About 75% of SunCity’s operating profit of RM175mil for the first two quarters ended Dec 31, 2008 was from its property investment assets and the balance from property development.
SunCity can look forward to total rental income of RM285mil this calendar year, of which 70% will be from Sunway Pyramid Shopping Mall.
“All our property assets, with total net lettable area of 4.5 million sq ft, are fully tenanted and we are thankful the stable rental income has contributed to the resilience of SunCity during the current difficult times,” SunCity chief financial officer Tan Poh Chan told StarBiz yesterday.
During the second quarter, sales of new property units by SunCity dropped to only RM58mil from RM62mil in the first quarter. A year earlier it recorded RM367mil.
The weaker property development is a drag on the group’s overall performance.
Although SunCity’s property investment, leisure, hospitality and healthcare divisions are still performing quite well, poor property take-up and sales in the past few quarters have badly affected the group’s property development earnings.
The postponement of SunCity’s proposed real estate investment trust (REIT), which was earlier planned for the second half of last year, has been a blessing in disguise for the property group as the severe slowdown in property sales and deferment of project launches by its property development division would have severely affected its income streams.
The listing of SunCity REIT was postponed when the local economy and stock market were affected by the deepening impact of the global crisis.
With assets valued at RM3.7bil, the proposed REIT would have been the country’s largest.
Among the assets to be injected into the REIT were the Sunway Pyramid Mall, with 1.7 million sq ft of net lettable space, the 4.8ha Monash University campus, Sunway University College, Sunway Carnival Mall in Penang and Tambun Hypermarket in Ipoh. Other investment-grade properties to be included were the Sunway Resort Hotel & Spa, Sunway Pyramid Hotel and Menara Sunway.
Following the deferment of the SunCity REIT, the company’s management reclassified the assets to be injected into the proposed REIT from “non-current assets held for sale” to fixed assets and investment properties of SunCity.
An analyst with a local brokerage said the earliest listing of the SunCity REIT would be around the first half of next year if the local capital markets had recovered by the end of the year.
“Once the market recovers and the window opens again, it will only take a few months to do the necessary preparation for the listing ,” he said.
By The Star (by Angie Ng)
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