SunCity and GIC sign agreement on REIT purchase

PETALING JAYA: Sunway City Bhd (SunCity) has entered into a conditional cornerstone agreement with the Government of Singapore Investment Corp Pte Ltd (GIC) whereby GIC has agreed to subscribe about 5% stake (134 million units) of SunCity’s Real Estate Investment Trust (REIT).

SunCity told Bursa Malaysia yesterday that the group, Sunway REIT Management Sdn Bhd, and Credit Suisse (Singapore) Ltd had last Thursday entered into a conditional cornerstone agreement with the GIC where it would acquire the units to be listed at the lower of the institutional price and 98 sen per unit.

It added that SunCity had also entered into an underwriting agreement with Sunway REIT Management (the manager), OSK Trustees Bhd (on behalf of Sunway REIT), RHB Investment Bank (the coordinator) and RHB Investment Bank, CIMB Investment Bank Bhd and Maybank Investment Bank Bhd (as joint underwriters), to severally but not jointly underwrite the offering of 134 million units, subject to clawback and reallocation, to the Malaysian public.

An analyst said the deal showed that GIC was still confident with the assets of SunCity as currently, it had about 21% stake in that group.

Another analyst said that despite GIC showing confidence towards the REIT and other investors would follow suit, SunCity needed to offer a much better yield.

“Generally, the market’s yield for REIT in Malaysia is about 8.5% and GIC has to offer no less than that or higher in order to attract more investors,” he said.

Earlier reports stated that SunCity might place out about a fifth of its planned initial public offering of the REIT to cornerstone investors who had greater holding power for the shares.

The Sunway REIT, with a fund size of 2.78 billion units, is set to become Malaysia’s largest when it is listed in the third quarter this year.

The issue price of the Sunway REIT will be determined in a book-building process. The properties, comprising shopping malls, office towers and hotels, have a combined market value of about RM3.7bil.

By The Star

'Include development projects in subsidy cuts'

The Malaysian chapter of the International Real Estate Federation (Fiabci) has called on the government to look into widening the scope of subsidy cuts to include development projects and not focus on consumer items alone.

Fiabci former president Datuk Teo Chiang Kok said property developers now spend a large sum of money to provide infrastructures like roads, power sub-stations, water supply pipes and water storage tanks.

"We subsidise a lot to provide these infrastructure," he told reporters after the federation's morning talk with its global president Enrico Campaglani in Kuala Lumpur yesterday.

Teo, who is also See Hoy Chan Holdings group director, said by giving subsidy cuts to developers especially for projects that involve infrastructural work, it will enable them to offer houses at a more affordable price.
"It will give a big impact on prices of houses and better influence buyers when deciding to buy a property," Teo said.

Teo said the subsidy reduction must be done in small steps to enable industry players to adjust their operation costs and pricing of properties.

"There will definitely be changes in the pricing system for big items such as houses if the government reduces subsidy on non-consumer items," he said.

By Business Times

'China, HK real estate retains long-term allure'

HONG KONG: Real estate in mainland China and Hong Kong retains a strong long-term allure despite current fears of a damaging bubble, according to an influential player in the regional market.

Alastair Hughes, Asia-Pacific chief executive of Jones Lang LaSalle, a dominant presence in the Chinese property markets, sees plenty of reasons for optimism.

"For every expat who whinges about pollution, there are 20 people in London who'd like to be here," he said, gesturing out across Hong Kong's famed skyline on a rare clear day in the city.

"I don't think you'd find many people who've made money betting against Hong Kong," Hughes added.
The market for luxury property in Shanghai and Beijing is seen as "a little bit frothy" because of wealthy individuals indulging in speculation, he said.

"On the other hand, you've got everywhere else in China," he said, pointing to the annual migration of 50 million people from the Chinese countryside to cities in search of work and better housing.

As other parts of the world struggle out of recession, property markets in China and Hong Kong have been charging ahead, so much so that Beijing has taken increasingly aggressive steps to rein in the mainland market.

Nonetheless, Hughes says that not only is market "frothiness" confined to the swankiest neighbourhoods, but that the commercial and office sector, where cooler heads prevail, is largely unaffected.

Hong Kong regularly takes a bashing for its polluted air and fares poorly in some international rankings of cities for "liveability", such as those by the Economist Intelligence Unit.

But boosters of Hong Hong real estate point to the sale this May of an elite property on the Peak, known for its majestic views over the South China Sea - weather permitting - for a cool US$233 million (US$1 = RM3.25), to a local tycoon.

For Jones Lang LaSalle, Asia and particularly China look set to remain key growth areas.

By AFP

HLG to create luxury hotel chain in China

SHANGHAI: Malaysian conglomerate Hong Leong Group(HLG) is to create a luxury hotel chain in China, with at least ten Guoman Hotels over the next five years.

Violet Lee, Group Managing Director of Guocoland China, HLG's property investment arm here, told reporters at a special interview, the company would bring the unique English hospitality to the market long dominated by hotel chains from the United States.

"With Guoman's 30 year history in hospitality management and its uniqueness in services, I am confident of the group's future in the China market," she said.

Lee was in Shanghai to witness the official launch of the Guoman Hotel Shanghai, last Saturday.

The US$80 million Guoman Hotel Shanghai is the Hong Leong Group's first five-star hotel investment in China, with another equally spectacularly-designed Guoman Hotel Beijing, to be launched in the middle next year.

"All future Guoman Hotels in China will be part of our Guoson Centres to be build in Tianjin, Nanjing, Chengdu and others major cities in China," she disclosed.

However, she did not rule out the possibility of building, stand alone Guoman Hotels, in specific locations and there could be more than one in big cities like Shanghai and Beijing.

The Guoman Hotel Shanghai's opening was officiated by the Executive Chairman of the Hong Leong Group, Tan Sri Quek Leng Chan and officials from the Shanghai government.

The Guoman Hotel Shanghai is located within the Group's US$600 million mixed-use project, the Guoson Centre, Shanghai, Changfeng, in the business-hub of the Putuo district.

The hotel is also located beside greenery, lakes surrounding the Changfeng Park in the east and the Suzhou Rivers in the south.

The 26-storey Guoman Hotel Shanghai has 442 bedrooms, including 127 suites and 315 deluxe rooms.

Other hotel facilities include a leisure centre, a 500 capacity ballroom, a western restaurant and bar, all day dining, a Chinese restaurant and lobby on the first two floors.

According to Lee, the Guoman Hotel Shanghai's service staff will be trained by British Guoman specialists.

"We want to create a 'home away from home' experience for our customers, especially those from the United Kingdom and Europe.

"I think the Guoman Hotel Shanghai has a competitive edge over other five-star hotels in the busy central business district of Shanghai," she explained.

She also said the hotel is connected to the Guoson Mall which has a direct metro connection to the HongQiao International Transportation Hub with multiple transportation modes, including an intercity express rail, subway, magnetic suspension train and intercity buses.

"We are expecting a 70 per cent or more occupancy rate in the first six months of operation," she added.

By Business Times