Property developers receptive to 10:90 concept

KUALA LUMPUR: Major property developers are receptive of the government’s initiative to encourage the 10:90 concept of house purchase and delivery that promotes the completion of 10% of a building before sale, said Housing and Local Government Minister Datuk Seri Ong Ka Ting.

He said: “The big developers are quite forthcoming (and) also want to try this system.”

However, he added these developers should be given time to introduce the concept. He was speaking to reporters yesterday at a media briefing about the status of the one-stop centre (OSC) programme for property developers to submit applications relating to their projects.

Ong said the government was expected to fully roll out the e-local authority programme (EPBT) by end-2008. EPBT is an electronic service, which allows local councils to offer services such as payment of taxes, quit rent and sending of complaints online that will also benefit property developers where layout plans for houses and infrastructure could be done online.

He said the ministry had carried out a pilot project of six EPBTs at a cost of RM5 million that began in April 2007 and completed in August this year, and expected the rollout programme for all 144 local councils to be completed by end-200 “Some (local councils) are already equipped with their own information technology systems (but) we want to standardise EPBT so there is a uniformed way of checking,” he said.

On the status of the OSC, Ong said the programme was a success as the ministry had received 2,193 applications. He said the ministry had received positive feedback and was exploring new avenues of improving it.

By The EDGE

CHHB mulls REIT of at least RM500m

SERI KEMBANGAN: Country Heights Holdings Bhd (CHHB) is mulling over the setting up of a real estate investment trust (REIT) with a minimum portfolio value of RM500 million as early as the end of next year.

Its managing director Tan Sri Lee Kim Yew said CHHB had been approached by several parties to set up a REIT and “as for the properties to be injected into the REIT, we prefer it to be specialised… only commercial properties.”

The developer is looking at its Mines Waterfront Business Park project in Mines Resort City and will also consider buying existing commercial properties in the Klang Valley’s southern corridor like Cyberjaya.

Speaking to reporters after CHHB’s EGM yesterday, Lee said CHHB would also consider injecting up to 150,000 sq ft of nett lettable area of the Heritage Southlake development in Seri Kembangan comprising serviced residences, a retail village and an office tower into such a REIT. The project is a joint-venture development undertaken by Lee in his personal capacity.

However, he said CHHB was not in a hurry to set up a REIT. “Our aim is to reduce the company’s gearing levels by selling some of our properties owned by East Vision Leisure Group Sdn Bhd which include the Mines Waterfront Business Park and the Mines International Exhibition & Convention Centre (MIECC).” East Vision Leisure is CHHB’s wholly-owned subsidiary.

Lee said there were interested parties for the Mines Waterfront Business Park, and the company would not hesitate to sell it if the price is right. He added that the market value for the first phase of Mines Waterfront Business Park was about RM130 million.

CHHB has already started work on the second phase that will add another 350,000 sq ft of space that will be completed by the end of next year.

On the MIECC, Lee said it faced stiff competition from other similar properties developed by government-linked companies and the government.

“We still want to dispose of the MIECC. In the past, we even tried to sell it at cost for RM250 million but such property is a tough one to run in the business sense. However, if it can’t be sold at cost, we will find ways to make it work,” Lee said.

The developer is planning to add value to the MIECC by converting the ground floor space for retail use. There are plans to lease it out while the exhibition space will be on the upper floors.

Earlier at the EGM, CHHB shareholders approved the disposal of the leasehold Mines Shopping Fair in Mines Resort City for RM432 million cash to Mutual Streams Sdn Bhd, whose principal activity is investment holding. It is owned by Singapore’s CapitaLand Ltd.

Sited on a 10.19-acre tract, the 4½-storey shopping complex was built at a cost of RM300 million and began operations in 1997.

With a nett lettable area of about 638,000 sq ft, its main anchors include Giant Hypermarket, TGV Cinemas and Best Denki. It recorded occupancy levels of 88% and for the year ended Dec 31, 2006, the audited gross rental income totalled RM34.9 million.

By The EDGE

SP Setia unveils RM30m bungalow

KUALA LUMPUR: SP Setia Bhd plans to sell “super high-end” bungalows priced at RM30 million each next year — making it the country’s first property developer to venture into this property segment, its group managing director and chief executive officer Tan Sri Liew Kee Sin said.

For a start, Liew said it had targeted to sell 15 units of such bungalows at Kenny Hills in Kuala Lumpur, over a period of two years beginning 2008, pending the authorities’ approval on the building plan.

“Hopefully, we will get all approvals by next April or May,” he said, but declined to provide specifications of these bungalows.

Speaking to reporters after a RM500 million bond issue signing ceremony here yesterday, he added that the idea of the RM30 million bungalow was part of its plans to diversify its range of property products. Currently, its properties are mainly marketed under “Setia” and “Eco-” brands.

Liew said: “We are shifting ourselves to be a full-range developer from a developer of normal housing because these two brands can sustain us only for this number of years.

“We want to extend ourselves to the other part of the business cake. We are going into condominiums and super high-end bungalows, and commercial development.”

On the group’s venture into Vietnam’s property market, he expected its upcoming residential project there to contribute 10% to the group’s earnings in the financial year 2010 despite the stiff competition in the property market there.

He said Vietnam, being an open economy and already full of foreign players, was a challenging market but SP Setia would strive to replicate its Malaysian success in Vietnam.

“Vietnam is a big market. It has 85 million people. We have a long way to go in Vietnam.

It’s good to concentrate, to focus on what you are doing.

“To strengthen ourselves in Vietnam and having (gained) a foothold in Vietnam, we like to do what we did here, that is to be number one,” he said.

SP Setia announced in June that it had teamed up with Vietnam’s state-owned conglomerate Becamex IDC Corp and Treasure Link Far East Ltd to develop an integrated township project on a 226ha land in MyPhuoc Industrial Park of the Binh Duong province, 40km north of Ho Chi Minh City, with a gross development value of RM2.1 billion.

Liew said the project, initially targeted to be completed in seven years, could finish in five years in view of the strong economic growth and huge population in Vietnam.

He said the joint venture company was still waiting for the licence from the Vietnamese authorities, and targeted to launch the first phase next year. It also planned to go to Hanoi, he added.

Other than Vietnam, he added that the company had no plan to venture into other overseas market at the moment.

Yesterday, the signing ceremony between SP Setia, Aseambankers Malaysia Bhd and United Overseas Bank (Malaysia) Bhd (UOB) was for a RM500 million bond issue with detachable warrants. Aseambankers is the principal adviser and lead arranger, while the joint lead managers are Aseambankers and UOB.

RAM Rating Services Bhd has assigned a long-term rating of AA3 to the bonds, which indicates a high safety for timely payment of interest and principal.

Of the RM500 million raised, RM200 million will be used to repay borrowings that carry higher interests, while the remaining will be used to finance its new projects, especially the commercial developments.

SP Setia will announce in mid-December its results for the financial year ended Oct 31, 2007. Liew said it achieved some RM1.2 billion of sales in FY07, and that the earnings would be better than that of the the previous year.

By The EDGE (By Gan Yen Kuan & Lim Yu Min)

AmFirst REIT's 2Q net profit at RM8.05m

KUALA LUMPUR: AmFirst Real Estate Investment Trust (AmFirst REIT) posted a net profit of RM8.05 million on the back of revenue totalling RM15 million in the second quarter ended Sept 30, 2007.

AmFirst REIT said yesterday, the cumulative net profit for the six months to Sept stood at RM15.54 million with a revenue of RM27.82 million.

It declared 100% of its net income for the period amounting to 3.62 sen as income distribution.

"Considering the tight supply of office space in the Golden Triangle, the trust's properties are expected to renew their tenancies at higher rental rates for the remaining period of the year.

"The manager will continue to adopt its operating strategy to enhance the performance of the existing properties and will also continue to pursue its acquisition strategy to grow the income and asset size," it said.

AmFirst REIT said the board of directors of the manager was of the opinion it would achieve its forecast profit for the year ending March 31, 2008 as stated in its prospectus.

By The EDGE (By Kevin Tan)

45,000 visitors expected for 2008 property exhibitions

KUALA LUMPUR: Exhibition Guide (M) Sdn Bhd is targeting at least 35,000 and 10,000 visitors at its inaugural Super Home Ideas Exhibition and Malaysia International Luxury Properties Exhibition respectively in 2008 that will feature the latest trends in home property living and future perspective of properties development.

The Super Home Ideas Exhibition will be held from Jan 21 to 24 in Mid Valley Megamall and its international luxury properties exhibition from March 21 to 23 at the Kuala Lumpur Convention Centre.

Exhibition Guide’s managing director Moey Sai Yee said its exhibitions were aimed at foreign investors and expatriates who were keen to settle down here and wanted high-end luxury properties.

“We find many expatriates have settled down here because of education, tourism, the Malaysia My Second Home Programme (MM2H) and also the affordable luxurious lifestyle they can enjoy here,” Moey told reporters after the launch of its exhibition logo by Tourism Malaysia director-general Datuk Mirza Mohammad Taiyab.

“In this region, apart from Malaysia, you will not be able to find or afford high-class living even in Thailand or Singapore. In fact, developers in Bali are selling these properties for above RM10 million,” Moey added.

Meanwhile, Mirza said the country’s global ranking at 32nd position for international exhibitions and conventions needed to be improved by organising more seminars and exhibitions.

By The EDGE

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)

SP Setia Vietnam township to contribute 10% to net profit

KUALA LUMPUR: SP Setia Bhd expects its RM2.1bil township, EcoLakes at MyPhuoc Industrial Park in Binh Duong province, Vietnam, to contribute to 10% of net profit by 2010.

Chief executive officer and group managing director Tan Sri Liew Kee Sin said via a tie-up with state-owned conglomerate Becamex IDC Corp, SP Setia was the first developer in Vietnam to build an integrated township on 500 acres.

“We hope to set a foothold in this growing market where property prices are higher compared to Malaysia, so we can hope for higher margins as well,” he told reporters after the company's EGM and a signing ceremony yesterday.

At the ceremony, SP Setia inked an agreement with Aseambankers Malaysia Bhd and United Overseas Bank (M) Bhd for the proposed issuance of RM500mil nominal value redeemable serial bonds with 168,151,302 detachable warrants (RSB).

Aseambankers is the principal adviser and lead arranger while the joint lead managers are Aseambankers and UOB.

Left to right: UOB Bank (M) Bhd CEO Chan Kok Seong, SP Setia Bhd CEO and group MD Tan Sri Liew Kee Sin, Maybank Group deputy president and CFO Datuk Mohammed Hussein, SP Setia Bhd chairman Tan Sri Abdul Rashid Abdul Manaf, Aseambankers CCO Tracy Ong and Pacific Trustees CEO Wong Siak Nyen.

The RSB, to be fully subscribed by Aseambankers and UOB on a bought deal basis, would be issued at a discount to its nominal value in two tranches of RM250mil each, with a tenures of three and five years respectively. The coupon rate is 2% per annum payable semi-annually in arrears.

Upon issuance of the RSB, the warrants will be split from the bonds and offered for sale to the existing shareholders of SP Setia on a renounceable basis of one warrant for every four existing SP Setia shares of 75 sen each.

According to Liew, the RSB is not only to enable SP Setia to raise the requisite capital to fund company's expansion, but also reduce financing costs as some of the existing bank borrowings were procured at higher interest rates.

“This would allow us to diversify our funding sources and lock in fixed interest rates to rebalance our current financing portfolio, which is primarily based on floating interest rates,” he said, adding that the RSB would also enable SP Setia to plan its cash flow requirements.

Of the RM500mil to be raised, RM200mil would be used to repay existing borrowings, RM298.5mil to finance operating expenses, capital expenditure and working capital needs while RM1.5mil is set aside for expenses incurred in the corporate exercise.

“Besides focusing on the mixed development in Vietnam, the exercise would also allow SP Setia to embark on commercial developments such as Setia City in Shah Alam, Setia EcoCity in Johor Baru and luxury projects such as Duta Grande and Setia Sky Residences to further boost its strong and steady earnings base,” Liew added.

Along with the bonds issuance, SP Setia has also proposed a one-for-two bonus issue in order to increase the company's capital base and to better reflect its current and future scale of operations besides rewarding its shareholders.

On completion of the bonus issue and assuming full exercise of the warrants, SP Setia's issued and paid-up share capital will enlarge to about 1.2 billion shares, equivalent to RM882.8mil, from 672 million shares, or RM504.4mil.

RAM Rating Services Bhd has assigned a long-term “AA3” rating to the RSB, which indicates a high safety for timely payment of interest and principal.

By The Star (By Laalitha Hunt)

More hospitals for REIT

JOHOR BARU: KPJ Healthcare Bhd will continue to inject properties, including overseas hospitals, into its Al-’Alqar KPJ REIT.

However, it was not setting any time frame to do so, said chairman Tan Sri Muhammad Ali Hashim.

KPJ Healthcare currently owns and manages 17 hospitals nationwide and six overseas – three in Indonesia, one in Bangladesh and two in Saudi Arabia.

The world's first Islamic REIT, the Al-’Alqar KPJ REIT invests in healthcare and related properties, primarily hospital buildings. It owns a composition of investment worth RM481mil, including Ampang Puteri Specialist Hospital, Damansara Specialist Hospital, Johor Specialist Hospital, Ipoh Specialist Hospital, Selangor Medical Centre and Puteri Specialist.

KPJ Healthcare had proposed to dispose of five hospital buildings to the Al-’Alqar KPJ REIT for RM170.04mil, comprising RM85.76mil cash and the issuance of 88,721 new units in the former at an issue price of 95 sen per unit.

Datin Paduka Siti Sa’diah Sheikh Bakir and Tan Sri Muhammad Ali Hashim at the Al-’Alqar KPJ REIT’s EGM

Shareholders at KPJ Healthcare and Al-’Alqar KPJ REIT EGMs approved the proposal, paving the way for Perdana Specialist Hospital, Kuantan Specialist Hospital, Sentosa Medical Centre, KPJ Kajang Specialist Hospital and Kedah Medical Centre to be injected into the REIT by year-end.

“With the exercise, the company will be able to focus on its core activities of managing hospital services,” Ali told a press conference after the EGMs yesterday.

Ali said funds raised from the sale to the REIT would be used for other investments and to reduce borrowings.

He said the company would continue to look at REITs as part of its expansion programme to unlock the true value of its properties.

“There will be a continuous injection of properties, including overseas hospitals, but we are not setting any time frame,” Ali added.

Meanwhile, KPJ Healthcare managing director Datin Paduka Siti Sa’diah Sheikh Bakir said there were many invitations by various parties to manage and own hospitals overseas and the company was open to any opportunities.

The company’s nursing college branch at Metropolis Tower in Johor Baru would have its first intake of some 100 students in January, she said, adding that the branch was important as it would cater to the health service sector, which was one of the key sectors in the Iskandar Development Region.

Sa’diah said that as the first private nursing college in Johor, it had the potential to cater to student nurses from Indonesia as well.

By The Star (By Zazali Musa)

Bertam Properties sells RM150mil land

KEPALA BATAS: Bertam Properties Sdn Bhd has sold land worth RM150mil in Bertam, Kepala Batas, to five educational institutions.

Group chief executive officer Datuk Roslan Ibrahim said the institutions were Universiti Sains Malaysia (USM), Universiti Teknologi Mara (UiTM), Nursing College, Penang International Dental College and Alliance College of Medical Science.

“Construction of these institutions is expected to start within two years,” he said during the company’s Raya open house celebrations at its new office here recently.

Roslan said USM, which bought 45.3ha for its Advanced Medical and Dental Institute, was expected to start construction of its campus next year.

UiTM's land size is 91.8ha, Nursing College 20.2ha, Penang International Dental College 4ha and Alliance College 10.1ha.

Datuk Roslan Ibrahim: »It would take 12 to 15 years to fully develop the land here depending on demand«

“Once the institutions are up and running, we anticipate 2,000 to 15,000 people (students and staff) to come to Bertam,” he said.

“We hope the ‘medical educational park’ would be fully developed in four to five years. Once it’s up, the area will grow even further.”

Roslan said Bertam Properties still had about 500ha to develop in the area.

“It would take 12 to 15 years to fully develop the land here, depending on demand.

“We have developed 4,000 houses and, on an average, we can develop 500 to 600 houses per year,” he said.


By The Star (By Yeng Ai Chun)

AmFIRST REIT chalks up RM27.8m revenue in first half

AM ARA REIT Managers Sdn Bhd said its AmFIRST Real Estate Investment Trust (REIT) has registered a gross revenue of RM27.8 million for the financial half-year ended 30 September 2007.

The distributable income for the same period is RM15.54 million, which would translate to a distribution per unit of 3.623 sen.

Am ARA acting chief executive officer Anthony Ooi said it had achieved an average rental reversion of close to 12 per cent on a portfolio basis over the last six months, and expects rental rates to firm up further, especially in the Golden Triangle area.

The REIT has five properties under its portfolio namely Bangunan AmBank Group, Menara AmBank, AmBank Group Leadership Training Centre, Menara Merais and the newly acquired Kelana Brem Towers.

"Moving forward, we plan to carry out asset enhancement works to one or two of our office buildings to improve their yields," said Ooi

By New Straits Times

Emaar has no immediate plans to invest in Malaysia

DUBAI: Emaar International, the Middle East's largest property developer with a market capitalisation of more than US$40 billion (US$1=RM3.34) always has Malaysia as a future investment destination but has no plans to go into the country just yet.

Emaar managing director Issam Galadari said the company which has a property project in Lombok, Indonesia, has been eyeing Malaysia for a long time.

He said the property developer has been looking particularly at Johor, but has not made a decision whether to come and invest.

"Malaysia is an attractive market but so far we have not been approached by any local companies to set up joint ventures," said Issam at the sidelines of a Kuala Lumpur Business Club seminar on attracting United Arab Emirates (UAE) investments into Malaysia.

Established in 1997, UAE-based Emaar has US$60 billion worth of commercial and residential projects globally.

ICON: An artist's impression of Emmar's flagship project, the RM66.8 billion Burj Dubai, which will be the tallest building in the world when completed.

It also owns and operates 150 shopping malls in the Middle East region.

Emaar International which is in the midst of building the world's tallest building, the Burj (tower) of Dubai, is 32 per cent owned by the Dubai government and the remaining 68 per cent by 60,000 shareholders.

By New Straits Times (By Zaidi Isham Ismail)

More more information, please visit Burj Dubai website.

Country Heights mulls setting up REIT

COUNTRY Heights Holdings Bhd (CHHB), which announced the sale of three properties worth RM800 million to pare debts, is looking at setting up a real estate investment trust (REIT) to include one of the unsold components - the Mines Waterfront Business Park.

The developer plans to set up a REIT comprising commercial properties with an asset value of at least RM500 million, either on its own or on a joint venture basis.

In June, CHHB had identified the Mines Shopping Fair, Malaysia International Exhibition and Convention Centre (MIECC) and the Mines Waterfront Business Park for sale to wipe out its debt.

In August, the company announced the proposed sale of Mines Shopping Fair to Singapore's CapitaLand Ltd for RM432 million. Yesterday, CHHB obtained shareholder approval for the sale.

"We have had a lot of interests and enquiries for the the other two (unsold) properties especially the office space. We have the option to dispose of the business park if the price is right or we may consider setting up a REIT," CHHB managing director Tan Sri Lee Kim Yew said.

"We would like to do the REIT either on our own or with partners. We are looking at a minimum of RM500 million asset in the REIT," he said following the company extraordinary general meeting yesterday.

"We have been approached by others for the reit joint venture," he added.

According to Lee, the earliest possible date when the REIT may be set up is at the end-2008.

Apart from injecting its existing or phase 1 of the business park valued at about RM130 million, CHHB is also looking at adding its second phase of business park when it is ready at the end of next year.

At RM600 per sq ft, the second phase with 350,000 sq ft of nett lettable area is valued at RM210 million.

The rental income from the first phase is about RM650,000 a month or about RM7.8 million annually.

As for the MIECC, Lee said that if CHHB is unable to fetch at least RM250 million, which is the cost price, it will continue to keep the property but add value to enhance it.

"We would like to dispose of the exhibition centre at cost or RM250 million, otherwise we will turn it around by converting the hall and adding value to it," Lee said, adding that the ground floor has been converted to accommodate retail and office space.

Meanwhile, the sale of the shopping complex will provide CHHB with an estimated gain of RM102 million.

This single sale has helped improve gearing to 0.6 times from 1.4 times and reduced interest rate on loans by half from RM50 million per year.

By New Straits Times (By Vasantha Ganesan)

Dijaya plans RM600m property launches

DIJAYA Corp Bhd will launch at least RM600 million worth of properties in fiscal 2008, amid plans to expand geographically and reorganise its product range to sustain earnings.

The year to December 2008 will see the unveiling of, among others, the estimated RM205 million Tropicana Avenue shop offices, and RM390 million Tropicana Grande luxury condominiums.

Both projects sit within Dijaya's existing 253-hectare upmarket Tropicana Golf & Country Resort township near the Bandar Utama enclave in Petaling Jaya.

Dijaya's upcoming property projects in Malaysia coincide with its initial real estate launches in India, the developer's first foreign venture.

It has tied up with a landowner in India to build an approximately RM800 million mixed-development project in Hyderabad.

"It is at least RM600 million locally and abroad," Dijaya managing director Tong Kien Onn told Business Times in Petaling Jaya yesterday.

Tong said Dijaya intends to venture into Johor and Penang, the other two property hotspots in Malaysia besides the Klang Valley.

Plans are also afoot for an entry into fast-growing Vietnam.

In Johor, Dijaya plans to build commercial units and high-rise homes while in Penang, it hopes to develop landed houses.

Tong declined to elaborate on Vietnam, only indicating that a deal could be struck within the next four months.

To sustain earnings, commercial properties will take greater prominence in Dijaya's real estate portfolio to enable the company to increase income from rental.

Initial rental boost is expected to come from the lease of company-owned retail and office space within its upcoming Tropicana Mall in Petaling Jaya.

"Our current rental income is minimal," Tong said.

Dijaya prefers to sell its foreign offerings, but may retain strategically-located ones for lease.

Recurrent rentals offer a buffer against a cyclical real estate sector while outright property sales may fluctuate according to economic conditions.

In Malaysia, the developer still has some 243ha of untouched land across the Klang Valley, Behrang and Bukit Mertajam.

These sites can last the company up to the next seven years. Its unbilled property sales stand at about RM250 million.

Dijaya's first half to June 2007 net profit rose 19 per cent to RM15.4 million, or 5.9 sen a share, while revenue climbed 29 per cent to RM114 million.

Shares of Dijaya dipped two per cent or three sen to end at RM1.37 yesterday, valuing the firm at RM355.6 million.

The stock has advanced 71 per cent this year, surpassing the benchmark index's 26 per cent rise.

By New Straits Times (By Chong Jin Hun)