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Thursday, July 1, 2010

KSL to launch high-end Ampang condo project

SEGAMAT: KSL Holding Bhd plans to launch its high-end condominium project in Ampang in the first or second quarter of next year.

Executive director Ku Hwa Seng said the company was now working on the details of the project and was hoping to submit its plans to the relevant authorities soon.

He said it planned to build a 10-storey building on its land in Jalan Madge off Jalan U-Thant. The condominium block will comprise 50 units, each with a built-up area of between 334.45 sq m and 464.51 sq m with its own private lift.

“The indicative selling prices start from RM3mil to RM5mil per unit and the project has a gross development value of RM200mil,” he told StarBiz recently.

It would take two years to complete the project, expected to be named D’Embassy, in view of several foreign embassies being located within the vicinity, Ku said, adding that the company was confident that the project would attract interest from the rich, businessmen and expatriates due to its good location in the Golden Triangle area.

“We can also benefit from the spill-over effect of the KLCC and the redevelopment projects in certain parts of Kuala Lumpur.”

The project will be KSL’s second outside Johor for the Johor-based developer. The first is in Klang.

Phase one of the Klang project would be launched toward the end of the year with 100 units of mixed residential units comprising double-storey link cluster, semi-detached and bungalows priced from RM500,000 each, he said.

With the company taking bigger steps out of Johor, Ku said it would be looking for more land in the Klang Valley for future projects.

He said after the Klang Valley, the company would probably go north to Penang as demand for houses, especially high-rise living, in the land-scarce state was good.

For the financial year ended Dec 31, 2009 (FY09), KSL recorded net profit of RM91.38mil on revenue of RM186.17mil compared with RM90.50mil and RM216.24mil respectively in FY08.

By The Star

Mapletree plans to float 2 property trusts

SINGAPORE: Mapletree Investments, a property firm owned by Singapore state investor Temasek, plans to float two real estate investment trusts, including what may be Southeast Asia's largest REIT listing.

Listings of property trusts are making a comeback in Asia as investors are lured by their high yields relative to bonds, recovering from the credit crisis.

Malaysia's Sunway REIT is raising about US$455 million (RM1.48 billion) in Southeast Asia's biggest initial public offering so far this year. CapitaMalls Malaysia Trust is aiming to garner over US$300 million (RM978 million) in a Malaysia IPO.

Mapletree hopes to get as much as S$1 billion (RM2.32 billion) from the initial public offering of Mapletree Industrial Trust, which currently owns about S$1.7 billion (RM3.94 billion) worth of factories, business parks and warehouses in Singapore.
"We hope to launch the REIT by this year," Mapletree CEO Hiew Yoon Khong told reporters yesterday. He declined to name the bankers involved in the deal but banking sources said the institutions were Citi, DBS and Goldman Sachs.

The banks either declined comment or were not contactable.

Bahrain's Arcapita will help market the REIT, which is syariah compliant, to Middle East investors, the sources added.

Following the listing of Mapletree Industrial Trust, the Temasek unit will float Mapletree Commercial Trust, whose assets include Vivocity, Singapore's largest mall, and several office buildings west of the city-state's central business district.

Mapletree has not yet appointed bankers for its commercial REIT, which will draw the initial portfolio from the firm's S$6.4 billion (RM14.85 billion) worth of Singapore commercial properties, Hiew said.

Mapletree owns or manages over S$13 billion (RM30.16 billion) worth of real estate assets in Singapore and around Asia.

Its listed property trusts include Lippo-Mapletree, whose main assets are Indonesian malls, and Mapletree Logistics Trust, which owns warehouses and other industrial properties across Asia.

The company, which is unlisted, reported yesterday an 87 per cent increase in net profit to S$393.8 million (RM913.62 million) for the financial year ended March 2010.

Mapletree Industrial Trust will likely be Southeast Asia's largest REIT IPO when it comes onto the market.

REITs are property funds that pay out most of their rental income as dividend and are aimed at investors who want regular income with an opportunity to benefit if property values rise.

HSBC said recently it expects a surge in the number of Asian REITs over the next three to four years due to demand for more risk-averse property investments.

"We have plans to launch more REITs and private real estate funds," Hiew said. "We are optimistic about our growth in the year ahead (and) we will continue to scale up our fund management platforms and increase the share of assets under management as part of our overall growth strategy."

Besides listing the two REITS, Mapletree Investments intends to launch several private property funds including a US$300 million (RM978 million) Japan fund focused on IT-related infrastructure, a US$300-US$500 million (RM978 million to RM1.63 billion) Vietnam fund in which Mapletree may inject existing commercial and residential projects, and a US$500 million China-focused fund that will invest in a wide range of sectors.

By Reuters

Spotlight on REITs

The impending high profile initial pubic offering (IPO) for Sunway Real Estate Investment Trust (REIT) on the Main Board of the Bursa Malaysia has certainly raised investor awareness on this particular class of investment securities.

Sunway REIT will make its debut on July 8. Hot on its heels, yet another REIT, the CapitaMalls Malaysia Trust is slated for listing on July 16.

Although REITs have been around for some time — Axis REIT was the first REIT to be listed in Malaysia back in August 2005 — investor interest has been largely subdued with relatively thin trading volumes observed for most of the 12 REITs currently listed on the local bourse.

However, we could see increased interest going forward. For starters, the listing of Sunway REIT has helped raise the profile for this entire asset class. It will be the largest REIT on Bursa Malaysia with assets valued at almost RM3.73 billion and a market capitalisation of roughly RM2.7 billion (assuming the indicative unit price of RM0.97). Elsewhere, CapitaMalls will list with assets totalling RM2.19 billion and a market capitalisation of about RM1.46 billion (assuming a price of RM1.08). By comparison, Starhill REIT, currently the largest listed, has assets of about RM1.64 billion and market capitalisation of little over RM1 billion.

We expect the larger size and better liquidity will broaden the appeal of REITs to a wider spectrum of investors, including foreigners. Case in point, one of the four cornerstone investors in Sunway REIT is the Government of Singapore Investment Corp.

Several of the other REITs have also announced plans to increase their assets base. For example, AL-AQAR KPJ REIT recently completed the acquisition of additional assets that lifted the total value of its investment properties above the RM1 billion mark. It has further proposed additional purchases, including two hospital buildings in Indonesia, worth some RM303 million. Axis REIT too has announced acquisitions that will boost assets under management to some RM1.1 billion by end-2010.

So, what is a REIT?
Although listed and traded on Bursa Malaysia, REITs are not equity. As the name suggests, a REIT is a form of trust that invests, primarily, in property assets. Funds, to acquire property assets, can be raised through the sale of units in the trust and/or borrowings.

REIT unit holders have a direct and proportionate ownership in the underlying properties. As such, buying into a REIT is akin to property investing, albeit on a smaller scale, but which requires minimal time and effort. The properties are professionally managed.

Part of a diversified portfolio
Indeed, investors may consider REITs as an alternative investment to properties — to form part of their diversified portfolio, which would typically also include bonds and equities.

The unit price of a REIT normally tracks closely the value of its underlying assets less borrowings (NAV or net asset value). Thus REITs, like property investing, are a hedge against future inflation.

Since REITs are listed and traded on the local bourse, they have the advantage of better liquidity as compared to owning properties. Plus, investors need only a small capital outlay in order to gain exposure to a diversified portfolio of real estate investment.

Attractive yields on high distribution rate
REITs are exempted from paying corporate tax provided they distribute in excess of 90% of their annual incomes, primarily rental, to unit holders. Hence, most are committed to a high distribution rate. For example, both Sunway REIT and CapitaMalls intend to distribute 100% of incomes in the first two years of operations and at least 90% thereafter.

The high distribution rate usually translates into yields that are more attractive than that from the average equity investment. Gross yields from REITs listed on the local bourse range from 7.2% to as high as 8.4%, based on 2009's distribution rates at prevailing prices.

Currently, incomes distributed to both individual and institutional investors in 2010-2011 are subject to a final 10% withholding tax. The government has yet to indicate the tax rate beyond this period. But industry watchers expect the rate will not stray too far from the global norm, especially if the government aims to attract foreign investors. Singapore, which has one of the largest REIT markets in the region, do not levy any taxes on income distribution to individual investors.

More defensive than equity investment
REITs are widely seen as a defensive investment alternative and are appealing to investors with a lesser appetite for risks.

To be sure, unit prices are still influenced by sentiment prevailing in the equity market. However, their volatility is generally lower since the rental incomes have been, by and large, steadier than revenue for many businesses in the economy.

Indeed, the majority of REITs have registered positive earnings growth over the past few years, albeit at a gradual pace. Rental rates have, on average, been trending higher as had property values. Of course, the longer-term rental prospects and market values for individual REITs will depend heavily on the quality of their underlying property assets.

Note: This report is brought to you by Asia Analytica Sdn Bhd, a licensed investment adviser. Please exercise your own judgment or seek professional advice for your specific investment needs. We are not responsible for your investment decisions. Our shareholders, directors and employees may have positions in any of the stocks mentioned.

By The EDGE Malaysia (Written by InsiderAsia)