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Wednesday, June 30, 2010

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

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