YNH plans more land buys with tower sale proceeds

KUALA LUMPUR: YNH Property Bhd will use the RM920 million proceeds from selling 50% of the upcoming Menara YNH in Kuala Lumpur to buy more prime Klang Valley sites, a move which may see the Perak-based developer incur more borrowings.

YNH head of corporate services Daniel Chan said the firm planned to buy more land along Jalan Sultan Ismail, Jalan Bukit Bintang and within the Mont’ Kiara enclave. “We are eyeing these areas, and talks are on-going. We will borrow if neccessary,” he told the The Edge Financial Daily yesterday.

YNH’s land bank in Malaysia includes 13.2ha in the Klang Valley, and 440ha in Perak’s Manjung district where the developer’s RM3.12 billion Bandar Manjung Point township sits.

The company announced on Tuesday that Kuwait Finance House (Malaysia) Bhd (KFHMB) is purchasing the 50% interest of the 45-storey Menara YNH, located on a 1.2ha feeehold tract along Jalan Sultan Ismail.

At RM920 million, the sale involving an area of 750,000 sq ft works out to some RM1,230 per sq ft. The price is about 10% above the RM1,120 per sq ft KFHMB and local property investor Prestige Scale Sdn Bhd paid for the 36-storey Glomac Tower in the Kuala Lumpur City Centre.

The remaining 50% of the tower will also be sold to foreign buyers, Chan added, without eloborating. Upon finalising the sale of the entire building, YNH stands to rake in some RM1.84 billion, he said.

“Menara YNH’s selling price is a new high, and a major catalyst for YNH’s future earnings” said an analyst. But the sale proceeds should first be channelled to the development of Menara YNH, and subsequently for YNH’s future land purchases, he added.

It is learnt that YNH may rope in a partner to build Menara YNH from which the developer is targeting a 15% operating profit margin, based on the RM920 million price tag.

In December 2006, YNH and Singapore’s CapitaLand Ltd had signed a memorandum of understanding (MoU) to jointly build Menara YNH on a 60:40 shareholding basis.

Construction of the building, initially valued at around RM800 million, was originally planned to begin in mid-2007 and scheduled for completion by end-2011.

However, the YNH-Capitaland collaboration was terminated in June 2007 as certain conditions under the MoU could not be fulfilled, resulting in YHH undertaking the task on its own.

YNH’s net profit for the nine months to Sept 30, 2007 rose 25% to RM66.3 million from RM52.9 million a year ago. However, revenue declined 2% to RM181.6 million from RM184.4 million.

Shares of YNH dipped 10 sen to close at RM2.75 yesterday with some 4.9 million shares traded.

By The EDGE MALAYSIA - (The Edge Financial Daily) - by Chong Jin Hun