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Wednesday, June 27, 2012

IGB eyes hospitality, office REITs

KUALA LUMPUR: IGB Corp Bhd (IGB), which will have RM800 million cash following the listing of IGB Real Estate Investment Trust (REIT), is looking at spinning off two more REITs in the next five years.

Group managing director Robert Tan Chung Meng said that the group would ultimately like to have a hospitality and office REIT, but the exact timing for the product could not be determined now.

"It could be anything between two and five years," Tan said.

The timing, he said, now is suited for a retail REIT and hence it is establishing a IGB REIT, which will have two of Malaysia's most prized mall assets - The Mid Valley Megamall and The Gardens Mall.

IGB's preference is also to have separate REITs for different business and not to place it all under the same REIT.

IGB, a property developer, also operates hotels and manages office buildings to obtain recurring income.

The listing of the IGB REIT is expected to be in September 2012.

Some 3.4 billion units will be issued under the exercise for the two malls which have been a valued at RM4.6 billion.

Currently, both assets come under KrisAssets Holdings Bhd, in which IGB has a 75 per cent stake. KrisAssets will sell the shopping complexes to the IGB REIT.

IGB's stake in the soon-to-be-listed trust will be 51 per cent. The dilution of the stake would provide IGB with an estimated RM800 million in cash, following the listing exercise.

Tan, who was speaking to reporters following IGB and KrisAssets annual general meeting yesterday, said that RM800 million will be used for future expansion both locally and abroad.

The board has no intention to maintain the listing of KrisAssets.

Meanwhile, Tan said IGB continues to look for properties in the country and abroad for merger and acquisition purposes, and take advantage of the opportunity in the uncertain global economy which could offer assets at a bargain.

By Business Times

Glomac FY12 profit jumps 36% on property sales

PETALING JAYA: Glomac Bhd announced a 36.2% jump in its financial year 2012 (FY12) net profit from RM62.98mil to RM85.78mil, attributable to the commendable sales of its prime mixed developments.

Its revenue for the 12-month period ended April 30 was 9.7% higher at RM655.61mil compared with RM597.48mil a year ago.

In its filing with Bursa Malaysia, the group said the improvement was due to “on-going sales and progressive recognition of development projects in Glomac Damansara, Bandar Saujana Utama, Saujana Rawang and Glomac Cyberjaya”.

In its press statement, Glomac elaborated that profits were anchored by Glomac Damansara, Glomac Cyberjaya and final billings from the completed Glomac Tower.

“Our total sales of RM663mil achieved in FY12 were higher than our internal target of RM500mil, driven by our prime mixed developments,” group executive chairman Tan Sri FD Mansor said.

He added that the launch of Glomac’s 39-storey Reflection Residences in March 2012 and the freehold serviced apartment project in Mutiara Damansara with a gross development value (GDV) of RM270mil received good response. The latter was 90% sold to date.

Moving forward, the group’s earnings growth will come from its record unbilled sales of RM731mil, alongside its pipeline of development projects with a total available GDV of about RM7bil.

Glomac has development landbanks of 200 acres in Sungai Buloh, adjacent to Bandar Saujana Utama and 192 acres in Dengkil for a new township project.

These projects are estimated to generate a GDV of RM800mil each.

Glomac is also proposing a final gross dividend of 2.75 sen per share less 25% tax for the financial year.

The total dividend paid for FY12 is 5.5sen, 4.75 sen higher than the previous year.

Meanwhile, Bernama reported that at an analyst briefing yesterday, group managing director and chief executive officer Datuk FD Iskandar Mansor said Glomac aimed to grow its market capitalisation to RM1bil from the current RM600mil in the next three years.

He said the growth would be underpinned by both merger and acquisition (M&A) exercise as well as organic growth. “To grow the market cap from RM300mil to RM600mil took us about two to three years. So we expect a similar timeline for this objective.

“However, the aim is still subject to the external economic factors and domestic demand,” he told reporters after the briefing.

By The Star

IGB Corp to fund growth with REIT listing proceeds

KUALA LUMPUR: IGB Corp Bhd is expecting to raise some RM800mil in cash from the upcoming listing of its retail real estate investment trust (REIT), which is expected to happen in mid-August.

IGB Corp group managing director Robert Tan said the proceeds would be used for future expansion activities, which “are in the pipeline.”

Tan also confirmed a recent StarBiz report that said IGB Corp was mulling over another two REITs to unlock the value of its office and hotel assets.

“If this (the listing of the retail REIT) goes well, we will look at the possibility of the office/commercial and hotel/hospitality REITs.

“It is a question of the timeline or timing. Now, the demand is good for a retail REIT but an office REIT is not the flavour of the month.

“Also, the office/commercial and hotel/hospitality REITs would have different investors with different expectations,” he told reporters after the group's EGM.

To recap, the listing of IGB's maiden REIT, the retail REIT, in the third quarter of this year is to unlock the value of its two prime retail assets - Mid Valley Megamall and The Gardens Mall.

Both the malls are currently parked under IGB Corp's 75%-owned unit, KrisAssets Holdings Bhd.

KrisAssets Holdings has proposed to sell both the retail malls and their related assets to its parent IGB Corp for RM4.6bil.

The disposal would be satisfied via cash and the issuance of 3.4 billion units in IGB REIT.

KrisAssets had also proposed an offer for sale of 670 million consideration units by Mid Valley City Gardens Sdn Bhd via the initial public offering (IPO) of IGB REIT.

KrisAssets said it wanted to distribute 2.73 billion consideration units, as well as the remaining cash proceeds from the sale of the two properties and the IPO to its entitled shareholders at a date to be determined and announced later.

KrisAssets' board has no intention of maintaining the company' listing status after the completion of the proposed disposal of its two malls.

Meanwhile, the group's hotel division including associates, reported revenue of RM424.2mil in 2011, which was up 14.5% compared with RM370.5mil in 2010.

In its annual report, IGB Corp also said last year, rental revenue from office buildings was within expectation with an improved contribution of RM112.2mil, compared with RM105.8mil in 2010.

Tan also said IGB Corp was looking at mergers and acquisitions, both locally and abroad.

“We are in an opportunistic mode,” he said.

Tan also said the group would continue to focus on centrally located city hotels.

“We do not want to compete with resort operators.

“We will continue to focus on our strength, which is city hotels.

“Location is central,” he added.

Meanwhile, the group has a remaining land bank of 2,000 acres with the bulk in Selangor.

In its annual report, IGB Corp stated that its property development unit had seen encouraging sales for its mixed commercial development G Residence, which was launched in Feb 2012.

To date, 85% of G Residence units have been sold.

Located off Jalan Ampang Hilir, Kuala Lumpur, G Residence comprising 474 service apartments and 26 retail shops, has a gross development value (GDV) of RM430mil.

By The Star

BB Plaza to make way for MRT station

Landmark: The iconic 38-year-old BB Plaza, located in the heart of Kuala Lumpur, will be demolished to make way for the MRT project.

KUALA LUMPUR: The 38-year-old Bukit Bintang Plaza (BB Plaza) will need to make way for the construction of a My Rapid Transit (MRT) station, contradicting earlier reports that only the front of the property and basement will be needed for development purposes.

UDA Holdings Bhd officials, who earlier met with BB Plaza’s tenants to clear up the confusion on the status of the property, said they had been asked to vacate the premises by MRT Corp by the end of the year in a meeting two weeks ago.

UDA, a wholly-owned entity under the ministry, owns BB Plaza as well as several other commercial properties in central Kuala Lumpur, Ipoh and Johor Baru.

UDA group managing director Ahmad Abu Bakar said at a media briefing that Tradewinds Corp Bhd, a property and hotel conglomerate majority-owned by media-shy tycoon Tan Sri Syed Mokhtar Al-Bukhary, had expressed its interest to acquire the property.

“We discussed it at the board and have related the offer back to the ministry, so we’ll wait for the decision,” he said, adding that there were parties who were interested to either jointly develop or acquire the property.

According to recent reports, Tradewinds Corp had approached UDA to redevelop BB Plaza under a 50:50 joint venture which the latter’s board had declined because the returns were not lucrative enough.

MRT Corp, the body tasked with overseeing the development of the MRT line, have previously said it has no plans to acquire BB Plaza, valued at an estimated RM500mil.

Ahmad said UDA had no plans to redevelop the property on its own due to the lack of funds. “There’s been talk of redevelopment but not in the near term as we don’t have the funds because we’re trying to clean up our balance sheet,” he clarified.

UDA’s senior vice-president of property management Syed Ahmad Nazri Syed Kamaruzaman said the company was just as surprised as the tenants that the property was going to be demolished.

“We had a meeting with the tenants because of the confusion over the status of the property especially after reports came out saying that BB Plaza will not be demolished. In all our meetings with the ministry, the understanding is that the property will be demolished,” he said.

Syed Ahmad Nazri said a letter from MRT Corp only requested UDA to vacate the front of the property while Ahmad pointed out that this has caused a lot of confusion.

“Initially MRT Corp told us that they just need the front portion and that the station will be underground.

“They said there was no need to demolish the whole building. Later on when we discussed with them, they said the whole building will have to be brought down, so this is the confusion of the last one month or so,” he said.

Meanwhile, Syed Ahmad Nazri said compensation for the tenants was discussed but it was the stance of the company that compensation should come from MRT Corp.

“In fact we’ve passed the claims of several of the tenants to MRT Corp and they have come back to us asking for more information. Even though there’s nothing formal, we’re working towards it,” he said.

By The Star

UMLand upbeat on new projects

KUALA LUMPUR: United Malayan Land Bhd (UMLand) is upbeat on its plan to launch about 1,500 units of mixed properties with a gross development value (GDV) of RM1bil this year.

Group chief executive officer Chia Lui Meng said the projects, both township and niche, were mostly located in Iskandar Malaysia and were expected to enhance the group’s earnings for at least the next two years.

By Bernama