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Tuesday, April 6, 2010

YTL plans to house hotels under REIT

YTL Corp Bhd has plans to house its various hotel brands into a real estate investment trust (REIT) and list it on the stock market in the near future, said its managing director Tan Sri Francis Yeoh.

The REIT will be modelled similiar to that of LVMH Mo√ęt Hennessy Louis Vuitton S.A. (LVMH), a French holding company, recognised as one of the world’s largest luxury goods conglomerate.

LVMH has a group of 50 luxury brands such as Louis Vuitton, Fendi and Marc Jacobs under its stable.

“It’s just the same as LVMH, within the REIT we will be able to own many brands in the hospitality business. Right now we have many brands such as JW Marriott, Ritz Carlton, Muse in Saint Tropez, France, hotels in Bali, Swatch Art Peace Hotel in Shanghai located at the Bund in China and Niseko Village in Hokkaido, Japan and several resorts in Malaysia such as the Pangkor Laut Resort,” he said in an interview with Business Times recently.

He said the Muse hotel in Saint Tropez, France, which is set to be launched in June is an old resort which has been refurbished into an “exciting hotel” will be a six-star resort with an investment of RM140 million.

Yeoh added that the idea of putting the hotels under a REIT was to expand globally, as the group is looking at expanding the brands of hotel through good property buys in the Asia-Pacific region.

“A lot of people ask why I do high-end and it’s because of economic returns, we feel our expertise is much better.... we have access to greatest architects and designers and it’s better to do a masterpiece for the people who want to buy our products,” he added.

“In Asia you get a lot of nice beach areas whereby they are filled with high-rise buildings but I want to do pockets of developments like in Europe... like in Saint Tropez, as there are regulations there that do not allow overbuilding and that is why it’s so beautiful and not overwhelming,” he said.

On the Sentul West housing project, which is the first private gated park in Malaysia, Yeoh said the project has been delayed as the price disparity is too wide compared to Shanghai and Tokyo.

“It hurts me as Malaysia is well developed but still cannot command (the property pricing) of a global city price. Even our hotel rates need to be increased. RM350 for a five-star room is too little ... in New York we give that much for tips,” he said.

Yeoh said the reason why Malaysia has yet to arrive to a global financial city was because the country did not have the right type of international showcase to attract the right type of high spending tourists.

“I am disappointed that we are very slow and we have to move faster so that we can compete with Ho Chi Minh, Vietnam, and Jakarta, Indonesia,” he said.

By Business Times

Ex-CapitaLand exec plans real estate funds

SINGAPORE: Perennial Real Estate, a firm set up by the former head of CapitaLand's shopping mall business, plans to launch property funds that will buy malls in China and Singapore to tap the region's growing consumer demand.

Pua Seck Guan, who left CapitaLand in 2008, is making a comeback in the property fund management scene, drawing on his experience in helping build the Singapore developer's regional shopping mall business and floating off assets via real estate investment trusts (REITs).

Perennial just closed a 1.2 billion yuan (100 yuan = RM47.35) Chinese shopping mall fund aimed at Chinese investors and it has started pre-marketing a similar fund aimed at international investors.

Beijing Hualian Group, a large Chinese retailer, is a cornerstone investor in the yuan-denominated fund, he said.
"Particularly in China, there is a huge amount of opportunity. There is no shortage in the pipeline (and) we can still buy malls at good valuations," Pua, who is Perennial's CEO, said in an interview.

He downplayed risks of a bubble in Chinese retail property, noting it was possible to acquire malls in Beijing for 12,000 to 13,000 yuan per square metre compared with prices of around 20,000 yuan per sq m for residences outside the city centre.

China's retail sales were also growing at a clip of over 15 per cent per annum, he added.

Michael Kerley, a fund manager at Henderson Global Investors, said concerns about property price bubbles in China were overstated, noting the country's high savings rates, rural-to-urban migration and strong gross domestic product (GDP) growth.

"If property prices go up by 20 per cent in London, that's a multiple of 5 times GDP. When they go up by 20 per cent in China, it is only a 1.5 times multiple of GDP," Kerley said.

Similar to CapitaLand and other developers that have diversified into fund management, Perennial is directly involved in the design and management of the malls.

In China alone, the firm employs about 450 people directly or through its partners.

"You need a platform to demonstrate you know the local market... We have anchor tenants who will follow us so we know what kind of rentals we can achieve. We are not the kind of fund managers who pluck numbers from the air," Pua said.

Chinese malls that the Perennial funds invest in will be divested to Shenzhen-listed Beijing Hualian Department Store once the malls develop a track record and are able to deliver steady rental returns.

The Shenzhen firm, which now owns 24 malls, is in the process of being renamed to reflect its status as a REIT-like vehicle for investors seeking fairly high, predictable dividends with the possibility of capital appreciation if property prices increase.

Beijing Hualian Group is an anchor tenant at several China malls owned or managed by CapitaMalls Asia, which was spun off by CapitaLand last year in a US$2 billion (US$1 = RM3.23) initial public offering.

As for Singapore, Pua said Perennial hoped to raise a S$300 million (S$1 = RM2.31) to S$400 million fund that will invest in underperforming malls as well as develop new projects.

The firm has already led one investment, paying S$248 million for Katong Mall in one of Singapore's wealthy eastern suburbs. Food retailer Breadtalk, which will be taking space at the mall after it is refurbished, was an investor in Katong Mall.

Pua, who is widely credited with building CapitaLand's malls business, resigned in September 2008, sparking a 7 per cent fall in the firm's share price amid already uncertain market conditions which caused Singapore's benchmark index to fall 3.5 per cent.

He is a civil engineer by training and holds a masters degree from the Massachusetts Institute of Technology.

Besides China and Singapore, Singapore-based Perennial, whose management includes several former CapitaLand executives, is also active in India where it advises property giant DLF on the retail business.

By Reuters

PLB buys land in Penang

PLB Engineering Bhd has bought via a public auction nearly 20ha of land in Penang for RM38 million, in line with its efforts to increase landbank.

The land was bought through wholly-owned PLB Land Sdn Bhd, PLB said in a filing to Bursa Malaysia yesterday.

The price paid for the land was the highest bid received by vendor Southeast Asia Special Asset Management Bhd, it added.

By Business Times