Country Heights injects its properties into REIT

It proposes to launch RM500mil fund

SERI KEMBANGAN: Country Heights Holdings Bhd (CHHB) plans to launch a real estate investment trust (REIT) that focuses on unlocking its commercial properties by 2009.

Managing director Tan Sri Lee Kim Yew said the group was looking at injecting properties worth at least RM500mil into the proposed REIT fund.

“We can either set up our own REIT or do it through a joint venture,” he said after CHHB's EGM yesterday. The group has also discussed with other parties to undertake the REIT via a joint venture.

Potential assets for the proposed REIT fund include the RM130mil Mines Waterfront Business Park as well as the RM90mil Heritage office block project owned by Lee in Seri Kembangan.

Lee said the group was currently developing phase two of the business park, due for completion by end-2008. The additional 350,000 sq ft of office space will boost the property from RM130mil to some RM350mil.

Tan Sri Lee Kim Yew

However, he said, CHHB would proceed with the REIT plan only if it failed to sell the first phase of the business park.

The group faces difficulty in attracting competitive price for the Mines International Exhibition and Convention Centre (MIECC).

“We originally planned is to sell the MIECC. But since running the MIECC is more of a 'national service' business, we had difficulty in getting the right price. Now, we either have to continue operating it as it is or add value to it,” Lee said.

CHHB has transformed the ground floor of the MIECC, which currently boasts a book value of RM250mil, into retail space.

Meanwhile, CHHB yesterday received minority shareholders' approval to sell Mines Shopping Fair (MSF) to Singapore-based CapitaLand Ltd for RM432mil.

Proceeds for the sale of MSF will retire RM420mil of CHHB's some RM837mil borrowings and help reduce gearing to 0.6 time from 1.5 times currently. It gives rise to a gain of RM102mil.

Property sale is still the group's priority as it plans to reduce gearing to a much lower level in the future.

By The Star (By Sabri Tahir)