Lehman plans asset sales, posts US$3.93b loss

NEW YORK: Lehman Brothers Holdings Inc said it plans to sell a majority stake in its investment management division and spin off commercial real-estate assets as the struggling US investment bank fights to raise capital.

Wall Street's fourth-largest investment bank also reported a much-larger-than-expected third-quarter loss of US$3.93 billion (US$1 = RM3.46), hurt by US$5.6 billion of net writedowns.

"This is an extraordinary time for our industry and one of the toughest periods in the firm's history," chief executive Richard Fuld said in a statement.

Lehman shares erased early gains that pushed them above US$10. The shares, which fell 45 per cent on Tuesday, were down 49 cents at US$7.30 in pre-market trading as the company failed to announce a deal to sell its asset management business.

"What you are dealing with is a confidence issue," said Doug Roberts, chief investment strategist at Channel Capital Research in Shrewsbury, New Jersey, "There is still an underlying level of uncertainty as to what Lehman's future is."

Lehman said it has reduced exposure to toxic assets, including cutting its residential mortgage exposure by nearly half, and slashed its annual dividend to five cents per share from 68 cents.

Lehman said it intends to sell about 55 per cent of a portion of its investment management unit, including Neuberger Berman asset management and the private equity and wealth management businesses. It said it is in "advanced discussions with a number of potential partners" for such a sale.

The company also said it intends to spin off US$25 billion to US$30 billion of its commercial real-estate assets into a separate, publicly-traded company.

Lehman said its third-quarter net loss applicable to common shareholders was US$4.09 billion, or US$5.92 per share. Net revenue was negative US$2.9 billion, reflecting the write-downs.

Analysts' average forecast was a loss of US$3.43 per share on revenue of US$88 million, according to Reuters Estimates.

Selling the investment management division is designed to boost the company's capital levels; spinning off commercial real-estate assets is meant to reduce the toxic investments that have reduced Lehman's market value by more than US$40 billion since February 2007.

Before yesterday, Lehman had already taken US$7 billion in credit-related writedowns and losses since the start of the global credit crisis.

By Reuters

Singapore group may sell tower to ING

Menara Standard Chartered likely to go for RM300M, sources say



DUTCH insurer ING has emerged as the front-runner to buy the Menara Standard Chartered on Jalan Sultan Ismail for almost RM300 million, sources said.

A decision and an announcement on the winner may be made as soon as next week, a source told Business Times.

It is believed that the Government of Singapore Investment Corp Real Estate (GIC RE) is selling the office building to ING Real Estate Investment Management.

While it could not be determined how much ING would be paying for the property, industry executives estimate it would be around RM900 per sq ft.

"Based on the recent Menara Citibank transaction of RM970 per sq ft, Menara Standard Chartered should go for about RM900 psf," one source said.

It was also reported that the owners were looking for a yield or return on investment of about six per cent.

Based on a nett lettable area of 321,000 sq ft, the building could be sold for around RM285 million.

ING said it could not comment on the matter immediately.

"The purchase of properties is an ongoing investment initiative that ING Malaysia conducts in the markets we operate in of which to date we have an estimated investment assets under management of RM10 billion," said Karen Yoong of ING Insurance Bhd's Branding & Corporate Communications division.

GIC RE did not respond to Business Times' query while calls to Rahim & Co's representative handling the deal went unanswered.

According to GIC RE's website, it bought Menara Shahzan Insas through its affiliate Reco City Sdn Bhd in November 2001 for RM135 million.

Built in the mid-1980s, Menara Shahzan Insas is a 42-storey office tower with a total gross floor area of 46,700 sq m.

The building was later renamed Menara Standard Chartered in July 2004 after Standard Chartered Bank relocated its corporate headquarters there.

The website also said the building required extensive renovation due to its age and condition at the time of acquisition.

Once renovation was completed, GIC RE repositioned Menara Standard Chartered as a premium office building, attracting class "A" office rentals and international tenants.

GIC RE is one of three business units under GIC, one of two of Singapore's investment arms. Temasek is the other arm that is more well-known among investors. Together, they manage Singapore's foreign reserves.

GIC RE's website states that its current assets in Malaysia include holdings in the Sunway Pyramid Mall, Sunway Hotels and Resorts and a stake in the City Square shopping mall in Johor Baru.

By New Straits Times (by Vasantha Ganesan)

YTL may open shopping malls in Singapore, London

SINGAPORE: YTL Corp, Malaysia's biggest builder, may open shopping malls in Singapore and London under its Starhill brand in the next 12 months, managing director Francis Yeoh said.

"London is actually pursuing us to do a Starhill," Yeoh told reporters in Singapore yesterday, referring to the company's luxury Starhill mall in Kuala Lumpur.



A recent decline in commercial rental rates has made the plan more viable, he said.

YTL's fourth-quarter profit dropped 36 per cent as income from its property and power businesses slowed, the company said on August 19. Demand for real estate has eased as Malaysia's economy grew in the second quarter at the slowest pace in a year.

YTL in April paid a record price of RM85 million for property of less than an acre in Kuala Lumpur, the Edge newspaper reported at the time, without saying where it obtained the information.

YTL also in November bought an apartment building in Singapore for a then-record S$435 million (RM1.05 billion), increasing its investment in a city where home prices had climbed to a 10-year high.

Gains in residential property prices have since eased in Singapore, rising 0.4 per cent last quarter, the slowest in four years.

By Bloomberg

YTL keen to launch Starhill brand in Singapore and London

SINGAPORE: After having successfully launched the Starhill brand in Dubai, YTL Corp Bhd wants to expand the concept to Singapore and London.

“We are being pursued by people from London. We also want to do a Starhill in Singapore and it can either be a greenfield or an existing property,” managing director Tan Sri Francis Yeoh said during the “The Luster of Luxury” forum at the Forbes Global CEO conference yesterday.

“Time is now a window for us and I can wait for 12 months to make a capital investment in Singapore,” he said.

YTL owns the Starhill brand concept. It first developed the concept in Kuala Lumpur and last April it launched the Starhill Gallery in Dubai.

Yeoh believes there is a booming market for luxury products and that “luxury should come to a person instead of the person going to luxury.” Malaysia will also be home to the “Forbes Asia Luxury Forum: The Art of Time” for the first time in Kuala Lumpur on Dec 5. It will examine the booming market for luxury timepieces in the region. A half day conference will also be held.

The event is held in conjunction with YTL’s “A Journey Through Time II” which kicks off from Dec 4 to 14 at the Starhill Gallery. It will be Asia’s largest watch and jewellery showcase. “YTL is an ideal partner for Forbes Asia in co-hosting this event given its expanding portfolio of luxury lifestyle resorts, luxury retail outlets such as the Starhill Gallery and other luxury-related projects,” Forbes vice chairman Christopher Forbes said.

By The Star

Next Malaysian property boom seen in 2-5 years

MALAYSIANS expect the country to experience its next property boom in two to five years, according to a survey conducted by property website, thinkproperty.my.

In a statement yesterday, thinkproperty.my said the survey, which received responses from almost 950 participants, showed a surprise strengthening of the people's perception of the Malaysian property market compared to last month, although overall confidence was still low.

“According to a survey, 43 per cent of the participants believe that the next property boom will be in 2-5 years, 20 per cent said within two years, 25 per cent thought it will happen in 5-10 years and 12 per cent more than 10 years,” it said.

Thinkproperty.my chief executive officer Asim Qureshi said the data from the survey were positive for Malaysia's property market.

“People perceive that the medium term for property in Malaysia is strong,” he said.

By Bernama

Cyberjaya office occupancy rate high

CYBERJAYA landowner Cyberview Sdn Bhd says that the average occupancy rate for offices in the MSC status area is at 94 per cent.

The demand for office space is so great that Cyberview will start work on SME Technopreneur Centre III a year ahead of schedule.

Cyberview had planned to start work on the third instalment of offices catered to small and medium enterprises in 2010.

Cyberview was set up by the government in 1996, with the Minister of Finance Inc owning 70 per cent and the remaining stakes held by different government agencies, which include the Multimedia Development Corporation (MDeC).

Between September 2007 and August 2008, the supply of office space in Cyberjaya had increased by another 1.05 million sq ft to 4.22 million sq ft.

Another additional 1.64 million sq ft of office space will be ready by the third quarter of 2009, bringing the total space for businesses in Cyberjaya to 5.86 million sq ft.

Cyberview managing director Redza Rafiq said interest in the intelligent city has also not waned, adding that MDeC is in talks with between five and six multinational corporations (MNCs) to set up base in the area. He did not elaborate.


MORE PROJECTS: MDeC is in talks with five to six multinational corporations to set up base in Cyberjaya, says Redza.

There are 474 companies located in Cyberjaya, 30 of which are MNCs.

Meanwhile, the master developer of Cyberjaya, Setia Haruman Sdn Bhd, is also upbeat about its housing projects in Cyberjaya.

Demand is now shifting to out-of-town buyers from just those working and living in Cyberjaya, said Setia Haruman chief operating officer Lao Chok Keang.

The Emkay group owns 75 per cent of Setia Haruman, which was appointed as master developer of Cyberjaya in 1998.

Setia Haruman has developed some 3,000 houses, of which 250 are high-end developments while the rest are medium-cost housing.

To date, some 750 medium-cost houses and about 200 high-end units have been sold. More medium-cost houses are expected to be built in the area to meet demand for homes within the RM200,000 to RM500,000 bracket.

By New Straits Times (by Presenna Nambiar)

China remains major real estate powerhouse

SINGAPORE: China will remain a major real estate powerhouse even after the Beijing Olympics and despite the backdrop of weaker property prices, according to Hang Lung Properties Ltd.

Chairman Ronnie Chan said the market had been growing very fast in recent years before the slowdown about eight months before the Olympics.

Hence, he said, a long-term players would have to devise ways to overcome the bear market.

“Property is a long gestation industry,’’ Chan said during a session on “Rolling the Dice on Real Estate,’’ at the Forbes Global CEO forum yesterday.

He said the biggest opportunity in China would include the large commercial and retail investments which could still bring in double-digit returns.

On the impact of the US credit crunch, he said there had yet to be a fallout on China and Hong Kong.

“Sooner or later, it (the impact) will reach here but, as long-term players, we are not perturbed.

“China is an opportunity of a lifetime and we are buying land for future projects.’’Hang Lung allocated US$5bil for projects in China and it had already nine projects under way, he said.

Apart from China, Vietnam also provided opportunities, although at a smaller scale, and that property prices had fallen 30% to 40% from their peak in 2007.

“It is like getting into China 10 years ago,’’ said VinaCapital group chief executive officer Don Lam. “For those who missed the first round, it could be time to enter (the Vietnamese market).

“True, there is a liquidity crunch, but for those who plan it right, it may take two to three years,’’ Lam said.

He added that inflation had no follow-through impact in Vietnam where 75% of the population is agriculture based.

VinaCapital is planning its second real estate investment trust of US$500mil, a follow-up from the successful US$800mil earlier.

By The Star

British home prices on downward spiral

LONDON: British house prices kept falling sharply in the three months to August even as the average number of home sales per surveyor hit a new low, a survey showed yesterday.

The Royal Institution of Chartered Surveyors (RICS) said its house price survey balance improved slightly to 81 in August from 83 but still showing a weak picture for the housing market, which is now slumping after a decade-long boom.

”A lack of mortgage liquidity is the key issue which is keeping the housing market from showing any real sign of recovery,” said RICS spokesman Jeremy Leaf.

Faced with a global credit crunch, mortgage lenders have tightened up the terms on which they make new loans, demanding as much as 25% of a property’s value as a deposit when before they would look for 5% or even provide as much as 120% of the value themselves.

The result has been a sharp fall in house prices and transactions drying up the effects of which are being felt right across the economy with construction and furniture retail companies particularly hard hit.

RICS said completed sales per surveyor stood at just 12.7, the lowest figure since the question was first included in the survey in 1978. Inventory levels on surveyors’ books also fell back.

As a result, the ratio of sales to the stock of unsold property an indicator of market slack fell to 15.4 from 16.9 in July.

The tentative improvement in sentiment seen in July’s survey have also proven to be short-lived, with a bigger balance of surveyors expecting sales to fall further.

By Reuters

The Pearl @ KLCC sold for RM550m

A KUWAIT Finance House (Malaysia) Bhd-led consortium has bought The Pearl @ KLCC at Jalan Stonor, Kuala Lumpur, for around RM550 million.

The Pearl @ KLCC is a 41-storey luxurious high-end condominium block, offering 175 units ranging from 3,000 sq ft to two 20,000 sq ft penthouses with stunning architectural design.

Each floor is to house six units with private lifts.

The consortium of four or five companies, known as Flora Bliss Development Sdn Bhd, acquired it from project developer Cera-mic Home Tiles (CHT) Sdn Bhd, a firm believed to be closely linked to main board developer Malton Bhd.

The purchase of the property is funded by KFH, the second major asset acquisition in the prime KLCC area financed by the banker.

Last December, KFH financed the purchase of the 40-storey Glomac Tower nearby Petronas Twin Towers by local Bumiputera firm Prestige Scale Sdn Bhd for RM1,160 per sq ft (psf), or RM577 million.

A source told Business Times Flora Bliss was offered a discount for The Pearl @ KLCC, which sold at less than RM1,000 psf.

Market prices for condominiums in the neighbourhood are doing at more than RM1,200 psf, while that of properties closer to the Petronas Twin Towers has soared above RM2,000 psf.
The Pearl @ KLCC will be constructed on 0.72ha of freehold land by China-listed Beijing Urban Constructive Group Ltd, hired by CHT.

Main structural works will commence in November and the building is expected to be ready by the end of 2010. The construction cost is estimated at RM280 million.

CHT has appointed Pintaras Geotechnics Sdn Bhd, a unit of Pintaras Jaya Bhd, for sub-structure foundation works due for completion next month.

It also appointed Malton's wholly-owned unit, Domain Resources Sdn Bhd, as project development manager.

"Flora Bliss may undertake a second sale of the building later or sell units to individual buyers when price escalates," a source said.

By New Straits Times (by Sharen Kaur)

Ascott may float Malaysian assets

The Ascott Group, the hospitality arm of CapitaLand Ltd, may float its assets in Malaysia into Ascott Residence Trust (ART), a real estate investment trust (REIT) listed in Singapore.

It currently owns and/or manages three serviced residences in Malaysia - Ascott Kuala Lumpur; Somerset Seri Bukit Ceylon, Kuala Lumpur; and Somerset Gateway, Kuching, Sarawak.

By end-2010, it will manage and own Somerset Ampang, which is being built for RM112.5 million.

Under its corporate leasing division, it manages 68 apartment units in two properties - Seri Bukit Ceylon Residence, Kuala Lumpur and Marc Service Suites, Kuala Lumpur.

It will manage 151 units of Tiffini by i-Zen in Mont' Kiara, Kuala Lumpur, developed by Ireka Group and due for completion by the first half of 2010.

Ascott International Management (2001) Pte Ltd senior vice president (operations) Alfred Ong said it is experiencing strong and stable performance at the properties.

"They have been performing well with occupancy of 80 to 90 per cent over the last two years and are suitable to be injected into the trust," Ong told Business Times in Singapore recently.

Launched in 2006, ART has a combined portfolio of S$1.5 billion (RM3.6 billion) as at June 30, 2008, comprising 37 serviced residences and rental housing properties across seven countries.

It is the first Pan-Asian serviced residence REIT set up to invest primarily in income-producing real estate like serviced residences and rental housing.

Ong said the group is on constant look-out for more opportunities in Malaysia to grow its presence.

"Our business in Malaysia is strong. Our occupancy and rates for our properties are above market, which gives us reasons to want to size up the locations and the properties," he said.

Ong said the group, which has invested RM193.7 million in Malaysia since 1998, is keen to explore potential in Penang, in Johor's Iskandar Region and in Petaling Jaya, Selangor.

"We are looking for more management contracts to manage residences for owners. We are negotiating for a few contracts in Kuala Lumpur and hope to seal a deal or two by the end of this year," he said.

Ong said the group is also looking for equity participation, which may involve land acquisition. It will work with local joint ventures or farm out building projects, he added.

By New Straits Times (by Sharen Kaur)

Ascott aims to manage more properties in Malaysia

The Ascott Group, the hospitality arm of CapitaLand Ltd, controlled by Singapore's Temasek Holdings, aims to manage more properties in Malaysia.

It now manages 68 apartment units at Seri Bukit Ceylon Residence and Marc Service Suites in Kuala Lumpur.

It will manage 151 units of Tiffani by i-Zen in Mont' Kiara, Kuala Lumpur, developed by Ireka Group, due for completion by the first half of 2010.

"We have been invited by developers who want us to manage their properties under our existing brands and we are looking into it," Ascott International Management (2001) Pte Ltd (AIM) senior vice president (operations) Alfred Ong told Business Times.

The Ascott Group, the largest global serviced residence operator in Asia-Pacific, Europe and the Gulf region, owns and manages 128 operational properties with 33 more coming up, under three brands - Ascott, Somerset and Citadines.

In Malaysia, it owns and/or manages Ascott Kuala Lumpur; Somerset Seri Bukit Ceylon, Kuala Lumpur; Somerset Gateway, Kuching, Sarawak; and Somerset Ampang, Kuala Lumpur, which will open by end-2010.

The brands Ascott and Somerset were introduced in Malaysia in 1998 and 2001 respectively, each aimed at high-end business travellers and expatriate families.

Ong said it is exploring ways to bring in Citadines, a more trendy brand popular in Europe, targeted at young and independent travellers.

In addition, Ong said, there may be "some improvement" in the group's net profit and revenue in its current financial year ending December 31, 2008, driven by higher portfolio gains.

Last year, it achieved a net profit of S$177.3 million (RM427 million) and revenue of S$435.3 million (RM1.1 billion), up by eight per cent and seven per cent respectively over 2006.

Ong said most of its properties offer an average 65 per cent gross operating profit, with some going as high as 80 per cent, he said.

By New Straits Times (by Sharen Kaur)

Malton’s strategy to weather slowdown

MALTON Bhd sees the potential to build up its exposure in the commercial and high-end residential property sector to weather the slowdown in the medium-end residential property market.

“The challenging market conditions, fuelled by rising construction costs and petrol prices, have resulted in a slower take up of property. Developers with ongoing projects have to be ingenious to ride out the tough times,” director of sales and marketing Tracey Lai told StarBiz.

Tracey Lai explaining the development plan for The Grove.

She said while a slowdown has crept into the residential market, there was still room for more commercial projects, especially Grade A offices in Petaling Jaya.

Being an integrated developer helps as Malton’s construction division undertakes most of the company’s construction needs. This act as a buffer against any need for cost renegotiations with contractors or stalling of projects.

“Our target market is very niche and provide some form of cushion against any excessive margin erosion caused by the rising construction costs,” Lai said.

She said in keeping to the company’s market-driven and buyer-centric product policies, its line up of projects would be targeting at the high-end market.

Malton’s strategy is to focus on product differentiation and the right branding for a broad spectrum of upmarket lifestyle products, Lai added.

“We believe high-end property products will continue to enjoy good take up as high net worth investors are quite insulated from the prevailing high food and fuel prices. Many are looking to invest in properties to hedge against rising inflation.

“While there are still uncertainties in the market, we believe an equilibrium will be reached in due course and the market will become buoyant again,” Lai said.

She said despite the prevailing caution among potential buyers, the property market would still be a good investment for investors, given the good rental yields and capital appreciation to be made.

“Developments at popular and prime locations will continue to attract buyers as decent yields could be reaped.

“Compared with many other countries in the region, Malaysia’s real estate products are still very much under priced and even with the full impact of cost increases, prices are relatively lower.

High-end properties in the country are considerably more affordable compared with in other countries,” she added.

Besides the quality workmanship and finishes, initiatives such as Malaysia My Second Home programme have also helped to attract foreigners to the country’s shores.

Liberalising guidelines such as the exemption of real property gains tax and relaxation of foreign ownership restrictions have also fuelled foreign buyers’ confidence in the market.

“There is still room to further raise the attractiveness of local real estate to foreign investors. This will largely depend on the Government’s efforts to ensure a healthy and stable economy and further liberalise foreign ownership guidelines.

“In the current challenging times, there is a need to be market savvy and more buyer specific. We have to work a lot harder to connect with and reach out to the buyers that include South Koreans, Chinese, Middle Easterners and Russians,” Lai said.

Malton has a number of interesting high-end residential and commercial projects that have a total gross development value (GDV) of RM2.1bil.


An artist's impression of a waterscape Villa at The Grove @ SS23 to be developed by Malton in Petaling Jaya.

One of its latest lifestyle offerings is the high-end gated development, The Grove in SS23, Petaling Jaya. The project on a 4.8 acre freehold land comprises only 35 exclusive three-storey bungalows and link bungalows priced from RM3mil to RM3.8mil each.

The Grove, with GDV of RM119mil, is planned for launch in October.

The designer homes, with six plus one en-suite bedrooms with a feature lift, boasts of a tropical garden living experience complete with water features.

The other upmarket residential projects include The Pearl @ KLCC and Amaya Saujana @ Saujana Subang. The Pearl @ KLCC comprises a high-end condominium project along Jalan Stonor and within the KLCC enclave.

The 41-storey block of 177 luxurious condominiums are spacious residences from 3,000 to 20,000 sq ft, including seven duplexes and three penthouses.

The 13-storey residential suite block of Amaya Saujana offers 318 residences priced from RM605,000 to RM918,000.

An artist's impression of the V-Square commercial project.

Malton’s flagship commercial development is V-Square (VSQ) – an integrated commercial project comprising two blocks of corporate tower, a block of corporate business suites, and two blocks of corporate offices, with retail space on the ground floors.

The project on a 2.6-acre plot in Jalan Utara, Petaling Jaya, will have a GDV of RM207mil.

By The Star (by Angie Ng)

Delivery comes first for Serai Saujana

RESORT STYLE LIVING: Hamidon (right) and Yam engrossed in a discussion on the Serai Saujana project.

SERAI Saujana Development (Serai) Sdn Bhd is working on a luxury boutique project in Subang, Selangor, which it may replicate in Kuala Lumpur and Langkawi in two years.

It is developing its flagship Serai Saujana, a luxury RM320 million gated and guarded community on a 4.25ha site within the Saujana enclave.

Serai Saujana comprises two 15-storey blocks of condominium with 163 units dubbed The View, priced from RM500 per sq ft and 42 units of three-storey homes known as The Villa, averaging at RM850 per sq ft.

Chairman and controlling stakeholder Hamidon Abdullah said 65 per cent of the units have been snapped up in the last eight months even before the launch.

"It is true that we are profit-driven, but we believe in our product and will market it to sustain in time. We do not intend to accelerate on the sales. Our philosophy is to deliver first," he told Business Times during a preview of the show unit recently.

Hamidon said the project, which elevates the art of resort living into an exquisite masterpiece backed by style, substance and serenity, has attracted locals and buyers from Korea, the UK, Australia, Sweden and the Middle East.

The other stakeholders of Serai are Saujana Consolidated Bhd with 30 per cent interest and Sunrise Bhd's former managing director Datuk Michael Yam and his brother with 20 per cent share.

Hamidon is confident that Serai Saujana will sell due to its exclusive location, which is adjacent to The Saujana Kuala Lumpur, Saujana Golf and Country Club and two 18-hole golf courses.

The development at the last piece of prime residential freehold site started early this year and is due for completion by mid-2010.

The View, which come in six designs and layouts, has built-up sizes ranging from 1,817 to 3,271 sq ft while the duplex penthouses range from 4,526 to 6,108 sq ft.

The Villas, with resort style living, offer built-ups ranging from 5,200 sq ft to 6,000 sq ft boasting four spectacular designs - stand alone, linked, corner or intermediate units, each with a private elevator, pool and gazebo area.

As for expanding the "Serai Saujana" brand, Hamidon said future projects, which it is in no hurry to launch now, will improve in terms of design, functional space and creation of the environment.

"We want to deliver what we are saying we will deliver first. So the plan now is to focus on the existing development," Hamidon said.

By New Straits Times (by Sharen Kaur)

Pangkor Island Beach Resort sees flat growth

PANGKOR Island Beach Resort expects occupancy and growth in room rates to be flat this year and 2009, as promotional activities and access into the island remain the same.

The four-star resort, owned and operated by IGB Corp Bhd, achieved a 65 per cent occupancy and an average room rate (ARR) of RM210 last year.

"For 2008 and 2009, we expect occupancy to remain at 65 per cent. We should finish this year at an ARR of RM230 and 2009 by about 20 per cent more," general manager Jimmy S. H. Yeo said.

YEO: Introducing various packages to improve performance

Although a 20 per cent increase in ARR translates to RM276 per night, Yeo said this is to mostly account for the increased cost of operation.

Yeo said if the hotel raises rates to help increase revenue, tourists will simply opt for other destinations.

"People are very conscious and sensitive about costs and they have options. Low-cost carriers offer attractive fares to other regional destinations," he said.

The option of filling more rooms to improve revenue is also proving to be tough.

Yeo said that the number of Taiwanese guests, making a major component at the resort, is reduced by 40 per cent this year compared to last year as they chose to travel to different locations.

"As a result, the hotel is now working on introducing various packages to improve its performance," he said in Pangkor recently.

One such package recently introduced is the Fly & Stay Free at Pangkor Island Beach Resort. Flights on the 48-seater Dash 7 air-craft into Pangkor, managed by Berjaya Air, are five times a week except on Tuesdays and Thurs-days.

For example, a return air journey for two persons for a one-night stay is RM1,252 (RM496 per person for flight and RM260 per night based on best online rate) and RM856 nett for one-night twin sharing, including breakfast and free usage of non-motorised land and sea sports.

The package is valid until December 19.

Meanwhile, Yeo, who is also the chairman of MAH (Malaysian Association of Hotel) Chapter in Perak, plans to present a memoran-dum to the authorities to consider helping to improve Pangkor Island, especially in terms of accessibility.

"If the island had a bigger runway to accommodate bigger planes, it will definitely help tourist arrivals into Pangkor," he said.

In fact, the hotel sits on a 40.5ha site, of which less than half has been developed. Yeo said that further development in Pangkor by IGB or other investors is unlikely to take place until and unless access into the island improves.

The 258-room hotel, which opened in 1986, was first managed by Pan Pacific. In 2004, IGB decided that its hotel management subsidiary Cititel Hotel Management will run the resort.

By New Straits Times (by Vasantha Ganesan)

Tradewinds scraps plan for luxury homes at Penang hotel

TRADEWINDS Corp Bhd, a company controlled by businessman Tan Sri Syed Mokhtar Al-Bukhary, has scrapped plans to halve room inventory and build luxury residences at its hotel in Penang.

The Mutiara Beach Resort Penang, which will be rebranded as InterContinental Resort Penang, has been closed for the past 29 months to accommodate a major renovation exercise.

Chairman Tan Sri Megat Najmuddin Megat Khas said that the decision to only have hotel rooms was made recently following a discussion with Syed Mokhtar.

"Tradewinds will now retain the hotel rooms and not have any serviced residences as the cost of building the product will not commensurate with the returns on investment," Megat Najmuddin told Business Times.

Tradewinds had planned to reduce the inventory of the 438-room property to 220 rooms and include 80 units of luxury residences. Cost at the time was estimated at around RM100 milion.
The residences were earmarked to be sold at around RM500 per sq ft and leased back.

Officials of the company had then expected the hotel to reopen at the end of 2008.

However, due to longer-than-anticipated delay in obtaining planning approvals and rising cost of materials, these plans have been abandoned.

Accordingly, the hotel will now only need some structural work and interior design work. Work on this is expected to begin by year-end and be ready for operation in mid-2009.

A sum of RM100 million is expected to be spent on the hotel, given the increase in cost and to convert the property to a luxury standard.

Megat Najmuddin said that Tradewinds was also working on obtaining financing for the project.

On whether the closure of the hotel for over two years is having an impact on group business, he said the hotel was previously only marginally profitable.

Tradewinds Corp's hotel portfolio includes Crowne Plaza Mutiara Kuala Lumpur, Hotel Istana, Hilton Petaling Jaya and Mutiara Johor Baru.

In the six months ended June 30 2008, the hotel division raked in RM159.07 million in revenue, or 70 per cent of the group's revenue of RM227.49 million.

By New Straits Times (by Vasantha Ganesan)

IJM Land: Call us a property supermarket

IJM Land Bhd will rebrand itself this Thursday as a new corporate entity that aims to be a top tier local developer with geographically diversified projects in Malaysia.

The rebranding exercise comes as IJM Land has completed its rationalisation of IJM Properties into the former last Friday.

"With a streamlined and focused business now, we can call ourselves a property supermarket as we have high-end products in KLCC and low-cost products in other townships," IJM Land managing director Datuk Soam Heng Choon told Business Times in an interview.

IJM Land currently sits on an enlarged landbank of 4,253ha with a gross development value (GDV) of RM26 billion, after holding company IJM Corp Bhd combined property units RB Land Holdings Bhd and IJM Properties Sdn Bhd into one entity.

As a softening property market looms ahead, Soam said, IJM Land will focus on its positive markets such as Sandakan and Penang.

"In Sandakan, the market is still bullish as its driven by crude palm oil while in Penang, we are launching new projects like The Light which will propel us into bigger developments there," he said.

The Light development is divided into four phases including residential, commercial and mixed developments plus seafront facilities.

The first residential phase, the Light Linear and Light Point projects, will be launched by year-end. "This project will see a blend of the new and old Penang," said Soam.

For a challenging market like Johor Baru, Soam said, the company will work harder at selling units while tweaking its products to meet the current market needs. "We will focus on the medium to medium high-end markets and slow down on (developing new) mass housing projects under RM250,000," he added.

Soam said, to contend with rising material costs and a softening property market, IJM Land will target housing needs of specific market segments. "We are focusing on the Malaysia My Second Home programme and marketing our Penang Pearl Regency project overseas. We are doing a sales launch overseas targeting Koreans over the next two months and if the response is encouraging, we will then do this for our other products," he said.

On overseas development, its maiden project will be an upmarket residential and retail project in China's automotive city, Changchun, with a GDV of RM500 million.

"We are looking at other second tier cities in China while considering other emerging markets such as Vietnam. However, we have not set a timeframe," Soam said.

By New Straits Times (by Jeeva Arulampalam)

Kulim plans REITs, unit IPO

KULIM (M) Bhd will be looking at plantation REITs (real estate investment trusts) and a separate listing for its plantation unit as part of its effort to unlock the value of the group’s diversified portfolio.

Managing director Ahamad Mohamad said the two avenues were among those closely considered under the group’s expansion plan but so far, no time frame has been set.

Ahamad Mohamad

“Kulim is looking at various proposals to unlock its value and further enhance shareholders’ worth.

“Nevertheless, the current pessimism surrounding the global equity market warrants a very cautious approach,” he told StarBiz.

Kulim is involved in four strategic core businesses – oil palm plantations, oleochemicals, biodiesel and quick-service restaurants.

Ahamad said the group planned to increase its landbank in Malaysia and Papua New Guinea (PNG) to ensure expansion in its plantation operations.

“Our strong financial position allows us to explore acquisition opportunities, especially in PNG, but we are doing it cautiously due to the buoyancy and prevailing high prices,” he added.

The group is also committed to the Roundtable on Sustainable Palm Oil (RSPO) principles as “we are cautious in opening new areas that will be regarded as unsustainable”.

He said Kulim was also open to landbank offers in Malaysia although such opportunities were quite limited.

As at March 2008, the group has 31,422ha in Malaysia, 44,714ha in PNG and 6,594ha in the Solomon Islands.

According to Ahamad, PNG would feature prominently in the plantation division’s future expansion.

The New Britain Palm Oil Ltd’s Numundo plantation

Its PNG subsidiary New Britain Palm Oil Ltd (NBPOL) is in the midst of acquiring Ramu Agri Industries Ltd (Ramu), which is listed on the Port Moresby Stock Exchange.

Ahamad said: “Upon the successful acquisition, we will be able to add 30,000ha of agricultural land in PNG.”

Ongoing expansion into new areas adjacent to the group’s existing operation is also taking place at 2,000ha to 4,000ha per year.

NBPOL is also setting up an integrated palm oil refinery in Britain with a production capacity of about 200,000 tonnes per year. It is slated to be commissioned by end of first quarter 2010.

“The move will see NBPOL expanding into the European Union and will make it one of the first palm oil producers to offer fully traceable and sustainable palm oil product,” Ahamad added.

On the group’s biodiesel operations, he said the lower palm oil price, which trades competitively with the crude oil price, does provide support for the viability of Kulim’s biodiesel production.

Kulim has a joint-venture with German-based Peter Cremer (S) GmbH to set up two biodiesel plants – one in Johor and another in Singapore. “We are still cautious on the commencement and operational arrangement of our Tanjung Langsat plant as there are other factors to account for,” he added.

However, the group’s biodiesel plant in Jurong, Singapore, which has been in operation since early this year, has been profitable. This is mainly due to the favourable tax and duty structures.

“We believe that the long-term viability of the biodiesel business rests heavily on legislation or government mandate,” added Ahamad.

As for the foods and restaurants division, QSR Brands Bhd (QSR) and KFC Holdings (M) Bhd (KFCH) have taken measures since early 2008 to stay ahead of competition while the market re-adjusts its spending as a result of the higher cost of living.

He pointed out the the success in securing franchise rights for Pizza Hut and KFC in Cambodia from principle Yum! Restaurants Asia Pte Ltd could see QSR emerging as a dominant force in the country’s food and beverage industry.

“We have introduced two KFC restaurants in Phnom Penh. We plan to open three more KFC outlets in that country in 2008 with an estimated investment of US$3mil,” he said.

This complements the existing plans of QSR to open more Pizza Hut and KFC outlets in Malaysia and neighbouring countries in 2008.

Ahamad said: “We do believe our subsidiaries will continue to perform operational and financial growth in 2008 as it continues to achieve same store sales growth and success in new regional markets.”

By The Star (by Hanim Adnan)

Mah Sing sees better outlook for property margin

KUALA LUMPUR: Mah Sing Properties Sdn Bhd may consider increasing the selling prices of its future property projects by 15% to 20% due to the hike in construction costs.

However, chief operating officer Ng Heng Phai said it would depend on the building materials costs at the point of launch and the company was looking for alternative ways to absorb the costs.

“The increase will be adjusted accordingly if construction costs drop in the future,” he said after the launch preview of Phase 2 of Hijauan Residence in Cheras yesterday.

He said construction costs had increased 20% to 30% over the last four months and it was still volatile right now.

Mah Sing Properties had planned to launch Phase 2 before year-end.

“Phase 2 comprises 30 semi-detached houses and bungalows and the estimated selling price would be at least RM1mil per unit,” Ng said, adding that the company had received over 1,000 enquiries about the project. Phase 1 has been fully taken up.Besides, he disclosed, the company was planning to launch its four-storey hill villas project in Hijauan Residence next year and the indicative selling price would be from RM2.3mil.

Asked whether Mah Sing Properties was affected by the property market slowdown, Ng said it had not been impacted because of its niche product offerings.

He said the company would continue to focus on the medium to higher-end market segment, but would not rule out venturing into the industrial property market again like it did about 10 years ago.

On another note, Ng said the company was now looking for partners to jointly develop projects, comprising commercial and residential development, in Vietnam.

“We are looking for potential landbanks in Ho Chi Minh City now,” he said.

By The Star

Mah Sing to proceed with Vietnam foray

Vietnam’s overheating economy provides opportunities to buy cheaper land and launch products.

PROPERTY developer Mah Sing Group Bhd will proceed with its RM1 billion planned township project in Vietnam, despite the country's high inflation and slowing economy.

"Vietnam's overheating economy provides opportunities to buy land more cheaply and launch products as other developers shy away," Mah Sing Properties Sdn Bhd chief operating officer Ng Heng Phai told Business Times during a preview of a new residential project, called "Hijauan Residences", in Cheras, Selangor, yesterday.


Ng Heng Phai Chief operating officer Mah Sing Properties

"We are evaluating the situation. We have identified some land and will cautiously plan the project with our local partner (in Vietnam) to mark our first foray overseas," he said.

Ng added that Mah Sing, which has a sales target of RM560 million for this year, is also exploring China aggressively.

It also wants to move into Sabah and Sarawak, although it will be busy for the next five years with 14 ongoing projects worth over RM3.3 billion in Penang, Johor and the Klang Valley.

"As a group, we always seek opportunities to grow the business. While we are into property development with a good balance of commercial and residential, we won't diversify," he said.

He, however, did not discount the possibility of launching industrial projects in the future.

Later, at a press conference, Ng said Mah Sing will increase prices of its new properties, launched in 2009, by 15 to 20 per cent to mitigate higher construction costs.

The company has been selling houses based on old prices as the projects were launched a year or two ago and were more than half-way built when rising fuel and raw material costs came into effect this year.

On Hijauan Residences, the company is launching Phase Two of the development, comprising 30 units of garden bungalows worth RM40 million by November, and Phase Three, consisting 78 units of four-storey villas each worth over RM2 million by the second quarter of 2009.

"We sold the first phase in eight months after the launch. The market for high-end products are still hot compared with the low- and medium-range, and those priced RM300,000 to RM500,000," Ng said.

Phase One, which will be constructed by the end of this year, features 122 units of two- and three-storey semi-detached houses, priced at RM583,000 and RM700,000 respectively.

Ng said Mah Sing is considering buying more land in Cheras to build niche projects as it offers good earning potential.

By New Straits Times (by Sharen Kaur)

Grooming TA

Datin Alicia Tiah was the epitome of happiness and confidence that morning. It did not matter too much that the global economy was rather challenging.


Datin Alicia Tiah

The MD and CEO of TA Enterprise Bhd was focused about where, and how she was going to drive the company.

The day of the interview also turned out to be her birthday and the staff has organised a birthday lunch for her, her husband Datuk Tony Tiah, 62, whose birthday is around the same time. He is also the executive chairman.

There were other reasons to celebrate. On Thursday evening, in a filing with Bursa Malaysia, the company announced the purchase of the Coast Whistler Hotel in British Columbia, Canada for RM107mil (C$33mil).

The 193-room hotel is located in an alpine skiing and mountain biking resort town about 125 km north of Vancouver. Currently undergoing renovations, the hotel is expected to be reopened in November 2009 for the Winter Olympics 2010.

The proposed cost of renovations, to be borne by TA Global Bhd, a soon-to-be listed property company on the main board, is estimated at C$30mil.

Besides the acquisition of the hotel, the company has also proposed to list its property division currently held by its subsidiary company TA Properties Sdn Bhd.

The new company, known as TA Global Bhd, will be a property counter while TA Enterprise Bhd will focus on financial services. (See side bar)

But over and above cakes and candles, hotel purchases and a flotation exercise, Alicia has found another reason to celebrate. Her son, Joo Kim, 28, joined the company about three months ago.

“I have a lot on my plate at the moment,” says Alicia, 58.

Succession planning

“I am so happy he will take over,” says the mother of three girls and two boys, Joo Kim being the third and older boy.

“I’m tied down with a lot of things and would like some help and he has the experience. He will be able to support me by way of his ideas and experience. I also want him to spearhead the financial services sector.”

Alicia is seeking universal broker (UB) status for the group and eventually, she hopes to build an investment bank (IB). Joo Kim has a masters in international business and was working as a financial adviser in Singapore prior to joining TA Enterprise.

Says Joo Kim on the proposed restructuring: “It makes a lot of sense to separate the two core businesses of the group – financial services and property development, investment and management.

“We are not saying one is better than the other. Listing the property arm will enable us to unlock shareholders’ value. To have two listed entities, both with their respective specialities, will reflect our businesses better. It will help us to put a market value to all our land and property assets.

“When we made up our minds to have this division, we also looked at things from the investor’s standpoint. When an investor considers a stock, they do so because they want exposure in a particular sector. This is where TA Global comes in. If it is financial services exposure, there is TA Enterprise. Before when an investor buys into TA Enterprise, they wanted exposure in both.

“The third reason for this restructuring has to be viewed from the management standpoint. With two separate entities, there will be greater transparency how the two entities are performing. It is no longer one business riding on the other. Separating the two will also improve execution of the respective entities that are accountable to stand alone to deliver on separate key performance indicators and strategies,” says Joo Kim.

He says TA Global is expected to be listed on Bursa’s main board by year-end. The initial public offering (IPO) involves a proposed rights issue of 860 million new shares at an issue price of 50 sen to all existing shareholders of TA Global on the basis of 10 new shares for every existing 27 shares and a proposed public issue of 350 million new shares at 50 sen. At the end of it all, there will be a total of of 1.21 billion of new shares, says Joo Kim.

TA Enterprise will then offer for sale 875 million shares of TA Global to the public and capital distribution to its existing shareholders. In the end. TA Global will have an issued and paid-up share capital of RM1.75bil made up of 3.5 billion shares at 50 sen each, says Joo Kim.

A Sept 5 report from Citi Investment Research says TA Enterprise plans to raise a total of RM612mil from the IPO proceeds and will eventually own 24% of TA Global. Tony Tiah will have a direct stake of 10.3% to 13.7% of TA Global depending on TA’s warrant conversion.

It will use a portion of the proceeds to apply for an investment banking licence and the rest for future working capital.

UB and IB

“With UB status, I can do many things, including bonds. In the meantime I do other things. After that, I would like to have an IB status. The investment bank scenario is rather crowded today but things can change any time. We have to be prepared and at the same time, it also means we have to take our financial services offshore,” Alicia says.

The group currently has TA Securities (HK) Ltd in Hong Kong. Its pre-tax profit surged 231% to HK$52mil for the year ended Jan 31, 2008, from HK$15.7 mil the previous year.

The growth was attributable to the rise in brokerage generated from trades on Hong Kong stocks coupled with the rise in interest income on margin lending and IPO financing.

“There are so many deals being signed and sealed in Hong Kong. We have not expanded that area yet. There is much we can do but I need more people to join me. I am seriously looking for talent. I am also strategising the way forward so it is very important that my son is here.

“I am tied down with having my own five-star hotel brand. I do not want to discount the financial services sector but this sector is rather lacklustre today.”

The company completed its first quarter for financial year 2009 with disappointing results. It achieved only 18% of its full year estimates, a June 23 Citi Investment report says.

Stockbroking income fell 34% quarter on quarter due to lower stock-market turnover (-20%) and decline in retail participation. Property development saw lower margins for the quarter, but Citi’s analyst expects stronger contributions in subsequent quarters owing to good progress and healthy sales in the current projects.

Stockbroking and related activities accounted for 30% of group earnings before interest and tax (EBIT) for the first quarter.

Its property development

Property development EBIT was 13% quarter on quarter. The lower margins are likely to be due to rising material costs. The Citi report says that take-up rates have improved from 50% to 65% for Idaman Villas, 60% to 72% for Damansara Idaman Phase 3 and from 80% to 88% for its KLCC high-rise condominium Idaman Residences.

Says the report: “We expect better turnover in the second half of financial year 2009. Property earnings are expected to remain strong with continued good take-up and work progress at all three ongoing projects with the Idaman brand. Over the next 12 months, TA will be launching the final phase of Damansara Idaman (27 units of bungalows), Seri Suria development (shoplots) and Bukit Bintang (service apartments).”

According to Alicia: “If the market is buoyant, the financial services sector will be good. But it is rather slow today. So property will be a major contributor this year, it will contribute about 60% to our bottomline, maybe even 65% and the rest from the financial services segment.”

“I enjoy property development because you can see the end result, the buildings, taking shape. It is a dream that eventually becomes reality. Financial services is not all that tangible by comparison. But this does not mean we are going to neglect financial services. We will not. It is just that the market is lacklustre today; when it is buoyant, the financial services sector will do well,” says Alicia.

A new line

“As for the new line we are opening – property management – there is much work has to be done there. Managing a hotel can be quite transparent. The group owns Radisson Plaza in Sydney, Australia and Terasen Centre in Vancouver, Canada.

“Although Radisson is managing the hotel for us, we are very hands-on. We will build our own hotel brand here in Kuala Lumpur, to be specific, on Nova Square between Jalan Bukit Bintang and Jalan Imbi. (See sidebar)

“Having said that, we are also open to options in countries we are familiar with such as Canada and Australia,” she says.

The purchase of the Coast Whistler Hotel will also put the group firmly into property management. This will be the group’s second property on Canadian soil. The other is office building Terasen Centre.

TA Enterprise bought the 362-room Radisson Plaza Hotel before the Sydney OIympics 2000 in the late 1990s. It has an average occupancy rate of 82% in July and a market value of A$120mil.

“We made good returns from that investment, both in terms of steady returns and also from diversification from the normal stockbroking business. It was a very good move,” she says.

Terasen Centre is fully tenanted and has an average rental rate of C$20 per sq ft. New leases are coming in at C$24 to C$26 per sq ft. That property has a market book value of C$175mil. Both the Australian and Canadian properties were bought about 10 years ago.

“Terasen Centre is strategically positioned in the golden triangle with 62-storey Shangri-la Hotel across from it, and close by is Ritz Carlton, a 60-storey building. We bought it for C$92mil and were offered C$160mil but I’m not selling. To look for a property that is so well located and one that fits our budget and corporate plan is not easy,” says Alicia.

“If we were to invest abroad, I would prefer somewhere familiar. Having said that, however, we are thinking about Vietnam, China and the US market, but we’ll see how things go. We will begin monitoring the US property market as the residential properties have declined by 40% to 50%; this represents buying opportunities.”

By The Star (by Thean Lee Cheng)

Better outlook for property players’ margins

PETALING JAYA: The outlook on margins for property players is becoming more favourable given that prices of key raw materials appear to be on a down trend.

The price of steel bars for instance has dropped by about 10% from its recent high of RM3,700 per tonne while oil, which is a major cost component for most businesses, has come off more than 20% from its high of US$147 per barrel in July.

Mah Sing Group Bhd managing director Datuk Seri Leong Hoy Kum said as a rule of thumb, a 10% reduction in raw material costs improved margins by about 2% to 4%, depending on product type.

“The outlook (on margins) will be more promising if prices continue to stabilise in the next six months,” he told StarBiz.

However, uncertainties in the market remain and property players are employing various strategies to safeguard against potential risks.

In a report, AmResearch noted that risk appetite among subcontractors “appeared to be on the mend” as larger developers had incorporated cost escalation clauses into their contracts.

As for strategies, the research house said some developers were not calling for tenders presently and not buying raw materials in a large way. It felt that developers would rather postpone launches than cut prices, given the current scenario.

“This is in view of higher costs compared with last year and their strong balance sheets that allow them to hold on,” it said

It noted Sunrise Bhd’s five-star KM28 project, Selangor Properties Bhd’s Jalan Batai project and IJM Land Bhd’s The Light project which had received most of the necessary regulatory approvals but were being put on hold until a more “opportunistic” time to launch.

While sales in the mass market had been slower, it had not “collapsed”, AmResearch said, adding that if demand “successfully” picked up by year-end, renewed interest would be ignited in the property sector.

“We have locked in construction costs and built ahead of schedule for our developments of Kemuning Residence, Aman Perdana and Sierra Perdana,” Mah Sing’s Leong said.

He said Mah Sing was one of the few developers that continued launching its products despite uncertain times.

“Nonetheless, it is a challenging market and developers have to work doubly hard,” he said.

By The Star - StarBiz

TA to list property unit

Group also seeks investment banking licence

TA ENTERPRISE Bhd has outlined plans to list its property business and apply for an investment banking licence as the group seeks to expand.

The group, 33.7 per cent held by Datuk Tony Tiah Thee Kian, has proposed to sell its property units to TA Global Bhd in an all-share deal and raise about RM613 million in an initial public offering (IPO).

The IPO, arranged by AmInvestment Bank Bhd, comes at a time when the stock market is sluggish, having lost some 25 per cent this year.

"The proposed reorganisation and listing will unlock the value of its strategically located properties and realise its investment in the said properties," TA said in a statement to Bursa Malaysia yesterday.

TA will sell all its shares in TA Properties Sdn Bhd, Sanjung Padu (M) Sdn Bhd and Wales House Trust to TA Global Bhd for RM1.75 billion. Wales House owns the Radisson Plaza Hotel in Sydney, Australia.

This will be satisfied with 2.24 billion new TA Global shares of 50 sen each priced at 50 sen apiece.

TA Global will also issue 1.22 billion new irredeemable convertible preference shares of 50 sen each, priced at 50 sen a unit.

The sale will result in a capital gain of RM924.5 million for TA.

In addition, TA will sell some houses in Taman Duta to TA Global for RM26.9 million in an all-share deal.

TA Global will then carry out a 10-for-27 rights issue involving 860 million shares.

Subsequently, TA Global will offer 350 million new shares, priced at an indicative 50 sen, to public investors under its IPO.

At the same time, TA will offer 875 million existing TA Global shares to Bumiputera investors approved by the Minister of International Trade and Industry. This will raise some RM438 million.

"TA will utilise a portion of the proceeds to apply for an investment banking licence. The remaining cash proceeds will be utilised for the future working capital of TA," it said.

TA plans to list TA Global, which will have a paid-up capital of RM1.75 billion, on the main board of Bursa Malaysia.

Finally, TA will distribute its capital to shareholders. However, instead of a cash payment, it will give investors 1.43 billion TA Global shares and all of TA Global's preference shares.

In the end, TA will hold at least 24.3 per cent, or 849 million shares, of TA Global. It expects to complete all of the proposals by the year-end.

Shares of TA fell half a sen to close at 82 sen yesterday.

By New Straits Times

TA Enterprise to list property division on main board

PETALING JAYA: TA Enterprise Bhd (TAE) has proposed to list its property division under TA Global Bhd on the Bursa Malaysia main board.

“The proposed reorganisation and listing would unlock the value of its strategically located properties and realise the market value of the said properties,’’ TAE said in a statement yesterday.

The exercise was expected to be completed by the end of the year. TAE said it expected to recognise a capital gain of about RM924.9mil from the exercise.

The proposed exercise will enable the company to streamline its operation into two separate core businesses, in financial services and properties division.

Under the plan, TAE will inject its property assets held under TA Properties Sdn Bhd, Sanjung Padu Sdn Bhd, Wales House Trust and Taman Duta Residences in exchange for shares in TA Global worth a total of RM1.75bil.

Subsequently, TA Global will undertake a 10-for-27 rights issue exercise and a public issue of about 350 million new shares at an indicative initial public offer (IPO) price of 50 sen per share.

It also proposed an offer for sale of 875 million shares in TA Global to bumiputra investors.

TAE is also proposing a capital distribution to its shareholders that will cut its share capital, share premium reserve and retained earnings. As a result, TAE’s par value would be reduced to 50 sen from RM1 currently.

Upon completion of the proposed capital distribution and listing, TAE will hold at least 24.3% equity interest in TA Global.

“The total proceeds from the proposals, via offer for sale, will amount to RM437.5mil,’’ TAE said.

TAE will utilise a portion of the proceeds to apply for an investment banking licence and the remaining for future working capital of the group.

In a separate announcement, TAE said its unit TA Global had entered into a sale and purchase agreement to acquire Coast Whistler Hotel in British Columbia for C$33mil (RM107mil).

The 193-room hotel is located 125km north of Vancouver and is the group’s maiden foray into Canada hospitality industry.

“The proposed cost of renovations to upgrade the hotel shall be borne entirely by TA Global and is estimated to amount C$30mil (RM97mil),’’ it said.

By The Star

Ho Hup seeks JV partners

PETALING JAYA: Ho Hup Construction Co Bhd, which suspended its managing director a week ago, is looking for joint-venture partners to develop its 24.3ha of commercial land in Bukit Jalil. The project could potentially help the financially ailing company to turn around.

It is understood there are several offers from local and foreign companies, including some very big names. The new shareholders of Ho Hup are evaluating them to finalise a deal soon.

“It is important to get joint-venture partners to undertake the development as Ho Hup on its own is unable to do so because it faces a liquidity crunch,’’ a source said.

There is a plan for a mixed development which could cost several hundred million ringgit. The land, sited next to Bukit Jalil golf course, is said to be worth around RM300mil.

Ho Hup told Bursa Malaysia last Thursday that it had suspended managing director Datuk Low Tuck Choy until further notice for certain alleged breach, commission and omission of duties and responsibilities.

Ho Hup, founded by Tuck Choy’s late father Low Chee, is a PN17 company with liabilities of over RM100mil.

In its heyday, Ho Hup won most of the prized construction projects in the country. There are several reasons for its current state, over-expansion being a major one.

The winds of change are imminent at Ho Hup, the country’s oldest construction company that has lost its lustre. Extreme System has emerged as the major shareholder with 27.95% stake. The Low family owns 22.66%.

The company is now managed by an executive committee (exco) led by chairman Datuk Vincent Lye. The other four exco members are Tuck Choy, his younger brother Teik Kien, Lee Chong Hoe and Lai Moon Chan.

Extreme System bought a 17.2% stake from UEM World Bhd for just over 40 sen a share. The rest of the shares were bought on the open market. Extreme System is owned by Lye’s wife, Datin Viannie Damit. Lye is also a director of Minetech Resources Bhd, a quarry operator, and Magna Prima, a property developer.

Ho Hup’s board composition has also changed. It now includes Tan Sri Abdul Kadir Sheikh Fadzil (chairman), Lye, Tuck Choy, Teik Kien, Lee, Lai, Zainal Abidin Mohd Yusof and Mustapha Mohamed.

Ho Hup’s new team also wants to revive a link-house project in Bukit Jalil that has been abandoned for two years. It also has a 6.5ha residential land in Bukit Jalil that would be either developed or sold to raise funds for the firm, according to the source.

“It is a whole process to strengthen Ho Hup and aggressive steps are being taken to revive the company,’’ the source said. “The exco is looking into every financial and operational aspect to strengthen internal controls, address accountability issues and review processes.’’

Ho Hup, which has been reprimanded several times by Bursa for not submitting timely quarterly financial reports, had done so for both the 2008 first and second quarters since the new exco took charge.

The source said that showed the seriousness of the new team to get things done.

For the second quarter ended June 30, Ho Hup reported a wider net loss of RM9.4mil from a RM6.7mil loss a year earlier.

By The Star (by B.K. Sidhu)

SunCity still bullish on India

PETALING JAYA: Sunway City Bhd (SunCity), which is launching the RM1.5bil Sunway Opus Grand Residency in Hyderabad in November, does not see the downturn in the Indian property market affecting its venture.

The 35-acre project is a joint venture with Opus Developers & Builders Pvt Ltd and will comprise 3,400 condominium units in five phases when completed.

HSBC Bank plc, in a report last month, said house prices could fall by 25% to 30% across most Indian cities due to high inflation and slower growth.

The Reserve Bank of India, in its quarterly monetary policy review, had hiked the repo rate, which is the rate it lends to banks, by 25 basis points to 9% on July 29 in an effort to curb inflation, which has risen over 12% in recent times.

SunCity chief financial officer Koong Wai Seng said the company had never been “aggressive” in the pricing of its project in India, which is targeted at professionals.

“We’re not building homes in Mumbai or New Delhi where the level of speculation is high.

“No doubt there will be some impact but in Hyderabad, property speculation is minimal. So we don’t envisage taking a hit on profits due to a slowdown,” he told StarBiz yesterday.

Koong said despite the prevailing market conditions, the two private launches done in March and May for Sunway Opus had seen a total take-up rate of 30%.

“While this is not an indicator because the show units are not up yet, we’re confident that the take-up rate will be higher when the show units are opened for viewing in November,” he said. Units are priced at an average RM280 per sq ft.

Meanwhile, Koong said the RM380mil joint venture with MAK Projects Pvt Ltd for the development of 14 acres into a condominium project in Hyderabad was still at the design stage.

The project would feature units with an average built-up of 1,500 sq ft and with an average selling price of RM208 per sq ft.

By The Star (by Fintan Ng)

China may set up real estate investment trusts

BEIJING: China may introduce property trusts this year, giving developers a much needed new source of funding, according to a top industry association official who believes Beijing is easing its tough stance as the property market cools.

The move could come as part of a government change of tack to ease tight monetary policies, many of which have been aimed at the property industry, according to Nie Meisheng, president of the China Real Estate Chamber of Commerce.

Beijing intensified a campaign late last year to clamp down on bank loans to the property sector, asking for higher down payments from homebuyers, as part of a wider effort to curb inflation and rein in runaway growth.

The steps hit home sales - down 50 per cent in Beijing, Shanghai and Shenzhen in July from a year earlier - and prices in some areas of Guangdong province have fallen 25 per cent.

Nie said the measures were aimed at cutting the industry's dependence on bank loans, which account for half of developers' funding, but added that Beijing was keen to ensure the property market did not collapse and hurt the broader economy.

"When one door closes, others will open," she said.

China has given the green light to big developers, such as China Vanke, Poly Real Estate and China Merchant to issue corporate bonds or new shares to replace loans coming due and to fund further expansion this year.

Setting up real estate investment trusts (REITs) - securities that pay rent from their property as dividends - will provide developers with a new avenue for funding, allowing them to effectively sell finished commercial buildings to investors.

"There will be some breakthrough by the end of this year," Nie said, referring to the introduction of REITs in China.

She said China's central bank was soliciting opinions from different government departments but declined to give a timeframe for any launch of REITs, or give any other details.

Many analysts believe property trusts will catch on in China because insurers are keen for stable investments to match their long-term liabilities, especially at a time when their stock investments have been hit hard by rocky markets.

By Reuters

JPMorgan eyes property financing in Japan

TOKYO: JPMorgan Chase & Co said it expects Japan's beleaguered property market to rebound and will use staff gained from its acquisition of Bear Stearns to develop its real estate financing business.

"There is a lot of interest in buying real estate right now both from domestic real estate investors and foreign investors," said Gregory Guyett, chief executive of JPMorgan Securities Japan in an interview.

"And those investors will look for financing. That's a business we think can be attractive."

JPMorgan gained some 80 employees in Tokyo when it took over troubled Bear Stearns in May, which has led it to expand its small real estate securitisation team to about 25 people.

The group, headed by a former Bear Sterns employee Rosario Antoci, may expand further depending on market developments.

In the wake of the credit crunch, a number of banks in Japan have tightened lending to small and mid-sized property firms, leading to a string of bankruptcies. But large firms have been relatively unaffected and some like Orix Corp have seen the downturn as an opportunity to go bargain hunting.

Guyett named Fortress Investment Group, Blackstone Group and Mitsubishi Estate Co Ltd as active investors in Japan.

JPMorgan has also been hiring aggressively to develop its commodities and other businesses, and anticipates overall headcount to increase by about five per cent over the next year.

"You will see us in the early part of next year with a number of senior hires," Guyett said.

Recent hires include Hiroki Kazekami from Goldman Sachs Group Inc as head of its global commodities division in Japan.

"Even though commodity prices will fluctuate up and down, it's a major business that our corporate customers and investor customers are interested in," he said.

It has hired former senior finance ministry official Yoshiaki Kaneko as a senior adviser to strengthen government and regulatory relationships, and Christopher J. LaFleur as head of government relations and corporate responsibility.

LaFleur once served as US Ambassador to Malaysia.

By Reuters

UK takes steps to boost property mart

LONDON: With the British economy forecast to slip into recession, Prime Minister Gordon Brown's government unveiled a raft of measures to perk up the sluggish housing market - and its own flagging fortunes on Tuesday.

The Treasury said homes worth up to STG175,000 (STG1 = RM6.13) would be exempted from property sales tax, or stamp duty, for a year.

The government also laid out steps to help first-time buyers and to help homeowners at risk of repossession.

By AFP

Properties in Subang Jaya to stay hot

PETALING JAYA: Subang Jaya will continue to command good demand for its properties, especially lifestyle products priced below RM250,000.

An artist's impression of First Subang

Titijaya Sdn Bhd director Chairmaine Lim Puay Fung in making this observation said this had been proven during the first day of the preview of the company’s The Studio @ First Subang (Northern Tower) in SS15, Subang Jaya, where 50 units were sold within a few hours.

The Southern Tower at First Subang was launched last year.

“Most of the purchasers are repeat buyers, a fact that we are most proud of,,” she told StarBiz.

“At the same time, we have a responsibility to these loyal followers, to ensure that our mutually beneficial partnership continues to flourish and prosper.”

The Studio consists of flexible studio office suites, with en suite baths. Units range from 472 to 954 sq ft.

Lim said sales had been good with 45% of The Studio in the Northern Tower sold although it had not been officially launched.

“We have also achieved 80% sales for Southern Tower. We only soft-launched it towards the end of June,” she said, adding that construction started last year.

“To-date we have completed the piling works and are commencing on the building structural works.”

The gross development value for each tower is about RM120mil. First Subang also consists of three levels of shopping podium, which is only for lease.

Lim said the purpose was to control the tenant mix and thus enhance the its value. The pricing is from RM410 per sq ft.

She said The Studio’s flexible studio office suites were suitable for those wanting to have a modern and fun working unit with security features.

“The project is due for completion in 2009 and we are ahead of schedule,” she said.

On the rising construction costs and inflation, she said there would definitely be an increase in property prices but this increase had not been fully transferred to the consumer.

“Hence, it is a good time to purchase (property) now, as most developers are subsidising the cost, and lowering their profit margin in the process.

“Moreover, investment in property is the best way to hedge against inflation. With inflation, construction costs are bound to go up further,” she said, adding that demand for properties depended very much on the product and location.

By The Star (by S.C.Cheah)

CapitaLand may delay REIT launch in Malaysia

SINGAPORE: CapitaLand Ltd, Southeast Asia's largest real estate player, may delay the launch of its retail property trust in Malaysia if market condition worsens over the next few months.

The Singapore-based group plans to launch a real estate investment trust (REIT), worth in excess of RM2 billion, by the end of this year or early next year.

It will include Sg Wang Plaza in Kuala Lumpur, Gurney Plaza in Penang and Mines Shopping Fair in Seri Kembangan, Selangor.

President and chief executive officer Liew Mun Leong said it will "pull the trigger" when the market permits.

"Real estate is a function of economic growth. Right now, we are targeting to get approval for the REIT by the fourth quarter of 2008. If the market weakens, we may delay the launch," he said at a media briefing in Singapore yesterday.

In addition, CapitaLand will invest the proceeds from the sale of its 30 per cent stake in Menara Citibank in Kuala Lumpur by buying more properties in Malaysia.

It may also build new malls and buildings, but Liew declined to say if the properties will be injected into the REIT later.

"We have asset allocation plan which is to invest now. So when we sell Menara Citibank, we will invest in new projects in Malaysia," he said.

Liew said CapitaLand will look for properties within its five strategic business units - residential; commercial; retail/financial; integrated leisure, entertainment and conventions; and The Ascott Group.

"When we build our retail portfolio and have promising returns, we will inject into the REIT. We will rejuvenate existing malls for higher yields so the REIT could absorb it," he said.

By New Straits Times (by Sharen Kaur)

CapitaLand to seize potential in real estate market

SINGAPORE: CapitaLand Ltd sees potential to expand its foothold in Malaysia’s real estate market in line with long-term plans to build its portfolio in the commercial and residential property sectors, group president and chief executive officer Liew Mun Leong said.


Liew Mun Leong

“Malaysia, which is expected to record a gross domestic product growth of 5% to 6% this year, offers good potential in both the residential and commercial property sectors.

“Through our equity stake in United Malayan Land Bhd, Quill Capita Management Sdn Bhd and Malaysia Commercial Development Fund (MCDF), we have exposure in both the residential and commercial property sectors,” Liew told Malay-sian journalists at CapitaLand’s head office yesterday.

CapitaLand is one of the largest foreign investors in Malaysia’s real estate market. Through its real estate private equity funds, Mezzo Capital Fund worth US$30.5mil and MCDF US$270mil, undertaken jointly with the Malayan Banking Bhd group, it is involved in real estate development projects in Kuala Lumpur and the Klang Valley.

Quill Capita Management, which manages the main board-listed Quill Capita Trust, is 40% owned by CapitaLand Financial Ltd through wholly owned unit CapitaLand RECM Pte Ltd, while Quill Resources Holding Sdn Bhd and Coast Capital Sdn Bhd each has a 30% stake.

In service residences, CapitaLand’s The Ascott Group owns and manages seven properties with a total of 814 units in Kuala Lumpur and Kuching.

The company plans to list its RM2bil real estate investment trust on Bursa Malaysia and hopes to receive the go-ahead from the authorities by the fourth quarter.

According to CapitaLand Retail Ltd and CapitaMall Trust Management Ltd chief executive officer Pua Seck Guan, CapitaLand is also looking to expand in Malaysia’s retail mall sector through asset acquisitions and new developments.

“We have created a strong franchise and asset management capability that will allow us to enlarge our presence in the retail malls sector in the regional and international markets.

“Malaysia’s relatively fragmented and untapped retail property sector offer much potential for CapitaLand to grow from our present three assets in Malaysia. We certainly want to grow our asset size to become one of the leading retail mall operators in Malaysia,” he said.

On the international front, Liew said CapitaLand had embarked on building integrated developments in gateway cities under the branded name Raffles City.

“We’d love to build more Raffles City integrated developments but the location must have heavy human traffic flow and a network of subways that ensures people movement.”

These integrated commercial projects incur high investment outlay or S$1bil each and the present gross development value of the six Raffles City products – four in China and one each in Singapore and Bahrain – is estimated at S$5bil.

By The Star (by Angie Ng)

CapitaLand plans integrated developments

SINGAPORE: CapitaLand Ltd plans to build integrated developments internationally, including in Malaysia, as the returns are higher.

In Malaysia, it plans to do this through its 21 per cent unit, United Malayan Land Bhd which has ample land, president and chief executive officer Liew Mun Leong said.

"Integrated development is a new idea which we are promoting. Not many countries have done such developments on large scale," he told Malaysian journalists in Singapore yesterday.

CapitaLand is currently developing six such projects comprising cover hotels, serviced apartments, retail and commercial buildings in Singapore, China and Bahrain under the "Raffles City" brand, worth a combined US$5 billion (RM17.1 billion).

Liew said it wants to build another Raffles City in gateway cities like Mumbai, India and Moscow, Russia, while not ruling out Malaysia.

"There is good demand for the properties if there is a suitable location, but there must be mass traffic flow of people as it involves huge investments," Liew said.

Meanwhile, Liew said CapitaLand hopes to meet its internal net profit and revenue target for its current financial year ending December 31 2008 through new product launches and sales from existing developments.

Last year, CapitaLand posted a net profit of S$2.8 billion (RM6.72 billion) on the back of S$3.8 billion (RM9.12 billion) revenue largely because of capital gain.

"It was a bumpy year last year. We were the best performing group on the Singapore Stock Exchange in terms of net profit. While we remain optimistic for 2008, it will be a tough year as the global economic is down," he said.

"Demand is there but whether profitability is, is another case. But because we have diversification into other markets, it mitigates the situation of rising cost, inflation and a gloomy economy," he added.

By New Straits Times

Brown unveils support plan for housing market

LONDON: Britain’s Prime Minister Gordon Brown yesterday cut an unpopular tax on home purchases as part of a package to boost the country’s slumping housing market and lift his flagging political fortunes.

Brown’s government said properties worth less than £175,000 would be exempt from the tax, known as stamp duty, for one year, up from a £125,000 threshold now.

The step was accompanied by a £1bil package to help first-time home buyers and people struggling to keep up with mortgage payments.

“The stamp-duty holiday may provide the domestic housing market with a marginal stimulus but we doubt it will have a major effect in getting the housing market moving again,” said Philip Shaw, chief economist at Investec.

The treasury said the rise in the threshold would cost it an additional £600mil and that half of home transactions would now be exempt from duty.

House prices in Britain are sliding and home repossession orders in England and Wales have risen to their highest level since the housing market crash of the early 1990s.

By Reuters

Ireka unit wins RM195m job

KUALA LUMPUR: Ireka Corp Bhd unit Ireka Engineering & Construction Sdn Bhd has secured a contract worth RM195mil from ICSD Ventures Sdn Bhd.

The contract is for the proposed construction of a 26-storey commercial building, including five-storey shopping complex, four-storey convention centre and 12-storey hotel in Sandakan, Sabah, on a design-and-build basis, the company said in a statement.

Works are expected to be completed on Nov 30, 2010.

By Bernama