Malaysian malls in regeneration phase

The key theme for Malaysian shopping malls over the next decade is regeneration.

It is a transformation that includes both an extension of an existing mall or an extensive makeover of a mall, Malaysian Association for Shopping Complexes and Highrise Complex Management (PPK) president HC Chan said.

"After a 35-year history of malls, we are now entering the regeneration phase. Some of the shopping centres will undergo a change," Chan said.

"There will be more regeneration (activities) rather than building of new malls," he said, adding that malls will transform to become more niche.

This, Chan said, largely because the current 100 million sq ft of net lettable area of retail space within shopping complexes is sufficient to cater to the existing market.

Regeneration via expansion included Mid Valley Mega Mall, which added the Gardens, Suria KLCC with a retail podium in Lot C, and Sunway Pyramid, which added a second phase and is now working on a third and a fourth retail phase.

One mall that recently underwent a major makeover is The Mines following the takeover by CapitaLand's CapitaMalls Asia Ltd.

Another example is KL Plaza that will be relaunched as Farenheit 88 after it undergoes a massive RM100 million renovation.

Similarly, UE3 (now Viva Home), Phoenix Plaza and Kenanga Wholesale Centre are also being rejuvenated.

"Until the greater Kuala Lumpur plan takes shape, there will be no mega shopping structures. Until then, there will be only medium-sized malls," Chan said, adding that most other mall openings will continue to be within the Klang Valley.

"The next wave of substantial shopping malls development will be in the next three to five years when huge parcels of prime Kuala Lumpur land are opened for development," Chan said.

Today, the Malaysian shopping mall industry comprising 300 malls is worth some RM100 billion in real estate value and provides direct employment for 500,000 people.

By Business Times

Starhill Global REIT gets RM$1.2bil loans

SINGAPORE: Starhill Global Real Estate Investment Trust, a Singapore-based investor in retail and office buildings, got S$496mil (RM1.16bil) of three-year loans from five banks, according to a Singapore stock exchange statement.

DBS Holdings Ltd, Oversea-Chinese Banking Corp, Commonwealth Bank of Australia, Societe Generale and ING Groep NV provided the loans, which include a S$50mil revolving credit facility, the statement said.

The proceeds would be used to refinance S$447mil of maturing debt while the balance will be made available for working capital and general corporate funding purposes.

In a revolving credit facility, money can be borrowed again once it’s repaid.

By Bloomberg

Sime Darby's new medical centre opens 2011

Sime Darby Healthcare is expected to invest RM250 million for the Sime Darby Medical Centre in Ara Damansara, Kuala Lumpur, which is anticipated to be opened next year.

In a statement today, Sime Darby Healthcare said plans are being drawn up to fit out and equip the centre with specialised facilities and services for the treatment and management of heart, neuro, spine and joint diseases.

It said the new 220-bed medical centre, will be the third medical facility established under the group, after the flagship Sime Darby Medical Centre in Subang Jaya and Sime Darby Specialist Centre Megah in Petaling Jaya.

Tan Sri Dr Wan Zahid Mohd Noordin, a Sime Darby board member who oversees Sime Darby Healthcare said the medical centre will focus on quality, safety and continuous improvement, especially in areas that most directly impact patient care.

The neuroscience unit in Ara Damansara will feature a comprehensive epilepsy management programme that includes an electroencephalogram or EEG studies laboratory and state-of-the-art equipment for early diagnostic and treatment capabilities.

The centre will also have a fully-equipped and state-of-the-art rehabilitation facility including a specialised Stroke Care Unit, hydrotherapy, occupational therapy, audiometry, musculoskeletal rehabilitation using wax and splints and a Child Development Centre with Snoezelen and speech therapy.

Snoezelen or controlled multi-sensory stimulation is used for patients with autism, intellectual or mental disabilities, post-traumatic stress disorders or brain injury.

The hospital will also be installing a new Hospital Management Information System that will allow, amongst others, central appointment bookings and management of patients' health records in a seamless manner across all the Sime Darby medical facilities.

By Bernama

BLand to launch projects worth RM500m this year

BERJAYA Land Bhd (BLand) will launch new projects worth more than RM500 million this year to take advantage of pent-up demand for housing in the Klang Valley.

BLand is bullish on the property market, its senior general manager of properties and marketing, Mah Siew Wan, said.



"We are seeing a return of buying interest for high-end houses. Our properties are all unique and in prime areas so we are confident of brisk sales," she told Business Times in an interview.

BLand, 53 per cent controlled by Tan Sri Vincent Tan's Berjaya Corp Bhd, will launch Vastana25, a high-end project, at Seputeh Heights in Kuala Lumpur by end-July.
Last weekend, it relaunched The Peak at Taman TAR in Selangor.

The Peak, comprising 88 guarded and gated bungalow lots, was re-launched as it now has freehold status.

By the end of this year, BLand will launch KM1 Condominiun in Bukit Jalil and shop offices in Berjaya Park in Shah Alam, Selangor.

The group has about 10 ongoing developments worth some RM1 billion and it will launch more projects next year, Mah said.

BLand has some 400ha in the Klang Valley with the potential of generating more than RM8 billion in gross development value.

It also has projects in China, Vietnam and South Korea worth more than US$12 billion (RM 38.4 billion).

In China, BLand has a mixed-development project comprising retail, entertainment, theme park and water park in Sanhe City, Hebei Province. It has yet to launch the project.

Infrastructure work on its maiden US$3 billion (RM9.6 billion) resort-type mixed-development township project in South Korea has started.

The project featuring apartments, serviced residences, semi-detached and resort-style villas, a wellness resort, a casino and resort hotel, hotel residences, a mall and an indoor arena will be launched next year.

In Vietnam, BLand has a US$6.3 billion (RM20.7 billion) mixed-development project in Dong Nai Province.

By Business Times

Case for more iconic projects

The furore over the proposed demolition of Pudu Jail puzzles me. Very few cities have old dilapidated prisons smack right in city centres. Even "The Rock" which is the infamous Alcatraz is on an island of the US west coast, and was initially the first lighthouse and US Fort. Later, it became a federal jail but it is on an island and not in the city centre of San Francisco.

The closure and the proposed redevelopment of Pudu Jail highlights the Government's intention to rebrand Kuala Lumpur as a vibrant city with a new look.

So far, we have seen announcements of government companies and government-linked companies being called upon to develop the Merdeka Stadium, the land at Imbi Road, Sg. Besi airport, the Matrade-Naza joint venture and EPF with the Rubber Institute of Malaysia (RRIM) redevelopment. While the RRIM development is at the fringes of Kuala Lumpur, the other sites are in the city, and the infrastructure to develop them will see a total change in the traffic flow, logistics of land use, and as a result, will provide for the first time alternative iconic centres to the 15-year old Petronas Twin Towers.

The idea of using government companies looks like the early Singaporean model started by their first prime minister where they identified a piece of land at the end of Orchard Road, master-planned it and invited leading Hong Kong tycoons such as Lee Kah Shing and Tan Sri Frank Tsao to develop what eventually became the 5 million sq ft Suntec City which served as a catalyst for the redevelopment of the entire Marina Bay area.

Singapore hopes to replicate that by opening up the new Marina Bay development where the very expensive Sail Condo is located right across from the Sands Casino. This is expected to be the new financial centre in Singapore, thereby creating an extraordinary new chapter as a regional financial centre.

Malaysia should not play second fiddle, and we certainly have more opportunities to develop more iconic platforms as we have a better foot print and better design features. Furthermore, we have more land, and are able to spread our designs over a larger base.

The task for the GLCs or government companies to design and master-plan certainly is a much better proposition than passing it to well-connected individuals as was previously the case. These wholly-owned government companies, run by highly trained professionals, are very conscious of the responsibilities they have been entrusted and fully understand that they are constantly and continuously being watched, analysed and monitored by very critical analysts. The government expects these companies to practice full transparency and accountability for the future success of these projects, and more importantly, expects them perform as intended, in accordance with world standards. Additionally, the benefits derived from these development projects will return to the people via the Government which is the sole owner of these government companies.

Obviously the scale of the projects requires not only massive funding, but also deft master-planning and an understanding of market forces so that all these projects do not flood the market at the same time. Not many private companies are capable of handling these mammoth tasks.

The fact that they have a single sovereign owner should also ensure that the release of these projects into the market place will be orderly, unlike previously where there was no adequate property information. Every private developer placed his project in a vacuum, assuming that he had no competition which resulted in over-supply and a drastic drop of capital values in the late 90's.

We already have such a successful model in KLCC. The Sentral development project, after a rocky start at the tail end of the 1997 crisis, is now going from strength to strength, and MRCB has a good model there.

While it is vital to inject private sector participation in these projects, it is more important to have wholly government-owned companies or GLCs to take the lead role in the master planning process.

Selling these properties to the highest bidder, local or foreign, may result in the risk of the land being lost if the project failed or the purchaser, in his urgency to get the returns of his investment, fast-track the project without due consideration to market needs. Under this scenario, the project is bound to suffer.

The most famous landmark failure of that is of Canary Wharf, the iconic Eastern Docklands of London, which was bought by the Reichmann Brothers of Canada. Their company, Olympia & York, became the most successful property developer in Canada and US before they ventured into bidding a high price for the Canary Wharf site in 1986.

The 33.58ha site in 1987 became the largest development project in the world which incorporated One Canada Square, Britain's tallest skyscraper.

With the UK running into recession in early 1990, the building remained empty and the Reichmann Brothers were declared bankrupt in 1992, owing debts in the amount of US$20 billion (RM64 billion). The banks then took over Canary wharf and sold it by auction years later.

The London property market survived that disaster due to its strength as a world financial centre. If we follow that privatisation path again we may not be so lucky.

The writer is the chief executive officer of Malaysia Property Incorporated

By Business Times

Johor developers keen to play integral role

Property developers in Johor want the Government to engage them in the consultation for and drafting of a plan to transform Johor Baru into a vibrant city.


Simon Heng

Real Estate and Housing Developers’ Association (Rehda) chairman of Johor branch, Simon Heng, says the private sector should not be left out in the drawing up of the plan although the initiative was mooted by the Federal and Johor Governments.

“It will be good for all stakeholders if both the public and private sectors could work together to ensure the success of the project,’’ he says in an interview with StarBizWeek.

Heng urges the Johor government to open up state-owned land in the city centre for redevelopment projects via the open tender system instead of awarding the parcels directly to certain parties.

He says it is only logical to engage property developers as they are responsive to the market and know what products sell and what buyers want.

“The former sites of the Lumba Kuda and Bukit Chagar low-cost flats are the best areas to build high-rise condominiums and serviced apartments.

“These properties will attract Malaysian professionals working in Singapore and expatriates based in the republic due to the close proximity,” he adds.

Heng says the number of Singaporeans renting houses in Johor Baru has risen in recent months because of the high rentals in the city-state. Most of these people commute daily from Johor Baru to work on the island.

Prime Minister Datuk Seri Najib Tun Razak had last month announced that the Government would allocate funding to rehabilitate and transform Johor Baru.

Under the 10th Malaysia Plan, some RM1.8bil will be spent within the city centre. T

his include RM200mil to clean up Sungai Segget, one of the dirtiest rivers in the country.

Sungai Segget flows along Jalan Wong Ah Fook in the city centre. Several years ago, RM6mil was spent to cover up a stretch of the river, which has a reputation for being a dumping ground for raw sewage.

The money for the proposed Johor Baru project comes from the Federal Government’s facilitating fund while the Iskandar Regional Development Authority (Irda) will act as a facilitator together with the State Economic Planning Unit (Upen).

According to Irda chief executive officer Ismail Ibrahim, Irda and Upen have until the end of this year to conduct studies to determine how the plan should look like. The findings are to be submitted to the Federal Government.

Undoubtedly, it is vital to rejuvenate Johor Baru city centre, in line with its status as one of the five flagship development zones in Iskandar Malaysia.

“Apart from engaging developers, views from property owners, non-governmental organisations, experts in town planning and chambers of commerce should be taken into account,’’ says Heng.

SP Setia Bhd executive vice-president (property division, northern and southern regions) Datuk Chang Khim Wah agrees with Heng.

He says the redevelopment plan will definitely increase the value of properties in areas near the city. These include those in Taman Pelangi, Taman Abad, Taman Sentosa and Taman Sri Tebrau.

Chang says while Johor Baru should have its own identity, the stakeholders can always look at the success stories of city-centre redevelopment in other parts of the world.

“A vibrant city should be a blend of the old and new, and a city should be a lively place not only during the day but also at night,’’ he says.

Chang says Istanbul is a good example as the city, with historical sites and monuments, blends well with its chic Taksim Square.

He says Johor Baru should have enough attractions to lure crowds back to the city centre even after office hours and during weekends. These can be done by having street performances, building specialty stores and boutique hotels in the old parts of the city, and by reopening the Ungku Puan night outdoor hawker centre.

The centre, which was the biggest alfresco dining area in the city centre, was highly popular with locals and tourists but was closed several years ago; instead, ugly concrete kiosks have been put up there.

KSL Holdings Bhd executive director Ku Hwa Seng suggests the authorities re-zone certain parts of the old housing estates near the city centre as part of the transformation plan.

He says residential properties facing the main roads in these estates could be converted into food and beverage outlets and specialty retail stores like in Bangsar, Kuala Lumpur.

Ku says developers should be allowed to buy these houses, refurbish and upgrade them, and lease these properties to restaurant and store owners.

“Concerted efforts are needed from the relevant parties to ensure the success of the plan. But the most important thing is the political will of the state government,’’ he says.

By The Star

Malacca and Penang: History in abundance

The Malacca government has turned the once old and quiet Jonker Street into the now vibrant and ‘happening’ Jonker Walk.

The saying ‘Old is Gold’ certainly holds true for many things.

Among the things that appreciate over time are family relationships, friendships and the value of some tangible things like real estate.

Many so-called “city folks” in Kuala Lumpur and Petaling Jaya actually do not hail from the city; their hometowns are in other parts of the country.

Home is where the heart is and many of us have set up homes in places where we work, after settling down with our own family, and have children attending schools or colleges in the city.

With passing time and wisdom, we learn to appreciate our loved ones better.

And despite the “rat race” of city life, it is important to stay connected with our loved ones and old friends back in the kampung or in other places.

Likewise in the built environment, we can find many undiscovered gems around, which, in spite of their old physical exterior, are actually hidden treasures with strong history and many untold stories within their walls.

The first thing that comes to mind is the many pre-war houses and buildings that can be found in large numbers in the inner cities of Penang and Malacca.

Despite being old and dilapidated, many have the potential to be restored and given a new lease of life.

Some of the ways to reuse these buildings and “monetise” them include turning them into museums, heritage hotels, alfresco dining and restaurants specialising in local fares.

It is interesting to compare Penang and Malacca as they share many similar traits and history.

Both will benefit by learning from each other new ways to improve and manage their built and unbuilt environment.

Since my other half is a Malaccan, I must admit that I tend to compare my hometown, Penang’s George Town, with Malacca whenever I’m back for holidays or family events.

After all, both have been declared Unesco World Heritage Sites and have many interesting buildings and structures that are reminiscent of their rich history and heritage.

Penang and Malacca are both former Straits Settlement states with a long history of early settlers from various parts of the world converging there for trade.

And both are renowned for their Baba/Nyonya culture and heritage.

Being port states, both also have strong foreign connection and influence.

Penang was a bastion of trade for the English and the East India Company after it was founded by Captain Francis Light in 1786, while Malacca was a confluence of Portuguese, Dutch and English influence.

Those influences can still be clearly seen in the architecture of the buildings today.

It is evident that both Penang and Malacca have their own distinctive assets and attractions that have endeared them to many loyal visitors who throng the cities in droves whenever there is a long stretch of holidays.

This could be one of the reasons for the traffic-choked roads during the holiday season and major festivities.

It is common to find many outstation cars among the long lines of cars on the roads during such times.

To give a boost to their intrinsic value as natural tourist attractions, there is a need to improve the public transport system in the two heritage cities to ensure that the different modes of transport are well integrated and connected to each other.

Being on the radar screen of tourists is one thing, but it is equally important to ensure that visitors have convenient access to a good public transport network.

More should also be done to further boost the alluring old world charms of these cities while at the same time, revitalise the inner cities and keep them alive as living heritage.

To achieve this, the old and new attractions and facilities should co-exist and blend seamlessly with one another to make them relevant and refreshing to the people.

Malacca has made some interesting headway in this regard with many old buildings and “once quiet” historical enclaves being given a new lease of life.

One just needs to hop over to the happening and vibrant Jonker Walk, which comes alive every evening, teeming with traders and visitors.

Penangites can certainly take a leaf from their Malaccan counterparts to liven up George Town’s dilapidated inner city.

Deputy news editor Angie Ng is keeping her fingers crossed that the old and new charms of our cities will be the pride of our present and future generations.

By The Star (by Angie Ng)

Sarawak to host infrastructure conference

SARAWAK hopes to attract both foreign and local investors to its shores by hosting its first Asian infrastructure exhibition and conference in Kuching in March next year.

Sarawak Minister of Infrastructure Development and Communications, Datuk Seri Michael Manyin Anak Jawong, said the infrastructure in Sarawak will be as developed as that in Peninsular Malaysia by 2020.

"We certainly have a lot to catch up but we will get there," he said at the soft launch of the 2011 Asia Infrastructure Exhibition and Conference in Kuala Lumpur yesterday.

Michael Manyin also stressed the importance of established domestic firms in the peninsula to make its way to Sabah and Sarawak.

"There are a lot of investment incentives given by both the federal and state governments. We hope by doing so, Sarawak will be the new Manhattan of Malaysia," Michael Manyin said.

He added that this move is to ensure continuous development and to build roads to link the rural communities together.

The ministry is also targeting big, foreign companies such as London-based mining companies Rio Tinto to invest in the state.

The 2011 Asia Infrastructure, to be held from March 1 to 3 2011, is expected to see some 200 exhibitors from 24 countries participating and to generate RM6.85 million of revenue.

By Business Times

YTL Land: Centrio to be 50pc occupied by year-end

YTL Land & Development Bhd expects 50 per cent occupancy by year-end for its newly-completed Centrio development in the highly popular Pantai Hillpark address.

"We handed over the keys on July 7 and we expect to achieve 50 per cent occupancy by year-end and 100 per cent by the first half of next year," its customer relations manager, Karen Tan, told a media briefing after a tour of the Centrio in Kuala Lumpur yesterday.

Centrio is a low-rise mixed commercial development located at Pantai Hillpark in Bukit Kerinchi.It was launched in December 2006 and completed early this year.

The development comprises 306 units of small office/home office (SOHO), boutique offices, boutique garden offices and retail stores on 1.52 ha in Bukit Kerinchi.
With a gross development value of RM100 million, Centrio is developed by Syarikat Kemajuan Perumahan Negara Sdn Bhd, a wholly-owned subsidiary of YTL Land.

Tan said the value of the property has almost doubled since its debut in 2006.

"The launch price for Centrio was RM280 per sq ft and RM350 per sq ft for the SOHO suites and boutique offices respectively, and in just over three years, they are currently valued at RM600 per sq ft," she said.

The rental rates for the SOHO suites and offices are between RM3 and RM3.50 per sq ft, she said.

By Bernama

Sedco to build RM30m resort in Semporna

The Sabah Economic Development Corporation (SEDCO) proposes to build a RM30 million holiday resort in Semporna, Sabah's east coast.

Chairman Datuk Mohd Ariffin Arif said the project to be undertaken by SEDCO subsidiary, Sabah Urban Development Corporation Sdn Bhd (SUDC), was currently studying the resort's layout plan.

"We want the layout plan for the one-storey resort to be unique and creative, from an aerial view the resort will look like "lepa-lepa" (a type of canoe made by hollowing a tree trunk).

“The new resort will provide the impetus for tourism development in Sabah, particularly the tourism sector in Semporna,” he told reporters after opening a property exhibition hosted by Sabah Urban Development Corporation.

Mohd Ariffin said since SUDC was set up 38 years ago, it had helped the state government implement development projects state-wide, including building shophouses, to help uplift the socio-economic status of Bumiputeras via property ownership at competitive prices.

He said SUDC was also building Darvel Bay Plaza, the biggest shopping mall in Lahad Datu, costing about RM40 million.

Earlier, in his speech, Mohd Ariffin hoped the property exhibition would help SUDC reach out to more buyers and to the people to know SEDCO's roles and contributions through SUDC.

“I hope this exhibition will have a positive impact on property buyers and local economic development," he said.

The state government through SEDCO was determined to ensure that the people tasted development via provision of industrial and commercial areas and housing and tourism projects.

By Bernama

Nagamas plans Yongzhou project

KUALA LUMPUR: Nagamas International Bhd’s wholly-owned unit Nagamas Enterprise (HK) Ltd has signed a memorandum of understanding (MoU) with the government of Yongzhou City to undertake China’s Yongzhou International Multi-Trade Project.

Nagamas said in a filing with Bursa Malaysia the project comprised an airport, along with administrative and management, residential, green belt, commercial, leisure, entertainment and industrial zones.

The project entails planning and investing in a piece of land situated in the surrounding 50km area of Lingling Airport in Yongzhou and Chaisze town.

Nagamas will act as a master planner and be involved in project and property management and become its exclusive marketing agent.

By Bernama

Project to develop Sabah into choice destination in Asia

SABAH Deputy Chief Minister Tan Sri Joseph Pairin Kitingan says Sabah would be developed into an internationally recognised destination of choice in Asia for business and leisure by 2025 under the 18-year Sabah Development Corridor (SDC) Project.



"Tourism, logistics, agriculture and manufacturing sectors will be the main focus of SDC, and shall be guided by the NKEA in line with its key factor endowments," said Pairin when addressing more than 100 delegates from Malaysia and China at the 7th Malaysia-China Joint Business Council Meeting in Jinan, China, yesterday.

He was here with ministers, assistant ministers and officials from the state government and corporate leaders from Sabah to attract Chinese investment in the SDC project.

When elaborating on tourism development under the project, Pairin said, the Sabah government would turn the state as a target of high-yield and long-stay visitors, with premier eco-adventure destinations, as well as a high-end second home destination with luxury holiday villas and lifestyle activities.

"Offshore islands and Kinabalu Gold Coast Enclave will be developed into high end signature resorts, together with new eco-tourism products such as wildlife safari, rainforest interpretation, island hopping and submarine diving," he said.

Lifestyle products like Mt Kinabalu lookout, MICE (meetings, incentives, conventions, exhibitions) facilities, marinas, holiday homes, spas, wellness, healthcare centres, boutique resorts, performing arts, handicraft centres and art galleries will also be built.

He said, development would capitalise on Sabah's largest genera of marine life (cradle of coral life), oldest rainforest and colourful and diverse native population, Agro-tourism in the interior districts and wellness tourism in the highlands.

"Handicrafts and home stay will also be actively promoted to encourage local participation in tourism. To achieve this ends, a handicraft village will be established and new handicraft products such as leather craft will be introduced," he said.

As Kota Kinabalu acts as the main gateway for tourists arriving in Sabah, the waterfront area would be rehabilitated and re-developed into an iconic attraction, added Pairin.

Earlier at a meeting with officials of the Jinan Hi-Tech Industrial Development Zone, Pairin invited Chinese officials to visit Sabah and look for investment opportunities in the state.

He said, investors can focus on four key sectors, namely agriculture, tourism, logistics and manufacturing.

By Bernama

Sibu to get boost from Sunhill project

An upcoming private commercial development project totalling RM60 million in Sibu is expected to spur greater development in the surrounding areas of the airport here.

The project, to be undertaken by Sunhill Development Sdn Bhd, will see the development of a RM35 million nine-storey hotel, a RM5 million two-storey food court and 20 units of shophouses worth RM20 million.

Joseph Ting King Sung, Sarawak Housing and Real Estate Developers' Association (SHEDA) president, said the project is expected to be completed in five years time by Sunhill, a company related to his Joseph Design and Contracts Sdn Bhd.

He also said the properties, to occupy high grounds at the 23rdkm of Tun Abdul Rahman Road, will be free from any flood problem.

Ting was speaking at a press conference to announce SHEDA Home and Property Roadshow Sibu 2010 yesterday.

The three-day roadshow from July 27-29 will be held at Wisma Sanyan in Sibu in conjunction with the upcoming Merdeka Day celebration.

"To date, 60 per cent of the total of 23 booths have been booked, with a 10 per cent discount given to members of SHEDA," Ting said.

"In view of the economic recovery, this should be the best platform for developers from Kuching, Miri and Sibu to introduce their housing packages," he added.

By Bernama

En route to HK listing

Listing of Kosmopolito, a unit of Far East Consortium International, to include five Malaysian hotels, sources say

Hong Kong-based Far East Consortium International Ltd (FEC) plans to include all five Malaysian hotels in a planned listing of its unit on the main board of the Hong Kong Stock Exchange, sources say.

It is understood that the Malaysian hotels have a combined value of about RM600 million. They are Dorsett Regency KL, Grand Dorsett Subang, Grand Dorsett Labuan, Dorsett Johor and Maytower Hotel.

Collectively, they made a pre-tax profit of HK$55.03 million (RM22.74 million) on revenue of HK$237.23 million (RM98.04 million) for the year to March 31 2010, according to FEC's latest annual report.

On June 30, FEC submitted an application to list Kosmopolito Hotels International Ltd on the main board. FEC's deputy chairman and chief excutive officer is Tan Sri David Chiu Tat-cheong.

According to the listing request documents, FEC, which now wholly-owns Kosmopolito, plans to maintain over 50 per cent equity in the company once the spin-off is completed.

Kosmopolito is described as a developer, owner and operator of value to upscale and boutique hotels in Asia with a strong presence in Hong Kong and Malaysia and a primary focus on expansion in China.

It is also involved in hotel investment, operation, management and development. It now owns and operates seven hotels in Hong Kong.

The listing will help FEC raise funds to support organic growth and acquisitions and separate the business of property development from hotel investment, operation and management.

Sources also said the listing is due to take place in the last quarter of 2010.

FEC's chief financial officer Bill Mok declined to speak to Business Times, pending the company's planned listing.

In 2008, it was reported that FEC was planning on a real estate investment trust (REIT) listing that would include the Malaysian properties. However, this did not happen.

The same year, it announced that it was delaying a planned REIT in Hong Kong, comprising seven hotels, to raise HK$4 billion (RM1.65 billion).

As at March 2010, FEC operates a total of seven hotels in Hong Kong, two hotels in China and five hotels in Malaysia with a combined total of over 3,600 rooms. The five Malaysian hotels have a total of 1,407 rooms.

The group also has eight hotels in various stages of development, including five in Hong Kong, two in China and one in Singapore, representing an additional 2,752 rooms that will bring its total number of hotel rooms to 6,356 rooms by 2013.

By Business Times (by Vasantha Ganesan)

Sunway REIT sets new industry benchmark

PETALING JAYA: Sunway REIT, which made its debut on Bursa Malaysia on July 8, has set a new industry benchmark in the local real estate investment trust (REIT) market (M-REIT) by adopting best practices in its business model, market disclosure and corporate governance practices.

Sunway REIT is the largest in the country in terms of asset value at RM3.4bil. It has a total gross floor area of 8.1 million sq ft and a market capitalisation of RM2.4bil, which represents about 28% of the total market capitalisation of M-REIT.

The trust’s eight assets comprise Sunway Pyramid Shopping Mall, Sunway Carnival Shopping Mall, SunCity Ipoh Hypermarket, Sunway Resort Hotel & Spa, Pyramid Tower Hotel, Sunway Hotel Seberang Jaya, Menara Sunway and Sunway Tower.


"There is no limit as to how high the rental can go" says SUNWAY REIT MANAGEMENT SDN BHD CEO DATUK JEFFREY NG

According to Sunway REIT Management Sdn Bhd chief executive officer Datuk Jeffrey Ng, with three hotels in its portfolio, the management company has signed hotel master lease agreements with Sunway City Bhd’s subsidiaries, Sunway Resort Hotel Sdn Bhd and Sunway Hotel Seberang Jaya Sdn Bhd, to mitigate fluctuations in the hotel’s cyclical business.

“The rental-guarantee floor will ensure the minimum rental for Sunway REIT’s 1,190 hotel rooms. Meanwhile, there is no limit as to how high the rental can go when the hotel market turns for the better, which will on the overall benefit the REIT’s income streams,” Ng told StarBiz.

He said Sunway REIT was also the first local REIT to subject its IPO offer to a market price mechanism as well as allowed its asset valuation to be determined by the REIT’s prevailing unit price.

Before the international roadshow for Sunway REIT commenced last month, the REIT manager signed up reputable cornerstone investors including the Government Investment Corp of Singapore, The Employees Provident Fund, Permodalan Nasional Bhd, and Great Eastern Life Assurance (Malaysia) Sdn Bhd, which collectively have confirmed allocation of about 14% stake in the REIT.

It also adopted an over allotment or green-shoe option that came up to 87 million units that will function as a stabilisation mechanism during the one month “stabilising” period until Aug 8.

“We have also proposed for up to 50% of the management fees to be paid in Sunway REIT units and this practice shows that the management company is confident in the REIT’s performance. This should translate to about 10 million units a year,” Ng said.

To attract more global investors, Sunway REIT is working towards being included as an indexed REIT by the Brussels-based European Public Real Estate Association (Epra) and the National Assocation of Real Estate Investment Trusts (Nareit) of the United States.

According to Ng, institutional REIT investors including pension and insurance funds, track these global standard index and use it as a benchmark to guide their investment decisions.


“With RM1.56bil worth of free-float units, big global investors will be attracted to invest in Sunway REIT because of its liquidity. Once accepted as the benchmark indexed REIT for Malaysia, Sunway REIT will be in the global investors’ radar screen,” Ng pointed out.

Based on the institutional offer price of 90 sen a unit, Sunway REIT offers a yield of about 7.5% for institutional investors for the financial year ending June 30, 2011.

Retail investors can look forward to a distribution yield of 7.66%, which is higher than the 6.9% yield disclosed in the prospectus.

The IPO raised RM1.56bil (including the over allotment of 87 million units at RM78mil), of which 44% or RM680mil were subscribed by foreign institutional funds.

Ng said although Sunway REIT had a diversified asset portfolio, some 70% of its asset value and 67% of revenue would be from retail assets, which showed that Sunway REIT was a retail-focused REIT.

The three retail assets have total net lettable area of 2.4 million sq ft and asset value of RM2.4mil, making it the largest retail-focused REIT locally.

“Both the retail and institutional investors are looking at broader and longer-term investment horizon. Being a defensive REIT, unit-holders can look forward to a longer-term growth catalyst as well as low risk and stable yields.

As long as its cashflow remains strong, the dividend payout will be 100% of total net distribution income,” Ng added.

By The Star

QSR buys 1.94 million KPJ REIT units

PETALING JAYA: QSR Brands Bhd has acquired 1.947 million units in KPJ Real Estate Investment Trust (REIT) from the open market on July 20 for about RM2.012mil.

The purchase was funded via internally generated funds.

QSR said in a filing with Bursa yesterday that the acquistion was based on better return on investment of about 7.3% (based on current dividend yield) as against the current fixed deposit interest rate of about 2.5% to 3.0%.

KPJ REIT is managed and administered by Johor Corp Bhd subsidiary, Damansara Assets Sdn Bhd. Johor Corp also owns 50.35% stake in Kulim (M) Bhd, which in turn has a 61% stake in QSR.

By The Star

Axis REIT to raise RM132mil

KUALA LUMPUR: Axis REIT Managers Bhd (ARMB), the manager of the world’s first office/industrial Islamic real estate investment trust (REIT), plans to raise RM132mil next month as part of its capital management process, said chief executive officer/executive director Stewart LaBrooy.


Axis REIT Managers Bhd chief executive officer/executive director Stewart LaBrooy at the media briefing yesterday. At the back fr left are chief financial officer Leong Kit May, business development & investor relations senior manager Chan Wai Leo and head of real estate David Aboud.

“The funds raised will be used to expand our property portfolio and to reduce our gearing,” he told reporters here yesterday at a media briefing in conjunction with its unaudited half yearly results announcement.

LaBrooy said ARMB was looking to acquire two new logistics houses and a retail warehouse in Johor, as well as an office building in Cyberjaya, which would cost about RM190mil in total to add to the existing 23 assets it currently owned.

Axis REIT properties include assets in commercial, office and industrial real estate.

“Upon conclusion of the acquisitions, our total assets under management will be RM1.2bil from the current RM900mil,” he said, adding that on average, the group acquired about five assets annually.

He also said ARMB planned to have at least US$500mil worth of assets so that it could attract attention from the international market and that the group was pushing hard to reach that level.

“Our aim is to acquire good assets in good locations such as in Penang, Klang Valley and Johor Baru that can bring value and benefit to the group and also to the unit holders,” he said.

On the group’s financial results, LaBrooy said ARMB was on the right track, with growth seen in revenue and distribution per unit compared to the preceding quarter despite the volatility in global markets.

“This year also saw us comprehensively revalued five of our properties - Axis Shah Alam DC, BWM Centre PTP, Giant Hypermarket, Nestle Office & Warehouse and Quattro West - and this resulted in a positive change in fair value of RM9.07mil,” he said. Axis REIT, which owns mostly industrial properties, posted a 74.51% rise in net profit to RM21.87mil for the second quarter ended June 30, compared with the same quarter a year ago.

LaBrooy attributed the jump in net profit to a combination of revaluation surplus and realised gains from distributed profit and revaluation gains. Revenue for the quarter under review stood at RM21mil, a rise of just over 21% compared with a year ago.

LaBrooy said Axis REIT’s performance in the third quarter would improve due to the satisfactory performance of its existing portfolio and with Quattro West property coming on stream.

By The Star

Axis REIT Managers on buying spree

AXIS REIT Managers Bhd (ARMB) targets to manage some US$500 million (RM1.6 billion) worth of assets and is in the process of buying more properties in the Klang Valley and Johor.

ARMB, manager of the Axis Real Estate Investment Trust, an Islamic office and industrial property trust, now manages 23 properties worth a combined RM952 million, ranging from offices and warehouses to logistic centres and hypermarkets.

By end-2012, it will manage 27 properties worth a combined RM1.2 billion, ARMB chief executive officer Stewart LaBrooy told a media briefing in Kuala Lumpur yesterday.

ARMB is buying a logistics warehouse in Port of Tanjung Pelepas and a Tesco hypermarket in Johor, as well as the Axis Technology Centre in Petaling Jaya, Selangor, and the Axis PDI Centre in Klang, Selangor, totalling RM240 million.
LaBrooy said the deals, except for Tesco, will be completed by October this year. ARMB is still in negotiations to buy the hypermarket.

He added that ARMB is also in the midst of buying the Axis Techpoint 1 in Petaling Jaya, a logistics warehouse in Johor and an office building in Cyberjaya, through third party transactions.

The acquisitions, worth a combined RM190 million, will be completed by early next year, he said.

LaBrooy also said ARMB will place out 68.82 million units next month or about 20 per cent of its current fund size, to raise RM132 million for the acquisitions.

"As you get bigger, the placement gets larger and you can do more. We can accumulate bigger assets and put them in our balance sheet, placing us in the big boys club," he said.

LaBrooy said ARMB will continue to look for valuable assets in prime areas with long term returns.

ARMB's net profit for the quarter to June 30 2010 almost doubled to RM21.9 million due to the higher value of its properties.

"It is always our intention to be in the billion ringgit club. We have reached the first step of development, which is to surpass the RM1 billion mark.

"What is next is to reach RM2 billion. We will work very hard to get to that level. Anything we buy must have a long term strategy," LaBrooy said.

He added that ARMB may dispose of some of its current assets that have fully matured.

By Business Times

KLCCP earnings to get a lift

The average rental rate of office space at Petronas Twin Towers is around RM9 per sq ft while Suria KLCC retail space is fetching average rental rates of around RM23 per sq ft.

Analysts see higher income streams on completion of retail podium, new office block next year

PETALING JAYA: KLCC Property Holdings Bhd (KLCCP) can look forward to higher income streams with the completion of the Lot C retail podium and a new office block next year despite the weaker performance of its hotel property business, analysts said.

Construction of the six-storey retail podium with 160,000 sq ft in net lettable area (NLA) and a 55-storey office block with NLA of 840,000 sq ft is under way.

The new retail podium is due for completion by the end of the year and should start contributing to the company’s earnings in financial year ending March 31, 2011 (FY11).

Suria KLCC has a net lettable space of 1 million sq ft now.

KLCCP’s 55-storey office tower is on track for completion in October 2011.

According to analysts’ estimates, Lot C could bring in RM147mil in rental income and contribute 21% to KLCCP’s FY13 earnings.

A senior analyst with a local brokerage said the KLCCP office building was without doubt the most prime office asset in the country.

“With Petronas as the master lessor for the office building, there is certainty in its rental income whether or not the office space is occupied. But there is also a downside in this arrangement as the company will miss out on the opportunity to review the rental rates should the market improve before the lease expires,” he told StarBiz.

The 15-year lease for Petronas Twin Towers which have a total NLA of 3.2 million sq ft was from August 1, 1997, while the lease for the 528,000 sq ft Menara Maxis was from June 1, 1998.

The lease tenure for the 380,000 sq ft-Menara Exxon Mobil was for 12 years until February 2012.

Hwang DBS Research analyst Yee Mei Hui said in a report yesterday that long term, locked-in rental income from blue-chip tenants would continue to sustain KLCCP’s future earnings.

The average rental rate of office space at Petronas Twin Towers is about RM9 per sq ft while that of Menara Exxon Mobil and Menara Maxis is RM7.50 per sq ft.

Suria KLCC retail space is fetching average rental rates of around RM23 per sq ft.

Yee said for FY10, the retail turnover at Suria KLCC shopping centre had returned to the pre-crisis level of RM2bil, while the number of annual footholds or visitors to the mall was 42 million.

During the period, KLCCP registered a 21% increase in net profit after minority interests of RM648mil while revenue grew 2% to RM881mil.

The improved results wermainly attributable to a 3% hike in office rental income and 8% increase in income from retail space.

She said the higher rental income from KLCCP’s office and retail segments would help mitigate its weaker hotel operations.

Income from Mandarin Oriental fell 13% as a result of a drop in the hotel’s occupancy rate to 55% in FY10 from an occupancy of 65% in FY09.

This was despite the average room rate holding stable at RM636. Yee said rental rates for the new retail space should be comparable with Suria KLCC at around RM35 per sq ft (ex-anchor tenants), adding that its occupancy rate could reach 80% in its first year of operation.

“KLCCP’s net gearing has improved to 27%, equivalent to a net debt of RM1.45bil in FY10 from a high of 130% in FY05. The significantly improved net gearing provides room for more borrowings for future expansion.

“Given the full repayment of Petronas Twin Towers’ private debt securities by 2012, the company’s net gearing ratio is expected to remain at a healthy level despite the loan drawdown for Lot C,” she pointed out.

By The Star

Axis REIT Q2 profit soars as property value jumps

AXIS Real Estate Investment Trust says its second quarter net profit almost doubled due to the higher value of its properties.

Axis REIT is bullish on its performance for the rest of the year.

Its net profit for the quarter to June 30 2010 was RM21.9 million, up from RM12.5 million in the same quarter a year earlier.

Revenue went up 21 per cent to RM21 million due to higher gross rental income.
The higher net profit was largely due to the change in its properties' fair value. The value of its assets rose by some RM9 million in the quarter, compared with RM2 million a year ago.

Excluding this unrealised value, its pre-tax profit increased 15 per cent to RM12.1 million.

Axis REIT plans to pay an income distribution of 4 sen a unit for the second quarter, which is 97 per cent of its realised pre-tax profit.

For the first six months, Axis REIT made a net profit of RM36.1 million, up from RM23 million in the same period last year. Revenue rose 18 per cent to RM40.9 million.

"The (REIT) manager is optimistic that in view of the current satisfactory performance of Axis-REIT's existing investment portfolio and its growth strategy to actively pursue quality acquisitions, it will be able to maintain its current performance for the coming quarter and the rest of the financial year," it said in a statement to Bursa Malaysia yesterday.

Axis REIT has leased out all of the space at Quattro West, its property in Petaling Jaya, Selangor.

It bought the building for RM39.8 million in 2007 and budgeted RM7 million for its makeover.

Axis REIT's properties are now worth RM928 million on its books at the end of June.

Its manager, AXIS REIT Managers Bhd, has targeted to manage RM1 billion worth of assets by the year-end.

It plans to buy five properties valued at about RM180 million in 2010.

In January, it said it was assessing two new warehouses in Port of Tanjung Pelepas in Johor, a factory or a warehouse in Puchong, Selangor, and an office building in Cyberjaya.

By Business Times