow all the divisions.

"To expand further, we will continue to recruit the right talent and manage the foreign exchange rates," he said.

Sunway, which has RM170 million in its reserves, has no immediate plans to do a rights issue, he said.

Yau said Sunway will manage its cash flow, generated from all its operations, to expand.

"We hope to come up with a consistent dividend policy from next year. We are looking to distribute 20 per cent of our profits to shareholders," he said.

By Business Times

MRCB expands KL landbank with RM105m acquisition

KUALA LUMPUR: MALAYSIAN RESOURCES CORP Bhd is expanding its landbank near in landmark KL Sentral development by acquiring a company which owns a piece of land fronting Jalan Brickfields for RM105 million.

MRCB said on Wednesday, June 30 it had proposed to acquire 22.82 million shares or 60% stake in GSB Sentral Sdn Bhd with 17.91 million redeemable preference shares of 1 sen each in GSB for a total of RM105 million.

It is acquiring the stake from Gapurna Sdn Bhd, which is principally engaged in property development.

GSB Sentral owns 91,040 sq ft of land which has been approved for a mixed development of office and service apartments with total gross floor area of 1.468 million sd ft and an estimated gross development value of RM850 million.

The development on the lot started in March 2009 and is expected to be completed by the fourth quarter of 2012.

By The EDGE Malaysia

Glomac profit jumps 27.4pc to RM40.7m

GLOMAC Bhd’s net profit for fiscal year ended April 30 rose 27.4 per cent to RM40.7 million, driven by contributions from its Sg Buloh township and Glomac Tower commercial project in KL.

Revenue was down almost 8 per cent to RM317.8 million.

Going forward, Glomac expects significant growth, helped by unbilled sales of RM588 million, and pipeline projects worth RM1.8 billion, over the next 2 years.

By Business Times

Tuesday, June 29, 2010

Good response to IJM Land project

Property developer IJM Land Bhd has seen overwhelming response from Korean buyers for its RM500 million The Pearl Regency development on Penang island.

Apart from an en bloc sale of the entire commercial portion of the project comprising 83 commercial units worth RM90 million to a Korean party, IJM has also seen 40 per cent of 574 condominiums sold to Koreans.

The units, which were launched in Penang yesterday, were pre-sold to the Koreans in December last year in South Korea.

"The buyers of the condos are mainly Korean retirees and families who send their children to Penang to brush up on their English skills," IJM Land general manager Toh Chin Leong told a media briefing in Penang yesterday.

IJM Land established a sales presence in South Korea at the end of 2008.

The residential units are priced from RM478,314 up to RM1.3 million each, while the commercial area is priced at RM750 per sq ft.

The project, which sits on a 20ha site close to the Penang bridge and next to the Tesco hypermarket and e-Gate, which is a popular retail and food and beverage hub, is slated for completion by early 2013.

The project, sited on freehold land, has been marketed to potential overseas buyers in countries like South Korea, Indonesia, Singapore and Hong Kong with the help of local private hospitals in Penang, international schools, along with golf and country clubs.

By Business Times

CapitaMalls Asia eyes RM860m from listing

SINGAPORE'S CapitaMalls Asia Ltd could raise about RM860 million from the listing of its Malaysian assets in a real estate investment trust (REIT) on Bursa Malaysia.

Held under CapitaMalls Malaysia Trust (CMMT), the portfolio is made up of Gurney Plaza in Penang, Sungei Wang Plaza in Kuala Lumpur, and the Mines in Selangor.

CapitaMalls Malaysia REIT Management Sdn Bhd is the manager of CMMT. At the prospectus launch in Kuala Lumpur yesterday, chief executive officer Sharon Lim said CMMT is Malaysia's largest listed "pure-play" shopping mall REIT by market capitalisation and property value.

According to its prospectus, CMMT has the right of first refusal for retail properties located in Malaysia that CapitaMalls Asia intends to buy and this includes the Gurney Plaza extension.
CapitaMalls Asia has set aside RM3.5 billion to acquire more shopping malls and retail properties in Malaysia. Asked on CMMT portfolio expansion, Lim replied, "we're going through a couple of evaluations. We can't reveal until they are concluded".

CMMT is offering 1.35 billion units for sale under the initial public offering (IPO). A total of 786.522 million CMMT units are being offered to institutional investors in Malaysia and overseas and to retail investors in Malaysia only.

CMMT's parent CapitaMalls Asia will retain a stake of 41.74 per cent. However, if an over-allotment option of up to 15 per cent of the offering is exercised, CapitaMalls Asia's stake in CMMT will drop to 33 per cent.

The retail offering in Malaysia consists of 67.5 million units made available for application by the Malaysian public and eligible directors and employees at the retail price.

The final retail price will be below the retail offer price of RM1.08 per unit or the institutional price less a discount of 2.0 sen.

At an indicative price of RM1.08, the retail offer will provide a distribution yield of 6.9 per cent to the prospective investor based on its distribution per unit of 7.45 sen for 2011.

By Business Times

CapitaMalls REIT listing expected to raise RM864mil

PETALING JAYA: CapitaMalls Asia Ltd, one of Asia’s largest listed shopping mall developers, owners and managers by property value and geographic reach, has launched the prospectus and retail portion of what will be the largest shopping mall REIT (real estate investment trust) in Malaysia to date.

Lim Beng Chee ... ‘We see acquisition opportunities in Malaysia’s shopping mall sector.’

CapitaMalls Asia is part of Southeast Asia’s largest property developer Singapore’s CapitaLand Ltd.

The listing of CapitaMalls Malaysia Trust (CMMT) REIT on the Main Market of Bursa Malaysia on July 16 is expected to have a market capitalisation of RM1.4bil if an over-allotment option of up to 15% of the offering of 786 million units is exercised. If this portion is not exercised, it may raise RM864mil.

Its initial portfolio of three shopping malls – Gurney Plaza in Penang, Sungei Wang Plaza in Kuala Lumpur and The Mines in Selangor – has a total net lettable area of 1.88 million sq ft and has been valued at RM2.13 bil.

The CMMT IPO will have a total of 1.35 billion units in issue, of which 719 million units were offered to institutional investors at between RM1 and RM1.10 each in late June and 67.5 million units for individual investors at an indicative price of RM1.08 yesterday, with a forecast distribution yield of 6.9% for 2011. The final price will be determined on July 8.

CapitaMalls Asia CEO Lim Beng Chee told a press conference that occupancy and rental yields had increased for all three malls in its stable despite a weak economy in the last two years.

“We see acquisition opportunities in Malaysia’s shopping mall sector, with its fragmented ownership structure.

“CapitaMalls Asia will give CMMT a right of first refusal over any retail properties that we may acquire in future, including the extension that is being carried out at Penang’s Gurney Plaza. If acquired, Gurney Plaza extension will increase CMMT’s asset size by about 11%,” he said.

CIMB Investment Bank Bhd, JPMorgan Chase & Co and Maybank Investment Bank Bhd are jointly managing the IPO sale.

“As part of our long-term commitment, CapitaMalls Asia also plans to set up a Malaysia retail property fund to acquire and develop retail properties in Malaysia. CMMT will similarly have a right of first refusal over this pipeline of retail properties,” Lim said.

Individual investors will get a refund if the final price for institutional investors is lower than the retail price.

CMMT’s sponsor, CapitaMalls Asia Ltd, will retain a stake of 41.74% in CMMT.

If an over-allotment option of up to 117 million units is exercised, CapitaMalls Asia’s stake in CMMT will be 33%.

The IPO follows the RM1.5bil raised by Sunway Real Estate Investment Trust in its initial sale last week and underscores rising investor appetite for equities in Malaysia amid an economic rebound.

By The Star

AEON buys land for RM27.13m

AEON Co (M) Bhd is buying three pieces of leasehold land and two parcels of state land in Perak, measuring a total 6.9ha, for RM27.13 million.

It told Bursa Malaysia yesterday that it is buying the land to expand its retail business by opening new shopping centres and outlets.

By Business Times

Gula Perak plans to sell hotels to settle debts

PETALING JAYA: Gula Perak Bhd said has proposed to sell two hotels to Hong Kong-based Time Glory Investment Ltd for a combined value of RM193.9mil to pay off outstanding debts, the PN17 affected issuer told Bursa Malaysia yesterday.

Gula Perak had, on April 22, announced that the redeemable secured notes (RSN) totalling RM287.3mil had expired.

As the properties — Dynasty Hotel in Kuala Lumpur and Empress Hotel in Sepang – are charged to the chargee under the RSN, the proceeds arising from the proposed disposals will be utilised towards the repayment of the outstanding RSN.

By The Star

Monday, June 28, 2010

The big spillover benefits of Greater KL plan

PETALING JAYA: The redevelopment of a number of major goverment-owned assets to transform Kuala Lumpur and the other satellite towns in the Klang Valley, or the Greater Kuala Lumpur, into a leading global city has the potential to create significant spillover benefits to the country’s economy if it is planned holistically and is well executed, property industry players said.

Their concern is whether there will be an overall authority to oversee the redevelopment exercise so as to ensure the projects complement the current environment and are spaced out well to prevent an over supply situation.

Under the Greater Kuala Lumpur Strategic Development Project, an initiative under the 10th Malaysia Plan, the Government is to revitalise the city by re-developing strategic federal assets including the Sungei Besi military airport, Pudu Jail, Kuala Lumpur Financial District and the planned township development on the Rubber Research Institute (RRI) land in Sg Buloh.

Datuk Michael Yam says largescale redevelopment allows a wholesale repositioning of KL

Newly elected Real Estate and Housing Developers Association (Rehda) president Datuk Michael Yam said such large-scale redevelopment would enable a wholesale repositioning of Kuala Lumpur as a world-class city, “embracing all the contemporary features not currently available in existing developments, which grew out of organic demand and ad hoc non-contiguous ventures.”

“Developing large parcels of land enables better integration of services, infrastructure and other components, and is generally more long term and sustainable,” Yam, who took office on June 19, told StarBiz.

He said the development plans needed to be carefully thought out and planned, “not only to achieve profit targets, but for other more holistic benefits including social, environmental and sustainable objectives for the long term.”

“The supply should be of high quality and value, and needed to be developed in phases, in order not to upset the supply and demand equilibrium.”

Yam also said the need for a new, more effective and efficient structure of the approval and decision process to avoid costly delays and from falling short of targets. “Strong financial oversight, corporate governance and supervisory measures by a monitoring team should be established with active private sector participation.”

Meanwhile, the Government can use the highly profitable parcels as a source of additional income to cross-subsidise housing for the poor. This will provide a boost to the public sector’s effort in ensuring affordable housing for the low-income group.

Datuk Eddy Chen ... ‘Each asset or land area must come under a unified master plan.’

Rehda patron Datuk Eddy Chen said the projects should be developments of a high-value nature that have the potential to lure foreign direct investment in assets and properties that are of international standards.

“Each of the asset or land area must come under a unified master plan that has its own unique theme and designated role to play.

This is to avoid inter-city competition and overlaps. For example, while one city can be a financial district, another can be the centre of regional headquarters for multinational corporations, and others for MICE and corporate tourism activities.”

Chen, who was a former president of Rehda, said such cities needed to be well-planned with components for work and play, citing a good public transport system as the main mode of travel was also paramount.

Hall Chadwick Asia chairman Kumar Tharmalingam said the proposed redevelopment of the government assets “shows there is a complete shift in paradigm in how the Government is going about to unlock the value of its assets.”

“Having a government company to undertake the projects is a clever approach as it would give an assurance of implied sovereign guarantee that the Government will actively pursue the completion of the projects,” Kumar said.

He said many foreign funds including private equity and pension funds would be keen to invest their funds in those projects.

“By having open tenders for the development of these assets, the private sector will have the opportunity to participate,” he said, citing the Employees Provident Fund joint-venture development of the Sungei Buloh land that would be opened for bidding as an example.

Located on 1,320ha, the massive development is estimated to cost some RM10bil.

As for the 160ha Sungei Besi airport, Kumar said with the project’s strategic location and the sizeable land, it should become a new gateway to the city if planned cohesively. “To ensure that the place remains vibrant even after office hours, there should be facilities not just for work, but also to live and play there.

Mah Sing Group Bhd group managing director cum chief executive Tan Sri Leong Hoy Kum said high-value project initiatives to redevelop the government assets would provide more opportunities for the players.

“It is a good way to allow greater participation from industry players with the expertise to add value to the assets,” he said.

By The Star

Serviced apartments boom looms in Malaysia

With spacious rooms, the availability of round the clock hours services and a similarity to the modern home lifestyle, it is no surprise that serviced apartments will be one of the fastest growth markets in Malaysia.

Frasers Hospitality Pte Ltd Chief Executive Officer Choe Peng Sum said many players including hotel owners see the opportunities offered in this market. "More serviced apartments will be available soon enough, making the competition more intense."

"As one of the top three global companies for serviced apartments, we realise the potential opportunities arising from this market, with people and tourists opting for residences that offer a myriad of amenities and features to make them feel at home.

"I can also say that many hotels have started investing in their own serviced apartments as a diversified business marketing strategy," he told Bernama recently.
Explaining the group's latest undertaking, Fraser Place Kuala Lumpur (FPKL), Choe said that it is a luxury project in Jalan Perak and close to the Kuala Lumpur City Centre (KLCC).

As a Singapore-based company, the venture marks Frasers Hospitality Pte Ltd's first foray into Malaysia.

"The apartments are strategically nestled in the heart of the city, comprising 30 floors with 215 one or two bedroom suites, studios, stunning penthouses and an infinity sky pool.
The pool offers a view of the city's skyline.

"We are positioned in the very heart of the city centre with a host of food and entertainment outlets, offering unparalleled convenience to residents," he explained.

With a proven international track record in the hospitality industry, FPKL is expected to carry on the legacy here in Malaysia.

By Bernama

RM4b projects seen in Penang

GEORGE TOWN: The Penang Master Builders and Building Materials Dealers Association (PMBBMDA) expects the value of construction contracts in Penang this year to be slightly over RM4bil, which is the same as last year, but below the RM5bil forecast in 2009.

PMBBMDA president Vincent Ong said this was due to the global uncertainties and the pending gradual removal of subsidies, which would hike construction costs and lower demand.

“Nevertheless for the first quarter 2010, the value of 38 contracts from both the government and private sectors in Penang hit RM206mil, compared with about RM45mil achieved in the previous corresponding quarter, according to the Construction Industry Development Board (CIDB) report,” he told StarBiz.

“Of the 38 contracts, 10 were from the government sector. This compared with 11 contracts in the first quarter last year, of which three were government jobs.”

He said the association hoped to get more contracts from the state and federal governments for projects such as the expansion of the Penang International Airport, the second bridge and the Mengkuang Dam expansion.

“A lot of the government and private contracts that our members are handling now were approved before 2010.

“We hope this year there will be more fresh projects. If not, there may not be sufficient work to go around,” he said.

Last year, there were a total of 88 contracts, with an estimated value of RM638mil.

Meanwhile, PMBBMDA immediate past president Finn Choong said there would be over RM350mil worth of renovation jobs available for the association’s 117 members from now till March next year.

The renovation jobs are from projects such as the phase three of Setia Pearl Island and The Looc Residence, which recently obtained a certificate of fitness, Prestige Heights, the Moonlight Bay, Suria, Pavillion, Summer Place and Platino, which will be ready for renovation before year-end, and the Residence@Southbay, which will be ready in the first quarter 2011.

“The total sales value of these projects is about RM1.32bil.

“These properties will easily generate about RM350mil worth of renovation jobs, as it is normal for the owner of a unit to spend 25% to 30% of the property’s value on renovation,” Choong said.

Real Estate Housing Estate Developers’ Association Penang chairman Datuk Jerry Chan said the pending removal of subsidy sales would spur the sales of properties.

“This is natural as people want to grab properties with prices as they are today before an increase after the subsidies are removed,” he said.

By The Star

CapitaMalls Malaysia Trust largest "pure-play" shopping mall REIT

KUALA LUMPUR: CapitaMalls Malaysia Trust (CMMT) will be the largest "pure-play" shopping mall real estate investment trust (REIT) on the main market of Bursa Malaysia by market capitalisation upon its expected listing on July 16.

At the launching of its prospectus Monday, June 28, CMMT said its market capitalisation was expected to be about RM1.4 billion, adding that its portfolio has been valued at RM2.13 billion in the valuation conducted by its trustee, AmTrustee Bhd.

The Trust said its initial portfolio comprises three shopping malls namely Gurney Plaza in Penang, an interest in Sungei Wang Plaza in Kuala Lumpur and The Mines in Selangor. The portfolios have a net lettable area of about 1.88 million sq ft.

Under its initial public offering (IPO), CMMT is offering 786.522 million units to institutional investors in Malaysia and overseas and to the retail investors in Malaysia only.

The retail offering in Malaysia consist of 67.5 million units made available through application by the Malaysian public, eligible directors and employees at the retail price pursuant to the retail offering. The final price according to CMMT would be the lower of the retail offer price of RM1.08 per unit or the institutional price less a discount of 2 sen.

CMMT noted that the institutional price would be determined by way of book building. At an indicative price of RM1.08, the retail offer would provide a distributional yield of 6.9% to the prospective investor based on its distribution per unit (DBU) of 7.45 sen for the forecast year 2011.

The Employees Provident Fund Board (EPF) and Great Eastern Life Assurance (M) Bhd have signed up cornerstone investors for the IPO to subscribe 90 million units or 11.4% of the total 786.522 million units offered to investors. They have agreed to pay RM1.10 per unit or the institutional price, whichever is lower.

By The EDGE Malaysia

CapitaMalls to offer shares at RM1.08

CapitaMalls Malaysia Trust plans to offer shares for its Malaysian initial public offering at RM1.08 each to individual investors, according to a prospectus published on Malaysian newspapers today.

Individual investors will get a refund if the final IPO price for institutional investors is lower than the retail one, according to the sales document.

CapitaMalls will offer a total of 786.5 million shares, it said.

By Bloomberg

Saturday, June 26, 2010

Encorp Strand to pull in the crowd

When Encorp Strand, in Kota Damansara, Petaling Jaya was completed in late 2007, there may have been some concern about who will be occupying these 265 units of shops and office space.

Datuk Seri Mohd Effendi Norwawi in his office, which overlooks the construction work on the mall and boulevard

Today, most of the ground floor units are tenanted. The story of Encorp Strand, with a gross development value of RM1.34bil by Encorp Bhd is pretty much linked to Dataran Sunway, another commercial development located adjacent to it across the road by the Sunway group.

Dataran Sunway, of about the same size as Encorp Strand, was the first to take off. Because it was the first to market, it was popular with investors and tenants. Investors, seeing the popularity and vibrancy it generated, bought into Encorp Strand when it was put on the market.

Says a real estate agent: “It is normal for any commercial development to take six months to a year to have tenants. Now the place is vibrant.”

With tenancy picking up and prices doubling in the secondary market, Encorp executive chairman Senator Datuk Seri Mohd Effendi Norwawi is encouraged with the work they have put in to create yet another hub.

The gross development profit (GDP) from the project is expected to be about RM300 mil. This comprises the GDP from the 265 units Shop Offices (less the 29 units retained by the company), the Garden Office and the serviced residence component.

The GDP excludes developments that will be retained by the group, namely the mall and its elevated car parks, the Boulevard, the 29 shop offices and the Garden Office car parks.

Besides Encorp Strand in Kota Damansara, the company also has projects in Penang, Shah Alam and Puteri Harbour in Iskandar Malaysia, Johor. Its three core businesses are property development (an on-going project with a gross development value of RM2.1bil), construction management (with an order book of 1.8bil) and government concession (housing project valued at RM2.2bil).

On the on-going changes at Encorp Strand, Effendi says his three-storey shop units were RM1.08mil in 2005. Today, some of them are priced at more than RM2.2mil in the secondary market while the four-storey units with lift are priced at RM3.2mil. It was previously RM1.8mil.

An agent who declined to be named said the capital value is growing faster than the rental.

Last week, they launched their second component, the Garden Office comprising 258 units of office suites on 2.6ha. It is currently 60% sold.

This project comprises 14 blocks of six and seven storeys with built-up ranges from 1,705sq ft and 2,510sq ft. It was sold at an average price of RM700 per sq ft.

The Garden Office is not designed as a single block, but a total of 14 blocks located in clusters around a stretch of landscaped area in the centre.

The second thing going for it is that it is low rise, comprising six to seven storey blocks. The third element is its use of open space with a rooftop garden for some of the blocks. On paper, the concept is aesthetically pleasing. Whether Effendi will be able to pull it off is another matter because rooftop gardens are not easy to maintain and there are several here.

The other interesting feature about Garden Office is that it will be connected to a larger and more comprehensive commercial development comprising its already completed shop and office suites via a walkway. The Garden Office is expected to be completed in 2013 with a gross development value of RM320mil.

Says Effendi: “Encorp Strand will be the most happening place when we are through with it.”

He could be right. Despite it being leasehold, Kota Damansara has become home to many. It is the 400,000 households within a 5km radius that Effendi hopes to draw to Encorp Strand. He is offering different components to attract the crowd. Besides the Garden Office, he is also planning to build a neighbourhood mall and on top of it will sit a 40-storey serviced apartment.

About 60% of the 280 units will be studio units of about 650 sq ft, 30% 2-bedroom units of about 1,000 sq ft.

He is targetting the young executives. To be launched next year, the studio units will be selling at about RM360,000.

“We have been getting quite a bit of enquiries for the serviced apartments,” he says.

Effendi has roped in the services of French architect Nicolas Ayoub to give the entire 18ha that make up Encorp Strand a bit of ooomph!

In some aspects, it will be a more pleasant place than its competitor across the road. For one, the roads are wider. For another, there is more open space.

Effendi promises his project will be of a superior product.

“Together with the office space, shop lots, Encorp Strand will be an integrated development comprising five components.

Work on the mall and boulevard started last year and is expected to be completed in 2012.

“We are creating a community in this 45 acres. The mall will have several anchor tenants - a cinema, a bowling alley, possibly a performing arts theater, a fitness centre and all the basic amenities that make up a township in this single location,” he says.

With The Curve a 10-minute drive away, and the newly opened Giza Mall in Dataran Sunway, and the Giant Hypermarket next to Encrop Strand and the Sun Suria Industrial Park, Effendi does not think there is any over supply of commercial and retail area.

“Encorp Strand will be very self-contained. It will be different from Dataran Sunway and the 40-storey block will be among the highest in this part of Petaling Jaya,” he said.

He has promised more than 3,000 car parks. With the way things are moving in Kota Damansara, whether that will sufficient is difficult to say. That place seems to attract people like bees to honey. What is missing is public transport which is currently in the pipeline.

By The Star

Mah Sing eyes 30pc sales abroad by 2015

Mah Sing Group Bhd, the country's fifth largest property developer by revenue, expects overseas projects to contribute 30 per cent of total sales by 2015, group managing director Tan Sri Leong Hoy Kum said.

Currently, there is no contribution from overseas.

Mah Sing has a cash pile of RM233 million and plans to capitalise on opportunities in China, Singapore, Australia, Indonesia and Vietnam.

It will launch its maiden project early next year in Jiangsu province, China, with an investment cost of US$620 million (RM2 billion).

Mah Sing has a 51 per cent stake in the project, which is expected to contribute to its sales from next year.
"We want to replicate what we have been doing here and further enhance our image and branding to be one of the premier lifestyle regional developers. We want to grow big and satisfy our shareholders," Leong told reporters yesterday after the company's shareholder meeting in Kuala Lumpur.

Mah Sing's strong institutional shareholders, who collectively own 56 per cent of the company, include Permodalan Nasional Bhd, the Employees Provident Fund and Koperasi Permodalan Felda Bhd.

Mah Sing has 21 projects worth RM6.3 billion in the Klang Valley, Penang and Johor.

The company has set a sales target of RM1 billion this year. In the first three months, it raked in sales of RM601 million.

Leong said that Mah Sing was confident of exceeding its 2010 target with contributions from its new projects and unbilled sales of RM1.1 billion.

Among the projects to be launched in the second half of the year are the Icon Residence @ Mont'Kiara, M Suites @ Jalan Ampang, One Legenda in Cheras, Garden Residence and Garden Plaza in Cyberjaya, and Austin Suites in Johor Baru.

Mah Sing is also scouting for niche, quick-turnaround landbank in Kuala Lumpur, Penang and Johor and an area of more than 80ha in Selangor, Leong said.

"When we buy land, we want to launch immediately and lock in sales to pare down debts. Property business is a financial game. You have to manage your cash flow.

"We are not highly geared now. With good concept, branding and track record, we are able to sell well all our products. We are confident our niche products will attract locals and foreigners," he said.

Leong added that Mah Sing was keen to develop the prized government land in Sg Besi and Sg Buloh and had expressed its interest to the government. It also wants to lend a hand in the proposed international financial hub in Kuala Lumpur.

By Business Times

Mah Sing has capacity to borrow more

KUALA LUMPUR: Mah Sing Group Bhd’s low gearing ratio of 0.05 times as at March 31 has provided the group with the capacity to gear up further, said group managing director and group chief executive Tan Sri Leong Hoy Kum.

At a briefing yesterday, he said that should the company gear up to 0.5 times, there would be about RM400mil available for landbank acquisition.

However, he added that the group was not in a hurry to raise its borrowings as it was in cash flow positive position.

Leong said the group had so far acquired three parcels of land with a gross development value (GDV) of RM712mil and was still on the lookout for more land.

“We are constantly scouting for more landbank. We’re looking at land aggressively everyday,” he said.

As at March 31, Mah Sing has cash and cash equivalents of RM166.9mil.

For the year ended Dec 31, 2009, the group had cash and cash equivalents of RM356.6mil.

Executive director for corporate and investment Steven Ng Poh Seng said the company spent some of its cash in the first quarter to purchase three parcels of land, resulting in the lower cash hoard.

However, he said Mah Sing’s cash and cash equivalents had improved to RM233mil in May.

Leong said should the group decide to raise its gearing up to a 0.5 times, it would be a non issue as it was still “very comfortable”.

Meanwhile, he said the group was confident of achieving its RM1bil sales target for this year as it had achieved sales of RM601mil in the first quarter.

For the three months ended March 31, Mah Sing posted a net profit of RM27.8mil on revenue of RM238.8mil, driven by its residential and commercial projects.

Leong said Mah Sing had a strong earnings sustainability from the combined RM6.3bil in remaining gross development value (GDV) and unbilled sales. Its unbilled sales stood at of RM1.1bil.

“Mah Sing is cautiously optimistic that 2010 will be a good year for the Malaysian property market and backed by a good employment market, strong liquidity and still-conducive interest rate levels,” he said.

The group is also interested to participate in government tenders for land in Sungai Besi and Sungai Buloh to be developed by the private sector.On overseas expansion, Leong said Mah Sing was looking to venture into Vietnam, Singapore, Indonesia and Australia.

Leong said the group had signed a letter of intent on a joint venture basis with 51% stake to develop a mixed development project in Wujin District, Changzhou, China.

He expects overseas projects to contribue 30% to group revenue in the next five years.

By The Star

Joint effort needed to make KL a world-class city

BUILDING Kuala Lumpur into a world-class liveable city will need clear, cohesive and holistic efforts and plans by all stakeholders and the authorities involved.

It is a huge exercise where all issues and challenges should be duly looked into and addressed. Kuala Lumpur has the potential to join the league of other leading global cities if all the relevant stakeholders put on their thinking caps and get their act together.

Doing an honest audit on what are its strengths and weaknesses will be a good start to find out where it stands compared with other cities around the globe. We can expect a long “to do” list that has to be executed cohesively to get the desired results.

A holistic master plan with the necessary strategies and plans can then be drawn up and it should leverage on the city’s key strengths and steps taken to address its weaknesses.

Among some of the key assets that Kuala Lumpur command are its friendly and culturally diverse people and their way of life, a wide array of culinary cuisine offerings and relatively lower cost of living.

For the shopaholics, it is also a shopping haven with nice shopping malls featuring world renowned brands and wide array of merchandise.

Instead of just focusing on the hardware side of things and jumping into more physical projects to trump up its global city status, due attention must also be given to its software.

While Kuala Lumpur can trumpet about having good infrastructure hardware such as one of the world’s best airports and buildings, the software that include the values and integrity of the people and the government, corporate governance and transparency standards, and consistency in government policies also need sprucing up.

Government policies should be long-term and consistent at all levels, especially at both the federal and state levels, as inconsistent and flip flop policies have long been frowned upon and are still bones of contention for foreign investors.

Other important “software” issues that need immediate attention include the level of security and safety in the city, the people’s general well being and their quality of life.

If we look around housing estates today, whether in Kuala Lumpur or the Klang Valley, the once “open and carefree” neighbourhoods have been replaced by fenced up and barricaded estates that are guarded around the clock.

This shows a general sense of insecurity and haplessness among the people.

Shoring up the safety and security index in in the country has been made one of the National Key Results Areas under the Government’s national priority areas of focus for a national transformation. It is now time to turn it into reality rather than just a target.

Another key area of focus is to put in place an efficient, reliable and well integrated public transport system for Kuala Lumpur and the other satellite towns.

Having the ability to move easily and comfortably around our cities will save resources and boost productivity for the country as less time is wasted on the roads when there is less congestion and traffic jams.

It will also attract more high net worth visitors and investors to the country.

The Government’s initiative to build a mass rapid transit system is a much awaited project that will certainly raise the liveability bar for Kuala Lumpur.

Most global cities are also renowned for their other software such as their rich culture and performing arts, well maintained parks and green lungs, and facilities for other wholesome leisure activities.

To alleviate the congestion in the city area, it will be appropriate for the authorities to restrict high density developments in already overcrowded areas, and be proactive in providing more public areas and parks for recreation and leisure activities.

For a better liveable environment, projects should be rated according to their scale of sustainability and how they can add value to the people and the environment.

Deputy news editor Angie Ng believes the challenge for Kuala Lumpur is to ensure the city’s old and new co-exist and blend seamlessly with each other.

By The Star (by Angie Ng)

Public transport poised for change

It may be an old issue but public transport is hogging the limelight again.

A new regulator has been tasked with the ambitious plan of drawing up a well-researched masterplan for public transport in the Klang Valley and the rest of the country. At the same time, two well-known construction companies have taken the initiative to draw up a plan for a much-awaited mass transit system (MRT), which no one disputes will propel the state of public transport in the Klang Valley to new heights, if executed well.

The public are excited that for once in their lives, there could be real connectivity from home to work. But there are also concerns if such a mega project will be well planned and whether it will be too much of a strain on the Government’s resources.

Moaz Yusuf Ahmad, who runs The Association For The Improvement Of Mass Transit (Transit), a consumer association championing better public transport, says existing systems need to be made better first.

“Before we can build more light rail transit (LRT) or MRT lines, we have to solve the existing problems in the industry, such as public transport workers’ salaries and benefits, flouting of rules, dismal safety record, and above all, the ineffective and costly ‘entrepreneurial’ model for public transport, which has done little for the industry beyond enriching permit owners,” he says.

To be sure, there are already plans afoot to enhance the existing public transport systems. The recently-formed Land Public Transport Commission or SPAD has been tasked with carrying out the initiatives for the National Key Result Area (NKRA) for urban public transport under the Government Transformation Programme.

These include re-routing buses through less congested highways and even having more specialised lanes for buses. There are also plans to increase the number of trains on the existing LRT and KTM Bhd Komuter and the monorail. In addition, there are two major extensions planned for the LRT.

However, there is a view that buses and the existing rail infrastructure alone will not cater to the growing needs of public transport in the Klang Valley.

Data compiled by SPAD indicates that Klang Valley’s rail coverage still lags behind most major cities in the world, in terms of km per million population. Even if the LRT extentions are included, the Klang Valley’s rail km per million population would stand at 32 versus an average of 34 for the cities of London, New York, Singapore, Hong Kong and Tokyo.

But data extracted from the recent proposal by Gamuda Bhd and MMC Corp Bhd for an MRT project in the Klang Valley shows that the gap is much wider, with Kuala Lumpur’s rail network being only 15km per one million population versus most other cities with over 40km per one million people.

No wonder then that the 10th Malaysia Plan (10MP) specifically mentions that the public would get to enjoy an MRT system 156km long and covering a 20km radius around the Kuala Lumpur city centre, carrying two million passenger trips per day when completed.

The 10MP does not, however, state the deadline for constructing the MRT system to overcome traffic congestion and transform the “Livability of Greater Kuala Lumpur” into a global city.

Property play

Gamuda group managing director Datuk Lin Yun Ling feels that merely relying on buses will not solve the solution in the long run. “You don’t want a situation where the traffic is transferred from one road to another as that leads to more congestion somewhere else. Highway development cannot keep up with the increasing volume of cars,” he says, adding that “the country should have started this (MRT) a long time ago.”

Another key aspect of the Gamuda-MMC proposal is that it stands to unlock land values, especially so as it connects major planned property development projects. These include major land privatisation projects in the Klang Valley.

The planned MRT route reaches the Matrade redevelopment area by the Naza Group, the proposed Sungai Besi redevelopment and the planned Kuala Lumpur International Financial District on 85 acres popularly known as Dataran Perdana.

“It is a no-brainer. The MRT will bring about a positive impact on values of real estate located within walking distance of the MRT stations,” says property consultant and map-maker Ho Chin Soon.

On the flipside, there is the concern of over-development and a property glut. “What you don’t want to see is all this massive investment goes into creating new pockets of development with MRT stations nicely built up to access these places, but they end up not being used due to a possible glut of such properties,” cautions Elvin Fernandez, managing director of property valuer and consultancy firm Khong & Jaafar Sdn Bhd.

Who’s going to pay for MRT?

Another major issue with regard to the planned MRT will be funding. Reports have indicated that the Gamuda-MMC MRT project could cost RM36bil. If land acquisition, rolling stock and the redevelopment of underground commercial space are included, the figure could top RM43bil.

The question is, who will fund this?

Thus far, the 10MP has been silent on how the MRT will be funded. The Gamuda-MMC proposal, based on those familiar with it, assumes that the Government will foot the bill on the basis that the economic returns from the project are very high. To be noted is that public funding for MRTs is typically absorbed by the government, like in Singapore and London.

It is also worth noting that the two LRT operators had to transfer the rail lines to the government-owned Syarikat Prasarana Negara Bhd in 2002, while the monorail was transferred in 2007. The operators had found themselves in financial distress after failing to make sufficient returns on the operations to finance debts incurred during the construction as well as other operational requirements.

Still, aside from the economic benefits, there are other multiplier effects that a project like the MRT will bring about. Construction and building materials will benefit, and jobs will be created for engineers, designers, architects and the likes.

Hence it is understood that some quarters are expecting the Government to fund the MRT from the savings from reducing fuel subsidies.

But that may not be so easy, points out Yeonzon Yeow, head of research at Kenanga Investment Bank. “The idea that the Government will finance it (MRT) with savings from eliminating fuel subsidies is theoretical at best. Remember that fuel subsidies affect everyone in the country. There would be questions if you used that savings just to enhance the transport system in the Klang Valley,” Yeow says.

He adds that if the funding is raised though bonds guaranteed by the Government, it (the Government) may ultimately have to bear the burden if the project is not able to cough up sufficient cash flows from ticket sales. “Will that fit in with the Government’s austerity drive to bring the budget deficit to below 2.8% by 2015,” he asks.

The only mega rail-based private-sector driven public transport system that had not needed a major bailout is the Express Rail Link Sdn Bhd (ERL), which operates the KLIA Ekspres and and KLIA Transit train services. Its executive chairman, Datuk Mohd Nadzmi Mohd Salleh, who is also a major player in the public bus sector through his Konsortium Transnational Bhd (KTB), agrees that the MRT is a step in the right direction but that careful planning will be key.

“The structure of public transport should be better planned so that there should not be any more bailouts like in the past. Instead of spending a large sum of money on mega projects, the government should have short-term, medium-term and longer-term plans, to alleviate the congestion in the city,” he says.

At the same time, he adds, private sector involvement in the running of public transport is important. “The private players are actually best suited to bring about the necessary efficiencies and new revenue streams like exploiting advertising opportunities on the vehicles.

He says the Government cannot afford to go on subsidising public transport. “It has to be efficiently run and at the same time, it has to be attractively priced. It can be well planned so that it can get sufficient numbers using it and then the returns from ticket sales can go a long way into subsidising both the operational and capital expenditure of the new systems,” he argues.

He cautions though that before the MRT is agreed upon, more detailed study of the needs of public transport should be done. “The methodology of public transport planning should be given a lot of thought and effort. At the moment, we don’t have this data. We don’t know where the real needs of public transport are,” he says.

Will SPAD get it right?

And that’s where SPAD comes in. Its officials have said they will study the MRT proposals (the one from Gamuda-MMC and any other ones that goes to the Government) and incorporate all of that if possible into its own public transport masterplan for the Klang Valley.

SPAD in fact is being tasked with revamping the entire public transport system. Besides the Klang Valley masterplan, which will be due in six months time at the earliest, SPAD will also be given the mandate to take over all licence issuing authorities, reorganise the bus network in the Klang Valley, integrate smart ticketing and monitor the overall standard performance of all public transport services, to name a few.

SPAD chairman Tan Sri Syed Hamid Albar told a news conference on Thursday that it aimed to more than double travel on public transport to 25% by end-2012 from 12% currently. “Yes, it is ambitious, but achievable. This is the first time we have a specific body to deal with the various land public transport issues,” he added.

But it is going to be an uphill task. Policy setting, operations, regulation and enforcement of public transport has been spread throughout a multitude of Government departments, agencies, including state bodies. SPAD has to not only communicate and extract data and expertise from these bodies, it also plans to usurp most of their powers. “This is going to be SPAD’s single biggest challenge, especially when it comes to the issuance of lucrative licences. Will SPAD be able to reorganise that?” questions a government official who declines to be quoted.

On a positive note, SPAD has been placed under the Prime Minister’s Office and that should give it the necessary clout to do its job well.

Overhauling the state of public transport in the Klang Valley is “not rocket science” says KTB’s Nadzmi. Adds Transit’s Moaz, “If we truly want to see public transport change over the next five years, we need a real vision for service-based public transport that puts people first, and focuses on performance. Other countries have done that, so Malaysia should be able to do it too.”

By The Star

Aero Mall to liven up Senai airport

Developments at the Senai International Airport in Johor are expected to accelerate following the set-up of the Aero Mall, a stand-alone and external airport mall.

"There are now RM2.5 billion worth of ongoing projects at the airport area," Senai Airport Terminal Services Sdn Bhd (SATS) chief executive officer Datuk Mohd Sidik Shaik Osman told Business Times in an interview.

They include the RM2 billion Senai High Tech Park and the Free Zone Logistics and Aerospace Industrial Park.

Sidik said the Aero Mall, which will open on July 1, will set a new wave of development for SATS, which has 1,120ha surrounding the Senai airport.

The RM80 million, 173,338 sq ft mall is an integrated lifestyle complex adjoining the airport. It has 29 retail outlets and 30,000 sq ft piazza area. Some 70 per cent of the lots have been taken up for shopping, entertainment and dining facilities.
Sidik said that there are also plans for a cineplex and a digital complex.

"When we took over the airport in 2003, it was just a building to service passengers flying to Kuala Lumpur. We have expanded service to include flights to Penang, Kota Kinabalu and Kuching, and other facilities.

"Malaysia Airlines and AirAsia operate some 220 flights a week (out of the airport) and we hope that will be increased as we work to grow air traffic and passenger volume," Sidik said.

"Passenger traffic at the airport is now more than two million, including meeters and greeters. We expect this to double in the next three years."

Sidik expects new developments in Iskandar Malaysia in the state to contribute to the airport's growth.

Ongoing projects at Iskandar Malaysia include Legoland, premium factory outlets, universities and hospitals, targeted to be ready by 2012.

"Iskandar is expecting some four million visitors a year. We think this will increase air traffic and passenger volume. The airport can handle up to 4.5 million passengers a year before it requires any expansion."

On the Senai High Tech Park and the Free Zone Logistics, Sidik said that SATS might undertake a fund-raising exercise, in the form of internal funds and loans, to get the projects moving.

He is ambitious about both projects and is confident that they will attract investors.

The high-tech park has drawn interest from investors in the US, Europe and China who are in various sectors, including semiconductor and solar energy.

There are confirmed investments from China's EQ Solar Technology International Sdn Bhd, which will invest US$500 million (RM1.6 billion) to produce solar modules, and leading industrial gas provider MOX-Linde Gases Sdn Bhd, which plans to set up an industrial gas separation plant.

"We have incentives to attract investors. Those who come into the Iskandar region will enjoy low income tax, among other things," Sidik said.

Still, SATS may face stiff competion from Singapore, the KL International Airport and the Port Klang Free Zone, which are also aggressively attracting investors through various incentives.

By Business Times

Sunway REIT IPO well received

PETALING JAYA: Sunway Real Estate Investment Trust (Sunway REIT) initial public offering of 1.52bil units was well received and the order book was fully covered despite a cautious sentiment and volatility in the equity markets.

In a statement yesterday, Sunway REIT Management Bhd (the manager) said the deal, which was signed yesterday, was set to raise RM1.49bil, mainly from key domestic as well as international institutional and high networth investors.

It said the institutional offering was priced at 90sen per offer unit and the retail offering was priced at 88sen per offer unit.

The implied market capitalisation of Sunway REIT upon listing, based on the institutional price and 2.68bil issued units, would be approximately RM2.41bil, positioning Sunway REIT as the largest Bursa Malaysia-listed REIT.

It added that upon listing, Sunway REIT property portfolio would include eight of Sunway City Bhd’s existing prime properties situated in Penang, Perak, Selangor and Kuala Lumpur.

By The Star

Friday, June 25, 2010

Mah Sing plans 'Icon City'

Mah Sing Group Bhd, the country's fifth largest property developer by revenue, plans to launch the "Icon City" in Selangor, its biggest commercial development thus far, which has a gross development value of over RM1.5 billion.

The project, which will be developed in phases, is located on 7.93ha site in SS8, Sungei Way, a site formerly occupied by Matsushita Group of Co.

Mah Sing had bought the land from Panasonic HA Air-Conditioning (M) Sdn Bhd for RM89 million or RM104.23 per sq ft. The deal was completed in March this year.

The land is situated at the crossroads of the Lebuhraya Damansara-Puchong and Federal Highway, making it strategic for development.

Initial plans for the land were to build three 17-storey serviced apartment buildings, a 16-storey hotel, five blocks of 25- to 31-storey office towers, a 20-storey small office home office block, 18 units of three-and-a-half-storey showrooms and 80 units of four-and-a-half-storey shop lots.

However, Mah Sing chief operating officer for commercial projects, Andy Chua, said the development plan for the five-year project is being modified to enhance its appeal.

"We are adding some unique and interesting concepts. We expect Icon City to be a new landmark for Petaling Jaya," Chua told Business Times.

He said Icon City will be a one-of-its-kind green and eco-friendly development with smart features and it will further enhance Malaysia as a property investment destination.

Chua added that the office towers will be tailor-made and sold en bloc while the apartments and shoplots will be kept for retail investors.

"We are bullish on the project as there is a pent-up demand for commercial properties in Petaling Jaya. Although the market may not be ready, but if the project is unique and special and people see the value of the properties, people will invest.

"A lot of companies are also moving to Petaling Jaya as an alternative to having an office in the Kuala Lumpur city centre. The rental yields are good here," he said.

Chua said Mah Sing aims to submit its final development plan to the local authorities by the third quarter of this year and start construction immediately.

It has started to demolish the Matsushita building and will complete the works by September, he said.

By Business Times (by Sharen Kaur)

Institutional tranche of Sunway REIT IPO 'fully covered'

The institutional segment of the initial public offering (IPO) of Malaysia's largest real estate investment trust (REIT), Sunway REIT, has been "fully covered" at above RM0.90 a unit, two sources with direct knowledge of the deal said.

The roughly US$500 million (RM1,610) IPO, Malaysia's largest so far this year, comes amid a faltering market for new offerings as investors fret about further financial troubles in Europe and its impact on the global economic recovery.

The IPO also comes ahead of a host of offerings by national oil corporation Petronas and shipping firm MISC scheduled for the second half of 2010.

"The book is fully covered. It's oversubscribed by about 1.2 times now," said one of the sources, who asked not to be named because he is not authorised to speak to the media.
"All the local funds are in and we're still getting international orders. It's quite an achievement given the current market conditions," the source said.

But Sunway REIT may have to price its IPO at the lower end of its indicated range because of deteriorating market conditions, said the sources.

The company last week set the indicative price range for the sale of 1.6 billion units of the REIT at between RM0.90 and RM0.98 per unit.

This means the IPO could raise between RM1.44 billion to RM1.57 billion.

The global market for IPOs, which had shown signs of a resurgence early in the year, faces a spate of delays and downsizings, underscoring difficulties for mega deals such as Agricultural Bank of China's IPO.

Sunway said earlier this month it had secured four cornerstone investors who will take 14 per cent of the IPO.

Sunway REIT will have a market capitalisation of RM2.4 billion to RM2.6 billion when it is listed on July 8.

By Reuters

Sunway REIT to sell shares at 90 sen each

SUNWAY Real Estate Investment Trust, controlled by Malaysian property and hotel group Sunway City Bhd, is selling shares at 90 sen each to institutional investors in an initial public offering, according to four people with knowledge of the matter.

The price is at the low end of the 90 sen to 98 sen range marketed to investors, said the people who declined to be identified as the details are private. The sale is being managed by a group of banks led by Credit Suisse Group AG and RHB Capital Bhd.

The IPO is set to top Masterskill Education Group Bhd’s RM771.4 million sale in May, and underscores rising investor appetite for stocks in the Southeast Asian nation amid an economic rebound from last year’s recession. Sunway REIT will begin trading next month and join 12 other REITs listed on the Kuala Lumpur stock exchange.

“Sunway REIT is a defensive REIT that will offer unit-holders a longer term growth catalyst,” Mervin Chow Yan Hoong, an analyst at OSK Research Sdn Bhd, said in a report June 22. “Malaysians are great shoppers and the recent global recession may have only slightly curbed this tendency.”

The Malaysian property trust includes shopping malls and hotels valued at RM3.7 billion, making it the biggest REIT in the country by asset value. Its Sunway Pyramid Shopping Mall is the biggest in Malaysia by net lettable area, according to OSK. More than 70 per cent of Sunway REIT’s income is derived from its retail properties.

By Bloomberg

Sunway REIT IPO well covered

KUALA LUMPUR: The institutional segment of the initial public offering (IPO) of Malaysia’s largest real estate investment trust, Sunway REIT, had been “fully covered” at above 90 sen a unit, two sources with direct knowledge of the deal said.

The roughly US$500mil IPO, Malaysia’s largest so far this year, comes amid a faltering market for new offerings as investors fret about further financial troubles in Europe and its impact on the global economic recovery.

The IPO also comes ahead of a host of offerings by Petroliam Nasional Bhd and MISC Bhd, scheduled for the second half of this year.

“The book is fully covered. It’s oversubscribed by about 1.2 times now,” said one of the sources, who asked not to be named because he is not authorised to speak to the media.

“All the local funds are in and we’re still getting international orders. It’s quite an achievement, given the current market conditions,” the source said.

But Sunway REIT may have to price its IPO at the lower end of its indicated range because of deteriorating market conditions, said the sources.

The company last week set the indicative price range for the sale of 1.6 billion units of the REIT at between 90 sen and 98 sen per unit.

This means the IPO could raise RM1.44bil to RM1.57bil.

The global market for IPOs, which had shown signs of a resurgence early in the year, faces a spate of delays and downsizings, underscoring difficulties for mega deals such as Agricultural Bank of China’s IPO.

Sunway said earlier this month it had secured four cornerstone investors who would take 14% of the IPO.

Sunway REIT will have a market capitalisation of RM2.4bil to RM2.6bil when it is listed on July 8.

The IPO, comprising an institutional tranche of 1.5 billion units, more than 90% of the total, and a retail portion of 134 million units, is expected to be priced on Friday.

The REIT will house eight properties, comprising shopping malls, office towers, and hotels with a combined market value of about RM3.7bil.

Credit Suisse and RHB Investment Bank are the joint global coordinators of the deal. The banks, along with CIMB, HSBC, JPMorgan and the investment banking arm of Maybank are joint bookrunners.

By Reuters

Collaborate to develop halal parks, states told

STATE governments are encouraged to share knowledge, experience and expertise among themselves to develop halal parks in their respective states.

There are eight halal parks in the country that are doing well, having collectively attracted RM4.8 billion in investment so far. They include Selangor, Negri Sembilan and Malacca.

In facilitating the orderly development of halal parks, Halal Development Corp (HDC), an agency under the Minister of International Trade and Industry (Miti) which is responsible to spearhead the development of the local halal industry, has published a HDC Designated Halal Parks guideline.

To date, a total of 97 companies have either purchased factory sites, started factory construction or are operating at the various halal parks.
"Halal park is a new initiative that has a lot of processes. I won't say the parks that are less developed are failures, they are just relatively new," said Minister Datuk Seri Mustapa Mohamed at the Third World Halal Research Summit 2010 in Kuala Lumpur yesterday.

"There should be a correlation between state governments to promote halal parks as well as support each other in the supply chain," he said.

Earlier, in his speech, Mustapa said Malaysia has developed the concept of halal parks which are dedicated economic zones with the infrastructure, incentives and support services readily available for potential investors.

"We also have the Global Halal Support Centre (GHSC) under HDC, which was established to be a world leader and global reference centre in halal knowledge and halal related services for both investors and consumers. GHSC hopes to be the one-stop centre for companies and service providers in halal-related sectors," he said.

Themed "Inspiring Innovation Through Halal Research", this year's summit focuses on encouraging innovation within halal research findings worldwide. It brings together the world's halal players to explore and discuss updates on research findings, emerging technologies, trends, issues and challenges within the halal industry.

While other countries are focusing on a certain halal products like halal food, halal meat or poultry, the government aims to develop a halal eco-system in the country.

The halal eco-system constitutes the components for a holistic halal supply chain incorporating production, research and development, banking and finance, logistics, tourism and other support services.

By Business Times

Prasarana given approval to build LRT lines

Work on the LRT extension from the Kelana Jaya line to USJ 20 in Subang Jaya and the Ampang line from Sri Petaling to Taman Puchong Prima will start soon.

Syarikat Prasarana Negara Berhad (Prasarana) has been given the approval for both lines from the Department of Railways.

There will be 13 stations for each of the two lines.

Prasarana group managing director Datuk Idrose Mohamed said they had their public hearing for three months beginning Sept 15 last year.

“The proposed lines were displayed at various locations of the local authorities,” Idrose told reporters at his office in Bangsar yesterday.

“We received a lot of feedback from the public and stakeholders while meetings were also held with residents on their objections raised.

“Both the federal and state governments ordered us to study the objections raised and how we can overcome the issues. We gave solutions and approval was granted,” he said.

On the remaining “unapproved” sections, Idrose said discussions were being held with the state and federal governments and hoped to obtain approval soon after all issues and residents’ concerns were sorted out.

For the Kelana Jaya line, the first phase of construction work covering 9.2km will be from the Kelana Jaya station to USJ near the Kesas highway.

For the Ampang line, the first phase is from the Sri Petaling station to Kinrara 3 covering 7.4km.

Work to relocate telecommunication cables, TNB underground cables and high voltage transmission lines, water mains, sewerage and gas pipes is expected to start in mid-July.

Idrose said work on both the lines would start simultaneously and was expected to be completed in three years.

He said the exact time frame would be clearer once approval for the remaining sections was obtained and tender called in September.

He added that there would be 800 to 1,500 parking bays depending on the location of the stations and the ridership.

Some stations are being integrated and some with just drop-off bays without the park-and-ride facility.

By The Star

Thursday, June 24, 2010

Sunway REIT IPO may be fully covered

The institutional segment of the initial public offering of Malaysia’s largest real estate investment trust, Sunway REIT, has been “fully covered" at above 90 sen per unit, two sources with direct knowledge of the matter said.

But Sunway REIT may have to price its IPO at the lower end of its indicated range because of deteriorating market conditions, the sources told Reuters on Thursday.

“The book is fully covered. It’s oversubscribed by about 1.2 times now. It’s quite an achievement given the current market conditions,” said one of the sources, who asked not to be named because he is not authorised to speak to the media.

The company last week set the indicative price range for the sale of 1.6 billion units of the REIT at between 90 sen and 98 sen per unit.
This means the IPO could raise between RM1.44 billion to RM1.57 billion.

By Reuters

REIT an option for TA, says CEO

KUALA LUMPUR: TA Enterprise Bhd (TAE) is open to the idea of injecting some of its property assets into a real estate investment trust (REIT), according to managing director and chief executive officer Datin Alicia Tiah.

“I wouldn’t say no (about considering a REIT), but it is something we would consider. It’s an option opening to us,” she said after the joint AGM and EGM of both TAE and subsidiary TA Global Bhd yesterday.

She said the company was looking at prospects of expanding its property division overseas, particularly in China.

“At the AGM, our chairman announced that the company is looking at possibilities of expanding into China. However, nothing is concrete so far,” she said.

Tiah said the group was currently developing a mixed-development project in Richmond, Vancouver.

“The area we are developing is the preferred place to stay for Asian immigrants. The project will be developed on a 22-acre site but only 10.5 acres can be developed. The remaining acreage is for landscape purposes.”

Tiah said the project would be spread over the next five to seven years.

Going forward, Tiah said, the group’s property development division was expected to contribute significantly to its earnings as it had several projects in the pipeline.

According to its annual report, the group has mixed commercial developments in Sri Damansara, Bukit Bintang and the KLCC area.

It also has a boutique residential development at Jalan U-Thant in Kuala Lumpur and a condominium development at Dutamas, Mont’Kiara.

Meanwhile, shareholders yesterday approved the sale of TAE’s entire stake in Quayside Gem Ltd (QGL) to TA Global for RM651.8mil, to be satisfied via issuance of consideration shares and assumption of a loan facility.

QGL is the owner of the Swissotel Merchant Court in Singapore.

TAE said in a statement that the proposed acquisition was expected to bring synergistic benefits to it as it would further enhance the group’s hospitality operations in major cities around the world.

By The Star

PNB to study plan for redevelopment of KL's Kampung Baru

KUALA LUMPUR: Permodalan Nasional Bhd (PNB) will conduct a study on the Government’s plan to redevelop Kampung Baru.

President and chief executive officer Tan Sri Hamad Kama Piah Che Othman said the study was to determine whether the redevelopment would yield competitive returns to PNB following the Government’s proposal to appoint PNB to undertake the redevelopment.

Two other Government-linked entities – Pilgrims Fund Board (Tabung Haji) and Pemodalan Hartanah Bhd – were also offered the job.

On Feb 6, Prime Minister Datuk Seri Najib Tun Razak announced the 122.93ha Kampung Baru would be redeveloped under a concept that would not require relocation of the residents and landowners.

He said the residents and landowners would have the right to determine the form of development to suit their requirements.

Najib had said Federal Territories and Urban Well-Being Minister Datuk Raja Nong Chik Raja Zainal Abidin had been asked to prepare a Cabinet paper on the redevelopment.

The Government also proposed to set up a special body to be run by government trustees without private sector participation to ensure Kampung Baru residents were assured of the redevelopment for their interests.

By Bernama in pact with

Malaysian Property website, Malaysia has formed a partnership with to power its property listings channel, according to a statement.

Visitors to can now view properties for sale and rent at''s store on the classifieds website.

All live property listings found on come complete with details, pictures, transport accessibility descriptions and property specifications.

According Richard Tan, Managing Director of, he was pleased to have on board as a partner.
"Forming partnerships with a clear market leader such as Malaysia, helps fuel content, that is not only relevant but of quality to our visitors," he said.

To date, has partnered with local and international giants like MSN Malaysia, Malaysiakini, and to power its property channel, with more additions in the pipeline.

By Bernama

Wednesday, June 23, 2010

Multi-Purpose’s RM3b project to be its biggest

The Malaysian government wants it to be an iconic development in Golden Triangle in Kuala Lumpur, says Multi-Purpose's managing director

Multi-Purpose Holdings Bhd (MPHB) will launch a RM3 billion project in Kuala Lumpur by the middle of next year which will complement the government's proposed international financial district and Pasar Rakyat redevelopment in Imbi.

Managing director Datuk Lau Kim Khoon @ Surin Upatkoon said the mixed development will be the group's biggest project.

It will comprise a one million sq ft full-fledge retail podium on 2.4ha, 50-storey luxury condominium, 35-storey four-star hotel and 30-storey office tower.

At a later stage, MPHB will build one more office tower and a residence complex. The whole project will be carried out over seven years, Lau said.

"We are fine-tuning the master plan and design. The government wants it to be an iconic development in Golden Triangle. This will be one of the biggest projects in town," Lau said after MPHB's shareholder meeting in Kuala Lumpur yesterday.

Lau said the initial stages of the project will be financed with MPHB's internally generated funds.

The cash-rich MPHB has RM1 billion reserves. Its shareholders' fund is RM2.1 billion.

"There is no need to raise funds at this stage as we are reasonably liquid in terms of cash. The project will be exciting for us to work on. We are confident property development will become a major contributor to our profit and loss account," Lau said.

Currently, 80 per cent of the group's revenue comes from the gaming business through its 51 per cent stake in Magnum Holdings Sdn Bhd. The rest is from property, insurance, stockbroking and treasury management.

In the fiscal year ended March 31 2010, MPHB made net profit of RM327 million on revenue of RM3.3 billion.

MPHB has some 2,200ha worth RM1 billion in Kuala Lumpur; Rawang and Mimaland in Selangor; and Penang. It also owns 1,840ha of agriculture land in south Johor.

"We are still acquiring land in prime areas in Kuala Lumpur to carry out more projects," Lau said.

At present, MPHB has three projects worth some RM300 million: two residential developments in Penang and one in Pudu, Kuala Lumpur. The project in Pudu is to turn an office block into a three-star hotel operated under the Flamingo chain.

By Business Times

Singapore's Marina Bay Sands opens

SINGAPORE: Singapore's second integrated resort, the Marina Bay Sands (MBS) formally opened Wednesday, with its owner Sheldon G. Adelson, Chairman of Las Vegas Sands Corp saying it would become the benchmark for future tourism development elsewhere.

"The MBS is not a casino-centric development project as in the old days," Adelson said.

He explained that his company's latest US$5.5 billion Singapore resort is a multi-amenities integrated facility which caters to all categories of visitors.

"It is like the bicycle spokes. Previously, the spokes led to the hub, where the casino was, but now lead to all amenities," he told a media crowd of about 1,100 journalists and television crew from over 60 countries, specially brought in for the resorts opening celebrations.
Adelson highlighted that among Las Vegas Sands Corp's integrated resorts, the MBS is the fourth, with the casino only occupying less than 10 per cent of its amenities.

He said for countries serious about boosting tourism and creating new jobs, the integrated resort model was unmatched.

"The MBS will now be the reference point by which all new tourism projects will be judged," he added.

He also said Singapore was already benefitting from the MBS with its tourist arrival figures on the rise since its soft opening on April 27.

The resort has been receiving about 125,000 visitors daily and about 500,000 people entered the casino this month.

Adelson said the casino expected its visitors to come from three market segments.

The primary segment he explained, comprised Singapore, Malaysia and Indonesia with the second being Thailand and the Indo-Chinese countries while the third has Hong Kong, Australia, New Zealand, China, Korea, Japan, India and the Philippines.

According to Adleson, he planned to open similar integrated resorts in the Mediterranean region, either in Spain, Greece or Italy, and in Seoul or Inchon in Korea, if local laws are in tune with his company's policy.

As part of the opening celebration, the rest of the hotel's 2,560 rooms and suites were thrown open for guests, along with additional shops, restaurants and facilities at Asia's largest expo and convention centre at the MBS.

Tomorrow, the much-anticipated 340-metre long rooftop strip, Sands SkyPark, will open. It is shaped like a floating ship in the sky and sits 60 stories high on three hotel towers like cricket-stumps and features swimming pools and gardens.

The MBS will continue to open additional features including theaters, a museum and crystal pavilions next year.

By Bernama

Several parties offer to buy 1 Mont’Kiara from Aseana

PETALING JAYA: London-listed Aseana Properties Ltd has been approached by several parties to purchase 1 Mont’Kiara (1MK) development, a retail cum office space development, but no decision has been made so far, a statement from Aseana Properties said.

“As this asset is situated in a prime location in Kuala Lumpur, it is inevitable that we continue to receive offers from interested parties. Any confirmation of a transaction will be announced to the relevant regulatory authorities,” a statement from Ireka Development Management Sdn Bhd said.

Aseana Properties owns 1MK while Ireka Development Management, a wholly-owned subsidiary of Ireka Corp Bhd, is managing the property. 1MK is developed by Ireka Corp Bhd.

It was reported on June 11 that a real estate fund management company affiliated with Hong Kong’s Cheung Kong Group has made a bid for it. Property tycoon and the world’s 14th richest man Li Ka-shing controls Cheung Kong Group.

1MK is the newest retail centre and is scheduled to be completed by the third quarter of this year. It is situated at the entrance to Mont’Kiara and is located directly opposite Plaza Mont’Kiara.

The project is located on 3.4 acres and comprises several components: a 34-storey office tower which is already 92% sold, a 20-storey office suite tower which will be put on lease and a five-storey retail block. The residential components which consist of Ireka @ Kiara 1 and Ireka @ Kiara 2 have already been completed. The different components are interconnected.

The bids were for the 20-storey office suite tower which has a net floor area of 185,000 sq ft while the retail block has a net lettable area of 250,000 sq ft, which is about half the size of The Gardens at Mid Valley Mega Mall.

To give an indicative price of the 20-storey block, the first phase which comprises the 34-storey office tower block was sold in 2007 at an average price of RM550 per sq ft. The asking price in the secondary market is about RM700 per sq ft today while the unsold units from the developer in hovering between RM680 and RM700 per sq ft. At RM680 per sq ft, the 20-storey office suite tower market value would be RM126mil while the retail block, with a mark-up value of a conservative 20% more than the office space market value would be RM204mil. That would total up to RM330mil. It was reported that Cheung Kong Group made a bid for this 20-storey office suite tower and five-storey retail block for RM300mil.

SK Brothers Realty Sdn Bhd general manager Chan Ai Cheng said other than Plaza Mont’Plaza, there is nothing to compare with 1MK.

Solaris@Dutamas and Solaris@Mont’Kiara are commercial areas, but they are four-storey high and do not have office tower blocks, nor the residential or retail elements enjoyed by 1MK, according to Chan.

1 Mont’Kiara was developed as a joint venture with Singapore-based CapitaLand, one of Southeast Asia’s largest property developer.

CapitaLand Commercial (M) Sdn Bhd in a statement said CapitaLand’s interest in 1MK is through the Malaysia Commercial Development Fund (MCDF), a real estate private equity fund.

“The MCDF, which owns 14.9% of 1 Mont’ Kiara, has an active portfolio management strategy where the fund will seek to divest its properties at the appropriate time. As 1 Mont’ Kiara enjoys a prime location, there has been continuing interest by other parties to purchase the development,” the statement from CapitaLand Commercial said.

CapitaLand owns an effective 21% stake in MCDF, a private equity fund which is managed by its wholly-owned financial services business unit, CapitaLand Financial Ltd.

By The Star