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SINGAPORE’S CapitaLand is now the new majority owner of Kuala Lumpur mall Sungei Wang Plaza, after it paid RM595 million (S$250 million) for a 61.9 per cent stake in the mall.

The 31-year-old property in downtown Kuala Lumpur is the third in a pipeline of assets intended to form part of a pure-play CapitaLand Malaysian real estate investment trust (Reit) investing in retail malls.

The Singapore property giant announced plans for the Reit in August last year, when it bought the first two assets - Gurney Plaza, one of Penang’s top retail malls for $336.8 million, and Mines Shopping Fair in Selangor for $190.3 million.

Back then, CapitaLand said it intended to launch the Reit within a year, that is, by August this year.

The proposed Reit now has about RM2 billion, or $840 million, worth of assets, after enhancement works done on the first two complexes resulted in an increase in their valuations.

CapitaLand has not stated how large the Reit will be by the time it hits the market, but if it was listed in Malaysia now, it would be the country’s largest.

The next biggest, YTL Corp’s Starhill Reit, listed on Bursa Malaysia in 2005, has an asset size of about RM1.3 billion.

CapitaLand is currently exploring either a Singapore or Malaysian listing, said a company spokesman.

It is ‘firmly on track’ to list by the end of this year, said Mr Pua Seck Guan, the chief executive of CapitaLand Retail.

‘Through our proactive management and by leveraging on our retail real estate management expertise, there are tenancy remixing opportunities to create significant value at Sungei Wang,’ he added.

The 11-storey shopping mall is located within the Bukit Bintang shopping district in Kuala Lumpur’s city centre. It has 800 retail outlets spread over 824,000 sq ft, with close to 100 per cent occupancy. There are more than 1,300 carpark lots.

By ‘tenancy remixing opportunities’, the company means it would, for example, look at existing tenants to see how they fit into the mall, and possibly bring in new brands, said a spokesman.

Sources said there are plans to refurbish the mall as CapitaLand did with the other two, but that is not its main focus for now as it prepares to launch the Reit later this year.

To date, CapitaLand has sponsored five Reits, of which four are listed on the Singapore Exchange and one on Bursa Malaysia - Quill Capita Trust, launched in January last year, comprising four office buildings.

Shares of CapitaLand fell three cents to $5.72, on 13.3 million units done. The stock has fallen 8.8 per cent so far this year.

GROWING FAST

CapitaLand’s proposed Malaysian retail Reit now has about RM2 billion, or $840 million, worth of assets.

KEY PLAYER

The property giant has so far sponsored five Reits, of which four are listed on the SGX and one on Bursa Malaysia - Quill Capita Trust, launched in January last year.

Source : Straits Times - 26 Jun 2008

Property developer CapitaLand has acquired about 62 per cent of Sungei Wang Plaza, one of the most established retail malls in Kuala Lumpur.

It paid about S$250 million for the purchase, which includes retail space and parking lots.

Sungei Wang is a prime freehold property along the main Bukit Bintang shopping precinct in the Malaysian capital.

The mall has close to 100 per cent occupancy and sees more than 24 million visitors annually.

CapitaLand said the acquisition will form the third seed asset for its proposed pure-play Malaysian retail real estate investment trust (REIT).

Its earlier acquisitions are the Gurney Plaza in Penang and Mines Shopping Fair in Selangor.

The three properties will have a combined asset size of about S$840 million.

CapitaLand said this will put it firmly on track to create its proposed pure-play Malaysian retail REIT by the end of this year. - CNA/ms

Source : Channel NewsAsia - 25 Jun 2008

It will book profit of £155m from sale of Millennium Seoul Hilton

KWEK Leng Beng’s London-listed hotel arm Millennium & Copthorne Hotels (M&C) is selling Millennium Seoul Hilton for about 580 billion Korean won (around S$767 million). This will bring a profitable end to a difficult relationship M&C has had with the asset. The chain has faced labour problems as well as escalating labour costs operating the hotel.

Mr Kwek bought the freehold property in 1999 for US$228.5 million. M&C will book a pre-tax profit of £155 million (S$417.4 million) from the divestment, which is subject to M&C shareholders’ approval. The hotel chain will use cash from the sale to finance acquisition opportunities, among other things.

Workers in the hotel went on a strike in 2000 and even after that was resolved, M&C continued to battle rising labour costs in Seoul. But the unsolicited offer for the property from Korean real estate and architectural services group Kangho was just too good to refuse for Mr Kwek.

The sale price works out to US$832,000 per room, nearly matching the US$836,000 achieved for The Plaza in New York, which M&C sold in 2004.

That was the last major asset sale by M&C, which had owned the hotel - which enjoys a prime location at Central Park South/Fifth Avenue - jointly with Saudi billionaire Prince Alwaleed bin Talal.

Millennium Seoul Hilton’s sale price of about £287.9 million works out to 35 times the hotel’s £8.2 million profit before tax last year. ‘The price is very good. I could not refuse,’ Mr Kwek said in an interview with BT yesterday.

Mr Kwek had been criticised for overpaying for the Seoul hotel when he bought it nine years ago from Daewoo Group. He beat 11 other contenders that had been shortlisted out of an initial 20 bids.

M&C is keen on buying a replacement hotel in Seoul, preferably a ‘brand new hotel’, Mr Kwek said. M&C is also on the lookout for acquisitions in Japan, US and Europe to fill gaps in its hotel portfolio.

‘We’ve been trying in Japan for a long time, but no one was willing to sell hotels in the past. Now, we can see some hotel owners, including funds, selling because of the credit crunch and tighter bank lending. But it’s still early days,’ said Mr Kwek.

The group could also look at opportunities to buy hotel chains available for sale, though these tend to be more in the West currently rather than Asia, where the economies are stronger, he added.

The sale of Millennium Seoul Hilton ‘further strengthens the M&C group’s ability to take advantage of market and cyclical opportunities’, he said in M&C’s statement.

The completion of the sale is expected in September this year. M&C is about 53 per cent owned by Singapore-listed City Developments Ltd (CDL), which is controlled by Singapore’s Hong Leong Group, which in turn is owned by the Kwek family.

CDL last year inked a memorandum of understanding to develop a mixed development project that will include a hotel, in Incheon City near the International Airport.

M&C chief executive Richard Hartman said: ‘We will be maintaining a constant watch for suitable opportunities as they may arise in Korea. Seoul is a key gateway city and this will present a more difficult decision on divestment to us. While the city has a challenging hotel operating environment particularly in Millennium Seoul Hilton, we have managed to achieve a profitable exit from the investment,’ he added.

M&C has been managing the hotel since December 2003 after a management contract with Hilton expired, but under a franchise agreement, the group continues to use the Hilton name.

Millennium Seoul Hilton was in the news recently in Korea, where a court ruled in favour of CDL Hotels (Korea), an indirect subsidiary of M&C which owns the hotel, after the company filed a lawsuit to nullify a long-term lease for a penthouse on the hotel’s 23rd floor to former Daewoo Group chairman Kim Woo-choong. The hotel’s previous owner, Daewoo Development, signed the 25-year lease contract with Mr Kim in early 1999 for just 328 won or about 31 US cents per day.

Source : Business Times - 25 Jun 2008

CITY Developments (CDL) hotel arm Millennium & Copthorne Hotels (M&C) has sold the Millennium Seoul Hilton hotel for $627.9 million.

CDL said in a statement yesterday that M&C had sold CDL Hotels (Korea), which is the owner of the Seoul Hilton, to Kangho AMC.

Although the hotel was valued at about $777.2 million, the sale price of $627.9 million was agreed on after taking into account the net liabilities of CDL Hotels (Korea) as at the end of last year, including a shareholder’s loan owed by the company.

M&C Hotels had bought the hotel in 1999 for US$228.5 million (S$312.5 million).

The deal is expected to be completed in September although it is subject to the satisfaction or waiver of certain conditions, including the approval of M&C shareholders at an extraordinary general meeting.

M&C Hotels chairman Kwek Leng Beng said: ‘The sale value attributed to the hotel demonstrates once again the underlying management skill of our group in maximising shareholder value.

‘The M&C group’s strategy of being an owner of hotel assets remains unchanged.

‘However, the opportunity for sale, while unsolicited, further strengthens the M&C group’s ability to take advantage of market and cyclical opportunities.’

Source : Straits Times - 25 Jun 2008

CapitaLand said land prices in Vietnam and India have fallen by as much as 15 per cent this year, making it easier to get sites now than a year earlier.

There may be more opportunities in “greenfield sites”, chief investment office Kee Teck Koon said at a property conference held here yesterday. CapitaLand is also looking at expanding in Japan, where it may acquire properties and set up funds for investments, Mr Kee said.

CapitaLand, which owns properties in more than 20 countries, made about 76 per cent of revenue last year outside Singapore. It’s also expanding as the credit crunch amid writedowns by banks on sub-prime-related investments weed out smaller competitors.

“It’s a global liquidity crisis, so the chances of this continuing in perpetuity is very low,” said Mr Michael Smith, head of Asia real estate investment banking at Goldman Sachs Group. “I think one day we’ll look back at this year and say this is a real opportunity to invest in Asian real estate.”

CapitaLand said earlier this month it’s looking for distressed assets in Japan and China to help its expansion in the two markets. The developer already runs two property funds in Japan and teamed up with Mitsubishi Estate in a Tokyo project worth as much as US$1.5 billion ($2.04 billion).

There may also be opportunities to buy Japanese real estate investment trusts on the cheap, said Mr Kee as some may have difficulty refinancing short-debt term amid the credit crunch. CapitaLand may buy more land in Vietnam and India on expectations that “there’ll be easier access to choice sites”, Mr Kee said. - Bloomberg

Source : Today - 25 Jun 2008