Syed Mokhtar behind UEM Sunrise-Eco World merger plan?

 

Syed Mokhtar behind UEM Sunrise-Eco World merger plan?

By Sharen Kaur - Published in NST Property,  October 7, 2020

sharen@nst.com.my

Is Tan Sri Syed Mokhtar Albukhary backing the proposed merger between the country's two big property players UEM Sunrise Bhd and Eco World Development Group Bhd?

Syed Mokhtar has a track record of investing in Khazanah Nasional Bhd-owned companies such as national carmaker Proton Holdings Bhd and Pos Malaysia Bhd.

UEM Sunrise is part of Khazanah's commercial assets and is among the clutch of companies that are up for sale.

Khazanah has been looking to divest its 66.1 per cent interest (held via UEM Group Bhd) in UEM Sunrise and had been looking for a suitor.

In 2018, the New Straits Times (NST) reported that Tan Sri Halim Saad, former executive chairman of Renong Bhd (now UEM Group Bhd), was believed to be making an offer to buy Khazanah's stake in UEM Sunrise that could trigger a mandatory general offer (MGO).

Halim, who was The New Straits Times Press (M) Bhd chief executive officer (CEO) in the early 1980s, and people close to him were eyeing more than 30 per cent stake in UEM Sunrise.

A stake of up to 33 per cent would have cost Halim and his associates about RM973.5 million, based on UEM Sunrise's market capitalisation (market cap) of RM2.95 billion back then.

UEM Sunrise shares have plunged to below 40 sen. Its market cap is currently around RM1.77 billion.

Property analysts believe that if Halim had acquired Khazanah's shares in UEM Sunrise, he would have "rebuilt" the property group into a mega-developer.

Halim, who had served as an executive vice-chairman of UEM Builders Bhd, PLUS Expressway Bhd, Kinta Kellas Bhd, and Faber Group Bhd would have taken UEM Sunrise private, streamline its operations, add value after a major restructuring, and re-list in two to three years.

Eco World Development Group Bhd controlling shareholder and executive chairman Tan Sri Liew Kee Sin. File Photo

There is a strong link between Syed Mokhtar and Eco World controlling shareholder and executive chairman Tan Sri Liew Kee Sin.

Besides holding a significant chunk of shares in Eco World, their relationship goes back a long way, from the time when Liew was the head honcho of property group SP Setia Bhd.

Back then SP Setia purchased 360ha in Johor in 1999 from Syed Mokhtar's private vehicle Kelana Ventures Sdn Bhd for RM11.06 million.

SP Setia also entered into a 50:50 partnership with Syed Mokhtar-controlled Tradewinds Bhd to build affordable housing under the now-defunct 1Malaysia People's Housing Programme (PR1MA) in Taman Ikan Emas, Cheras.

Liew is also close to Khazanah's managing director, Datuk Shahril Ridza Ridzuan, who is believed to be pushing ahead with the merger plan for UEM Sunrise and Eco World.

They have both worked together in the past when Shahril was the chief executive officer of the Employees Provident Fund (EPF) through various property tie-ups, including the multi-billion ringgit Battersea Power Station regeneration project in the United Kingdom.

All these developments have yielded positive results for EPF.

"If anyone has to be the captain of the newly merged entity it has got to be Liew, led by his crew," said a fund manager who is closely monitoring the development.

Tan Sri Liew Kee Sin was instrumental in securing the Battersea project in 2012 and placing Malaysia on the world map. File Photo

Liew is one of Malaysia's influential property captains. He has led Eco World and before this SP Setia, which are two of the nation's premier development companies over the last 28 years.

He was instrumental in securing the Battersea project in 2012 and placing Malaysia on the world map.

Merger talks started in 2019

The NST was the first to report last year that there may be a possible merger between UEM Sunrise and Eco World through a share swap arrangement.

The merger between the two property players would make the new entity the second-largest property developer by landbank in Malaysia.

As a combined entity, it will have a total landbank of more than 7,300ha with a potential gross development value (GDV) of RM175 billion.

Sime Darby Property Bhd is the largest landowner in Malaysia with more than 8,100ha.

The share swap deal would have resulted in Liew holding some shares in UEM Sunrise. Khazanah's stake would be diluted in the process.

Back then the proposal was said to have been mooted by investment bankers to lock down a major deal in the market.

Following the NST report, UEM Sunrise in a filing with Bursa Malaysia said: "UEM Sunrise continuously explores strategic business opportunities that can deliver stakeholder and shareholder returns. With reference to media reports on a potential merger with a property company, we wish to clarify that the board of directors has not made nor received any corporate proposal as reported in the media from any party for its consideration.

Now almost a year later UEM Sunrise has told Bursa Malaysia that it received a letter of proposal from UEM Group for a merger with Eco World.

UEM Group is proposing for the two property firms to merge through an exchange of shares and warrants.

In a letter dated October 2, 2020, UEM Group said it would expect a decision on the proposal by October 30 for further discussions on the merger to commence.

It said the proposed merger is envisioned to bring together the strengths and capabilities of UEM Sunrise and Eco World.

"The board (UEM Sunrise) will deliberate on the proposal and decide on the next course of action. Accordingly, a further announcement will be made in due course," it said in the Bursa filing.

An industry source said there were 'serious' talks to merge UEM Sunrise and Eco World in 2019 but 'some parties' were strongly against it as they felt it was a 'rescue plan'.

"Last year UEM Sunrise was doing well and there were some parties who were against the idea of it merging with another property group. Now the situation has changed. In the last two quarters, UEM Sunrise had posted losses. The company is expected to post another round of losses when it announces its third-quarter results soon while Eco World's performance is improving," the source said.

UEM Sunrise posted a net loss of RM93.36 million in the second quarter ended June 30, 2020, from a net profit of RM40.36 million a year ago. Its revenue fell 88.8 per cent to RM111.96 million from RM1 billion.

"UEM Sunrise can't seem to turnaround the landbank that they have and overseas acquisition has been slow so future projects coming on stream will also be slower. UEM Sunrise is the largest landowner in Johor and they are not doing well there. Eco World on the other hand has done very well for its project in Johor.

"From a shareholders' perspective, it makes sense for them to collaborate. The gain will be more for UEM Sunrise who will ride on Eco World's strong branding and track record for future projects. We are still wondering how this deal will benefit Eco World," the source said.

Kenanga Investment Bank Bhd in a note yesterday, said the proposed merger between the two property players favours UEM Sunrise, given that Eco World's key shareholders would lose their majority rights, and potentially their brand.

Upon completion of the proposed merger, Eco World will become a wholly-owned subsidiary of UEM Sunrise and will be delisted from the Main Market of Bursa Malaysia.

Liew will have a 3.6 per cent stake in UEM Sunrise, while his son and Eco World executive director Liew Tian Xiong will hold 2.8 per cent.

Sinarmas Harta Sdn Bhd, Eco World Development Holdings Sdn Bhd (EWDSB), and Jernih Padu Sdn Bhd (JPSB) which have shares in Eco World will hold stakes of 12.6 per cent, 3.4 per cent and 1.9 per cent respectively.

Citigroup Global Markets Inc's research team valued the share swap deal at RM2.6 billion.

The share swap is undertaken via the issuance of 3.1 billion new UEM Sunrise shares and 556 million new UEM Sunrise warrants (exercise price: RM1.96), with an exchange ratio of 1.0587.

Citi Research said UEM Sunrise's share issue price represented 18 per cent upside to its close on October 1, while Eco World's exchange price was at a 19 per cent premium.

Major shareholders of Eco World are disposing of their shares

The major shareholders of Eco World have been disposing of their shares before UEM Group announcing the proposed merger.

JPSB, the private vehicle of Liew, ceased to be the substantial shareholder of Eco World after selling 14.25 million shares, or a 0.48 per cent stake on September 28, according to Bursa filing.

Liew, however, still controls a direct stake of 9.41 per cent and an indirect stake of 5.29 per cent in Eco World.

EWDSB, controlled by Eco World's non-executive director Tan Sri Abdul Rashid Abdul Manaf and deputy chairman Datuk Leong Kok Wah, also disposed of 12 million shares on the same day, reducing its equity stake to 248.88 million shares or 8.45 per cent.

Sinarmas, owned by Syabas Tropikal Sdn Bhd which in turn is held by Leong sold 17.3 million shares on the day UEM Group announced the merger plan.

According to Eco World's latest annual report, as of January 16, Liew was the group's second-largest shareholder. EWSB was the fourth-largest shareholder.

"The way Eco World shares were transacted looked like a prelude to something is about to happen. Maybe they are all preparing for the big merger. The merger deal looks more palatable now compared to last year as Liew and parties related to him don't have majority control of Eco World. They have been deliberately selling down their shares so the deal looks more acceptable now than before.

"But will Liew hold the position of co-chairman of the newly merged entity as he is an entrepreneur with less than 10 per cent stake? There are a lot of details that needed to be ironed out before the merger can take place," the source said.

Bigger group, not necessarily better

Former Permodalan Nasional Bhd president and group chief executive Jalil Rasheed in a series of tweets on Monday raised concerns over UEM Group's plans to take over and merge Eco World with UEM Sunrise.

Jalil suggested that UEM Group should not rescue a subsidiary in financial trouble by merging it with a company with cash flow problems.

"You create this giant (UEM Sunrise) that you then feel compelled to rescue when in financial trouble. Why put yourself through this? The easier solution is to make UEM (Sunrise) more efficient.

"I fear this deal would go down this route, because the focus has always been on market capitalisation size, rather than efficiency metrics," he said.

Jalil also said that forming the biggest company does not mean it would be better.

"One must ask why Eco World wants to merge (and lose ownership control) unless they are not doing well? There are severe cash flow problems, add that to weak demand for properties," he said.

Eco World's net profit fell 72.7 per cent to RM13.8 million in the third quarter (Q3) ended July 30, 2020 from RM50.5 million a year ago.

It reported lower revenue of RM477.9 million in Q3 from RM521.4 million previous year. This was due to the lower share of the results of its Malaysian joint-ventures namely Eco Grandeur, Eco Business Park V, Eco Horizon, Eco Ardence, and Bukit Bintang City Centre.

According to a recent report by CGS-CIMB Research, Eco World's net gearing stood at 0.75 times as of the financial year 2019.

The research firm expected Eco World's net gearing to increase to 0.8 times for the financial year 2020 (FY2020), and further grow to 0.9 times for FY21 and 0.93 times for FY22.

Covid-19 to delay London's Battersea Power Station redevelopment?

An artist impression of the Battersea Power Station redevelopment, one of the largest regeneration projects in Europe. Image source from https://batterseapowerstation.co.uk/

Published in NST Property

The Battersea Power Station redevelopment, one of the largest regeneration projects in Europe could face a slight delay due to the Covid-19 pandemic, said sources familiar with the matter.

Sources said that whilst work has recommenced at the project last month, not all the workers are on site.

The £9 billion site was closed on March 24, just after UK prime minister Boris Johnson put the country into lockdown.

The Battersea site had over 4,300 workers before the Covid-19 crisis escalated.

UK media reported that the unprecedented large-scale stalling of projects and closure of sites like Battersea, HS2, and Crossrail due to Covid-19 had affected £26 billion worth of construction jobs in March.

Battersea Power Station Development Company Ltd (BPSDC) chief Simon Murphy said in a March statement that following the temporary closure of the site and in light of the government requirements and guidelines, the site should remain closed for a few weeks.

He promised a review of the position by April 17 and if deemed appropriate to reopen, the main site works would recommence on April 27.

Hopes that the construction site would be back up and running on April 27 were dashed with the reopening put back until May.

As a result, Apple's plan to move into its sprawling new U.K. headquarters could be delayed.

Apple is the largest tenant in Battersea Power Station and its office will account for circa 40 per cent of the total office space in the whole development.

The iPhone maker was set to move 1,400 staff from multiple Apple offices around London into the new 500,000 square foot space, which will occupy six floors of the central Boiler House inside the historic icon, in 2021.

Battersea Power Station Development Company Ltd chief Simon Murphy said it is too early to give a precise indication of the impact of Covid-19 on the development. Image source from https://batterseapowerstation.co.uk/

NST Property reached out to Murphy and was told that it is too early to give a precise indication of the impact of Covid-19 on the development.

Murphy said works recommenced at the beginning of May in stages and excellent progress has been made across the site in the past month.

"A large proportion of the workforce are back on site already with the numbers increasing every day," he said.

Murphy said whilst the site was temporarily shut, design and other offsite works continued to ensure the time is used effectively.

The project is master-planned by Rafael Viñoly Architects. It features buildings and exterior spaces designed by BIG, Gehry Partners, Foster + Partners, James Corner Field Operations, and LDA Design.

On the company's website, Murphy said it is making sure that both Circus West Village and the development of the power station and Electric Boulevard continue to run as efficiently as possible throughout this period.

"There are robust plans and procedures in place to ensure we remain resilient," he said.

Murphy said, following the temporary closure of the construction site on March 24, the company had spent a number of weeks working together with its construction managers, Mace and Sir Robert McAlpine, to test and develop new site processes that fully comply with the Covid-19 site operating procedures.

He said with the full support of the company's shareholders it will continue to deliver this iconic project through these unprecedented times and prepare to navigate the challenges ahead.

Phase 1, completed in 2017, is Circus West Village and worth an original £400 million. Image source from https://batterseapowerstation.co.uk/

Development progress

The 42-acre Battersea Power Station, poised to be one of the world's most innovative mixed-use developments is a project by a Malaysian consortium comprising S P Setia Bhd, the Employees Provident Fund (EPF) and Sime Darby Property Bhd.

The development, which anticipates 25,000 people to be living and working there, consists of eight phases, each designed by a range of renowned architects.

Phase 1, completed in 2017, is Circus West Village and worth an original £400 million. It consists of 11 blocks of apartments with 865 units housing more than 1,000 residents.

Phase 2 has about 253 units of apartments including penthouses at the main power station building, and the take-up rate is over 90 per cent.

BPSDC had targeted for Phase 2 to be completed in stages later this year.

The commercial assets (of Phase 2) is owned by EPF and Permodalan Nasional Bhd (PNB). They acquired the assets in 2019 for £1.58 million (RM8.51 billion).

Mace is carrying out work on the second phase of the scheme, estimated to be worth £1.15 billion. This phase will include retail and food space as well as an events venue and park and is due to complete by the end of this year.

For Phase 3A, also known as the Electric Boulevard, it will comprise 539 residential units with the main building, designed by Norman Foster and another three flower-inspired buildings by architect, Frank Gehry.

The residential units at Phase 3A were sold at an average price of £1,700 per sq ft, and the take-up rate is over 70 per cent.

The completion of Phase 3A is expected in 2021.

According to UK media reports, the second phase of the scheme and the third phase of the scheme had around 2,800 workers and 1,500 workers on it before the sites were shut.

Property sector may lag, despite ERP incentives

Higher unemployment and pay cuts brought about by the Covid-19 pandemic will dampen property transactions. File Photo

By NST Property, Published June 16, 2020

The Short-Term Economic Recovery Package (ERP) valued at RM35 billion may boost the country's economy but there are concerns that the property sector will lag amid larger unemployment and pay cuts brought about by the Covid-19 pandemic.

"A lot of small-medium enterprises, government-linked firms, and public-listed companies (PLC) are retrenching or asking their employees to go on unpaid leave until the situation improves. They are also cutting staff salary by up to 40 per cent and terminating contracts.

"So who will benefit from this stimulus package and who is addressing the issue of people losing their jobs or getting pay cuts? There are more than one million job losses now since the outbreak of the Covid-19.

"With the unemployment rate set to rise by the end of this year, more people will be skeptical to do anything concerning a big-ticket item like property. These include buying, selling, renting a new property and renovation. This will dampen property transactions," said the ex-chief executive officer and chief operating officer of several PLCs.

The measures introduced under the ERP for the property sector include the reintroduction of the Home Ownership Campaign (HOC) and revised Real Property Gains Tax (RPGT).

Gains arising from the disposal of residential properties by Malaysian citizens between June 1, 2020, to December 31, 2021, will be exempted from RPGT. The exemption is given up to three residential properties per individual.

Currently, the applicable RPGT rates for Malaysian citizens and permanent residents range from five per cent to 30 per cent depending on the holding period.

The existing financing limit of 70 per cent margin on housing loan for a third residential property valued at RM600,000 and above will also be lifted.

"These incentives are supposed to ease the challenges faced by developers during this difficult time and to provide financial relief to buyers. But if people do not have income, how are they suppose to buy a property and get a loan? The assessment of the bank is so stringent. There is no loan without proper income.

"While the HOC is a good thing, it will only benefit people with money. A cash-rich person will buy a property and keep it until it reaches a certain value and years down the road will flip it, make money, and walk away. I know cash is king now but if I have a lot of cash, I still won't buy a property as there are so many uncertainties right now. I would rather hold on to my cash," said the ex-property chief.

On RPGT, the ex-chief said that while it is a good move to boost property transactions, nobody will sell in a slumping market unless they are desperate, as they will not get the value their property deserves.

"If I bought my property for RM1 million, and a year ago it was worth RM1.5 million, I am not going to sell it today when the price has dropped to RM1.2 million. I will weight it out even if it takes three years or more for the price to get back to RM1.5 million. By then the RPGT exemption will no longer be applicable. I would still sell if I want to in three years.

"Unless I bought my property 20 years ago and if I sell now under the current market conditions and still make a lot of money, I would consider it.

"Regarding the third house financing with up to 90 per cent loan, I feel you are just going to create more debts in the market. I think the government didn't address the problem. Overall, I believe the housing market will continue to suffer," said the ex-chief.

A silver lining for property?

PropertyGuru Malaysia country manager Sheldon Fernandez said that property provisions in the ERP serve to unlock the demand for high-rise and landed residential.

Fernandez said while Gross Domestic Product (GDP) projections have gone from 4.6 per cent to -4.7 per cent for 2020, the deficit spending approach taken in the ERP is an established strategy in addressing potential recession trends, laying the foundation for a return to pre-Covid-19 levels for the market.

Pre-crisis asking prices were on the uptrend, with the PropertyGuru Malaysia Property Market Index rising by 0.63 per cent to 89.46 in the first quarter of 2020, along with a strong interest in the central region.

In May, web traffic for properties priced RM501,000 to RM700,000 and RM701,00 to RM1 million saw the highest increase on the property portal, at 10.4 per cent and 12.7 per cent respectively, he said.

Fernandez said similar increases were seen in condominiums (23.5 per cent), service residences (19.2 per cent), 3.5-storey terraced homes (28 per cent), and SOHO units (20 per cent), indicating healthy demand for these property types as property bounces back post-crisis.

However, search patterns moved away from the central region, with Johor (22.5 per cent) and Penang (19.3 per cent) as prime beneficiaries.

On the HOC, Fernandez said that it could help address ongoing residential overhang concerns, having sold 31,415 units worth RM23.2 billion in 2019.

"The overhang declined to 30,664 units worth RM18.82 billion in the same year, though this downward trend will likely be impacted by the Covid-19 crisis.

"However, some clarity is required when executing these provisions. Do stamp duty exemptions apply to new launches as well as overhang units? If so, it may be difficult to reduce the overhang even with HOC 2020," he said.

Mah Sing Group Bhd founder and group managing director Tan Sri Leong Hoy Kum said 60 per cent of its sales in 2019 was derived from the previous home ownership campaign. File Photo

Mah Sing Group Bhd founder and group managing director Tan Sri Leong Hoy Kum said the reintroduction of the HOC bodes well for the group to work towards achieving its 2020 sales target of RM1.6 billion.

The developer secured 60 per cent of its sales in 2019 from the previous HOC campaign.

Additionally, the government's move to uplift the 70 per cent margin of financing limit for the third housing loan onward for properties valued at RM600,000 and above during the HOC period will encourage upgrade of homes, he said.

"The previous HOC introduced in 2019 has proven to be effective as it has garnered positive results in terms of sales and most importantly, increasing the country's home ownership level, particularly first-time homebuyers. Malaysia still has a large population of youths whom have yet to own their first homes and thus, the HOC will help provide first-time homebuyers the opportunity to own their ideal home," he said.

Lower appetite for sub-sale market

Joe Hock Thor, CEO of MyProperty Data, operator of the PropertyAdvisor platform said more than 60 per cent of the sub-sale market in 2019 consisted of first-time buyers.

He said with so much uncertainty, he does not expect to see demand returning to pre-Covid-19 levels among first-time buyers in the sub-sale market until at least the fourth quarter of 2020.

He also believes that buyers looking to purchase a home at this current juncture might be greeted with better options, but that it is vital to undertake due research.

BCorp moving forward, cautiously

By Sharen Kaur
Published in NST Property, June 16, 2020

Berjaya Corp Bhd (BCorp) said almost all business operations of the group in Malaysia, including hotels and malls have resume partially or fully but going forward their performance will be affected mainly due to the expected liquidity squeeze arising from the contraction of the economy.

The group's property development business segment is expected to be impacted by slower property sales, it said.

Berjaya Corp Bhd founder Tan Sri Vincent Tan. File Photo

BCorp, which is founded by Tan Sri Vincent Tan said the lockdown measure will also affect the construction progress of the group's ongoing projects.

As for shopping malls, BCorp expects that the footfall will continue to remain low due to the general public still being wary of the Covid-19 infection despite the implementation of preventive standard operating procedures.

"The low footfall may create downward pressure on rental collections and revenue," it said in a filing with Bursa Malaysia today.

The group's shopping mall and complexes had granted rental relief (of which a 14-day relief period fell in the third quarter and the balance 14-day relief falls in the fourth quarter) to eligible tenants during this challenging time.

As for the hotels and resorts business segment, BCorp also expects that the occupancy rates and the revenue from events will remain low arising from low tourist arrivals coupled with new social distancing rules during the recovery movement control order period.

BCorp expects that the recent incentives announced under the Short-term Economic Recovery Plan, particularly for the hotels and resorts, motor industry, and property development business segments, may partly mitigate the adverse impact of the Covid-19 pandemic.

The group registered revenue of RM6.13 billion and pre-tax profit of RM522.04 million for the cumulative nine-month period ended March 31, 2020, largely contributed by the group's gaming and motor distribution businesses.

The property development segment reported higher revenue in the third quarter ending March 31, mainly due to the completion of Kensington Gardens in Penang and sales of units from previously completed local projects.

The hotels and resorts business segment had registered lower occupancy rates mainly due to the lower demand from the leisure and corporate markets and lower revenue from events arising from the low influx of tourists as the tourism industry was severely affected by the Covid-19 pandemic since January 2020.

Prior to the imposition of the global lockdown, the segment was already affected by lower sales, cancellation of events, and room sales primarily due to the growing concerns and uncertainties created by the Covid-19 pandemic.

The segment had also written off about RM7.06 million in respect of certain property, plant, and equipment which were destroyed in a fire at Berjaya Tioman Beach Resort, Pahang.

The adverse results in the segment, however, were overshadowed by the exceptional gain from the disposal of a property in Japan.

BCorp recently concluded the sale of the trust beneficial interest on the hotel component of the Four Seasons Hotel and Hotel Residences Kyoto, and recorded a significant gain of about RM662.11 million.

YTL Hospitality REIT bullish on long term prospects of the hospitality sector

The new rooms at JW Marriott Kuala Lumpur following the asset enhancement. File Photo

By Sharen Kaur, Published in NST Property, June 16, 2020

YTL Hospitality Real Estate Investment Trust (YTL Hospitality REIT) says the Covid-19 pandemic has adversely impacted the group's operations but it remains confident of the long term prospects of the hospitality sector.

The World Health Organization declared the Covid-19 outbreak a global pandemic while the International Monetary Fund (IMF) adjusted global economic growth projection to contract by three per cent this year, much worse than the 2008/2009 global financial crisis.

"The unprecedented pandemic has adversely impacted the tourism, travel, and hospitality industries worldwide and business recovery is expected to take a longer period given the uncertainties and challenges that are ahead.

"Notwithstanding the short term challenges, the Manager (Pintar Projek Sdn Bhd) remains confident of the long term prospects of the hospitality sector," it said in a filing with Bursa Malaysia today.

As at March 31, 2020, YTL Hospitality REIT has 15 properties under its portfolio, worth RM4.62 billion. It operates 10 luxury hotels and serviced residences in Malaysia, three in Australia and two in Japan,

For the nine months ended March 31, 2020, YTL Hospitality REIT recorded revenue and net property income (NPI) of RM356.67 million and RM190.94 million, respectively, as compared to RM372.24 million and RM193.02 million, respectively, recorded in the same period a year ago. This represented a decrease of 4.18 per cent and 1.08 per cent respectively.

The group recorded a pre-tax profit of RM135.16 million for the nine months, an increase of 61.19 per cent as compared to a pre-tax profit of RM83.85 million recorded in the preceding year corresponding period, mainly due to the unrealised foreign currency translation gain on borrowings denominated in foreign currencies.

The increase in revenue and net property income was mainly due to the additional rentals recorded from JW Marriot Hotel Kuala Lumpur following the refurbishment completed in June 2019.

Additionally, the acquisition of The Green Leaf Niseko Village in Japan in September 2018 contributed to the increase in revenue and net property income for the current financial period ended March 31, 2020.

Pintar Projek Sdn Bhd executive chairman Tan Sri Francis Yeoh Sock Ping said it took immediate measures to review business continuity plans, tighten cost-saving measures and delay non-essential capital expenditures to mitigate the financial impact. File Photo

Pintar Projek executive chairman Tan Sri Francis Yeoh Sock Ping said that revenue and NPI from the Sydney Harbour, Brisbane, and Melbourne Marriott hotels in Australia were impacted by the Covid-19 pandemic from February 2020.

"Australia's borders were closed to all non-residents from March 20, 2020, as the government implemented stricter social distancing measures to contain the pandemic. However, the three hotels participated in the Australian government's programme for self-isolating guests and remained in operation throughout, and we took immediate measures to review business continuity plans, tighten cost-saving measures and delay non-essential capital expenditures to mitigate the financial impact."

In Japan, the Japanese government declared a one-month state of emergency in April 2020, which was extended to May 31, 2020. The lifting of the state of emergency was declared on May 25, 2020 as the implementation of emergency measures is deemed no longer necessary.

In a separate announcement, YTL Hospitality REIT said that Pintar Projek has carried out revaluations of its real estate assets in Japan and Australia.

The assets are Hilton Niseko Village, The Green Leaf Niseko Village, Sydney Harbour Marriott, Brisbane Marriott, and Melbourne Marriott.

All the assets, except for The Green Leaf Niseko Village had decreased in market value. The decrease, however, was marginal.

The revaluations decreased the unaudited net asset value per unit of YTL REIT and its subsidiaries from RM1.6028 per unit as at April 30, 2020 (before the revaluations) to RM1.5030 per unit upon incorporation of the aggregate revaluation decrease of RM170.103 million.

The revaluations of YTL REIT's remaining real estate assets in Malaysia are being carried out and will be announced in due course, it said.

The different valuation dates were necessitated by the Malaysian Movement Control Order which were introduced on March 18, 2020.

Khazanah to decide whether to reopen or close KidZania KL

Khazanah Nasional Bhd’s leisure and tourism arm Themed Attractions and Resorts Sdn Bhd is mulling whether to reopen KidZania Kuala Lumpur post-Covid-19 or close it for good, sources said.

By NST Business, June 17, 2020

KUALA LUMPUR: Khazanah Nasional Bhd's leisure and tourism arm Themed Attractions and Resorts Sdn Bhd is mulling whether to reopen KidZania Kuala Lumpur post-Covid-19 or close it for good, sources said.

They said KidZania KL was not profitable and that its cumulative losses had been increasing since the movement control order was in place on March 18.

"The management is looking for an immediate solution," one of the sources said.

When contacted, a spokesperson from the company told the New Straits Times that at this moment, KidZania KL was not yet allowed to reopen as it is a family entertainment centre. The spokesperson declined to comment further.

KidZania KL opened nine years ago in Curve NX in the Mutiara Damansara township here.

The total cost of investment for the theme park is around RM80 million, but it has increased over the years due to upgrading works.

The project marked Khazanah's second investment in theme parks after its earlier investment of RM750 million for the development of Legoland in Iskandar Malaysia, Johor.

Themed Attraction also operates Kidzania Singapore but the educational and entertainment theme park in Sentosa is being closed down permanently after four years.

In a statement, Kidzania Singapore said business-wise, it had been a challenge for the theme park to achieve the returns needed over the years, and this had been exacerbated by the ongoing Covid-19 pandemic and its consequential economic fallout.

Aside from zero ticket revenue due to the temporary closure since early April, its revenue has also been impacted as commercial partners reduced their participation due to financial constraints and cost control efforts.

The decision to not reopen KidZania Singapore would affect about 103 employees, and they would receive appropriate severance packages with salaries, medical and other benefits paid up till their last day of service, it said.

The KidZania brand is an international franchise with 29 facilities in 22 countries worldwide.

Kids choose from over 100 different role-playing activities to earn money to spend or save as KidZania educates through experience, fostering the development of life skills without sacrificing fun.

Due to the coronavirus outbreak, all its facilities, except for those in South Korea and Japan, are currently closed to the public.

In Malaysia, the brand has been franchised to a joint venture between Khazanah and Boustead Holdings Bhd through Rakan Riang Sdn Bhd, in which the former holds an 80 per cent stake and the latter holds 20 per cent.

Law student raking in the dough

A law student has launched a cake-baking business called Nerishs Delight taking the market by storm.

The co-founder of the business, Nerisha S. was interviewed recently and she talked about her cake-baking passion, and how she turned her interests into a business venture two years ago.

Nerisha has been baking cakes since the tender age of 9 learning the tricks and trades from her mother. At that time she was helping her mother, S.K., who has been running a business baking cakes for weddings, birthday parties and all other important occasions for over 20 years.

Nerishs Delight cup cakes

"I started baking very young. I find joy in baking. It is very therapeutic. I create what I want to create, however little or magnificent that cake might turn out to be. When I come home from high school, I used to bake cup cakes as it helped me relax and unwind. Then I started to bake cakes and it truly kept me fulfilled and energised. I will distribute the cakes to my family and friends for their honest feedback and that is how I build myself. Spreading joy is immensely powerful.

"I started to bake more cakes when I went to college as my college buddies found out I was baking, and they all started to order from me. That is when I decided to make a career out of this passion and thus set up Nerishs Delight," said Nerisha.

Finishing her law degree

Some of you might scoff at the idea of leaving the law to drive around dispensing baked goods but Nerisha is not going to do just that.

"I plan to finish my law degree and proceed with chambering. Education is the key to success. I hope then baking still provides the same amount of joy and creative freedom," she said.

Nerisha said since the movement control order (MCO) was implemented on March 18, her cake business has improved tremendously.

She said there is pent-up demand for her cakes from families and friends, including those in her neighbourhood and they are placing orders for a variety of cakes to have at home during their tea time and snacks amid the Covid-19 pandemic.

Nerisha said there is higher demand for Banana Cakes, Classic Carrot Cakes and Moist Chocolate Cakes, which her customers enjoy with a cup of Chai Masala or Earl Grey tea.

Nerishs Delight Fudgy Brownies

"There are some customers who order the cakes to have as dessert after their meal, which they like to top up with vanilla ice-cream. We do get a lot of orders for Fudgy Brownies and the orders are repeating. I have been baking Fudgy Brownies since my school days. They are a classic!," she said.

Hot selling items - Egg-less Cinnamon Rolls and Loaf Cakes

Nerisha said since the MCO was implemented, there has also been a lot of requests from her existing customers to bake Egg-less Cinnamon Rolls and according to her, they are rolling like hot cakes now.

"The cinnamon rolls are soft and they are topped with cheese. The sugar level has been reduced so that everybody can enjoy them," she said,

Another hot selling item is the Loaf Cake and Nerisha bakes quite a few variety, including Chocolate Cake, Orange Cake, Butter Cake and Marble Cake.

Delicious and affordable home-made cakes everyone can buy!

When asked about the number of cakes she can sell a month Nerisha said the current count is about 180-200 cakes, as versus to 30-40 cakes a month before the MCO.

Her selling price? RM30 to RM35 for the cakes (7" x 7") and RM20.00 for the Loaf Cakes, probably the best deal in the market by far!

"I get orders daily. Sometimes it is hard to manage but I am glad that my mum and siblings help me out. I am glad to have the full support from my family," she said.

Nerisha said occasionally, she gets request from customers to bake a cake which is not already on her list and she does accommodate them.

Moist Chocolate Cake 

"They usually ask for Red Velvet or Cheese Cakes to have for a birthday celebration or other important gatherings. These cakes are bigger and they costs more. There have been more orders since the conditional MCO," she said.

Nerishs Delight is open for bookings made two days in advance. You can order the Cakes, Loaf Cakes and Egg-less Cinnamon Rolls for your teatime break, as a desert after your meal, or for that special occasion that is coming up, including festive seasons. She will be adding more varieties, including doughnuts for parties and gatherings. Food catering, too, perhaps?

My verdict?

I was given a slice of the Banana Cake, the Red Velvet Cake and also a piece of the Egg-less Cinnamon rolls and they were to die for. So soft, moist and rich. My birthday is coming up and I know now where to order from. Thank you Nerishs Delight for providing options, fantastic good tasting cake options!

How to order?

To order from Nerishs Delight, WhatsApp : 010 2360440 (place orders two days in advance).

Delivery coverage and charges apply. For Bangsar, Damansara and Subang it is RM10 while for Petaling Jaya (SS 1, 2, 3, 4, 5) it is RM5.

WATCH THE VIDEO ON BAKING A CLASSIC BUTTER CAKE

Dorsett takes the lead to reopen two hotels, amid CMCO

Dorsett Hospitality International has reopened the doors for Dorsett Kuala Lumpur and Dorsett Hartamas and is also accepting bookings for Dorsett Residences Bukit Bintang. Courtesy Photo

By Sharen Kaur, NST Property

Dorsett Hospitality International (DHI), one of Asia's fastest-growing hotel groups is taking the lead to reopening the doors for Dorsett Kuala Lumpur and Dorsett Hartamas, following the conditional movement control order (CMCO), effective May 4.

The CMCO, or phase five of the MCO has begun to see almost all economic sectors reopened this week.

Malaysia imposed the MCO to restrict domestic and international travel on March 18 with the aim of curbing the spread of Covid-19.

This move had severely impacted all industries, including hoteliers who are bleeding red ink.

At least eight hotels in Penang and Perak have confirmed that they are shutting down permanently.

It was reported that from January to June this year, hotels are looking at potential losses of RM3.3 billion from room revenue alone, assuming that the MCO will end on April 28.

During the first phase of the MCO from March 18 to 31, hotels lost RM510.75 million in room revenue, while in the second phase from April 1 to 14, losses are estimated at RM570.35 million.

Malaysian Association of Hotels (MAH) chief executive officer Yap Lip Seng said recently that the soft approach of relaxing Covid-19 restrictions step-by-step is needed to prepare the tourism industry to operate according to the new normal.

He said based on a recent survey by MAH, the association is expecting average occupancy of less than 10 per cent for the month of May, about 16 per cent for June, and 20 per cent in July.

With the CMCO in its third day now, hoteliers are ready to resume business operation, and are offering up to 40 per cent discounts to get tourists back into the market.

Dorsett Kuala Lumpur and Dorsett Hartamas are offering their post-MCO room packages with up to 35 per cent discounts, aimed at boosting the local market and to generate revenue to sustain their workforce.

Dorsett Hartamas has launched the ‘Book Today For Tomorrow’ package, offering 22 per cent off for all bookings made directly via their website.

Dorsett Hartamas has launched the 'Book Today For Tomorrow' package, offering 22 per cent off for all bookings made directly via their website.

Booking is open up till June 30, 2020, for stays from now till July 31, 2020.

Guests can also opt for the Super Saver package offering up to 35 per cent off for all direct bookings made via the hotel's website and enjoy free cancellation up to 14 days prior to arrival.

Super Saver is recommended for guests looking for a true hotel stay deal and is open for bookings up till June 30, 2020, for stays from July 15 up till December 20, 2020.

Dorsett Kuala Lumpur is offering up to 29 per cent off their best available rates for all bookings made directly via the hotel's website. This package is available from now till September 30, 2020.

For guests opting to stay at Dorsett Residences Kuala Lumpur, a further 10 per cent discount will be accorded for stays of seven nights and above.

KLCCP hoping for better times ahead

KLCC Property Holdings Bhd Stapled Group invests, develops, owns and manages a portfolio of premium assets comprising office, retail and hotel properties in Kuala Lumpur. AFP Photo

Published by NST Property

KLCC Property Holdings Bhd (KLCCP) says 2020 started negatively for the group and earnings were impacted by the unprecedented Covid-19 crisis.

Its chief executive officer Datuk Hashim Wahir said the group is likely to feel the impact of Covid-19 for several months to come as consumer sentiment remains cautious across all business segments.

For the three months ended March 31, 2020, KLCCP's net profit dipped by 3.8 per cent to RM176.9 million year-on-year (YoY) mainly due to the adverse impact in the hotel segment arising from the travel restrictions imposed from the Covid-19 outbreak and movement control order (MCO).

However, revenue increased marginally by 0.3 per cent to RM354.6 million YoY, mainly supported by the resilience of the office segment and additional rent commencement from the new tenants in the anchor-to-specialty reconfigured space.

There were positive contributions from office (42 per cent), retail (37 per cent), and management services segments (13 per cent), which had offset the significant decline in hotel (eight per cent) revenues.

KLCCP and KLCC Real Estate Investment Trust (KLCC REIT), collectively known as KLCCP Stapled Group is Malaysia's largest self-managed stapled security that invests, develops, owns and manages a portfolio of premium assets comprising office, retail and hotel properties in Kuala Lumpur.

Its portfolio has seven properties with a gross floor area of 11.9 million square ft, and worth a total of RM15.9 billion.

Hashim said the group expects the performance of the office segment to remain stable backed by the triple net lease agreements and long term lease.

The hotel segment is expected to be adversely affected for the rest of the year, while for retail, the group remains cautious.

"Suria KLCC continues to operate in a challenging environment, taking into consideration the potential changes in consumer behaviour and sentiments post-MCO. In response to the conditional MCO enforcement, Suria KLCC resumed operations, albeit short business hours," said Hisham.

He said, despite the looming uncertainties, the group will strive to remain resilient and enhance tenants, shoppers, and hotel guest communications in complying with the new normal.

Office segment

KLCCP's office portfolio consists of the Petronas Twin Towers, Menara 3 Petronas, Menara ExxonMobil, and Menara Dayabumi (an integrated office and retail development located outside the KLCC precinct).

This segment reported stable performance with a marginal decrease in pre-tax profit arising from one-off repair and maintenance expenses recorded during the quarter. Revenue was up 0.5 per cent to RM149.6 million, while pre-tax profit fell 0.9 per cent to RM133.9 million.

KLCCP said these properties continued to anchor the performance of the group, backed by their long-term, locked-in leases.

The offices remain open for O&G tenants at the twin tower buildings.

ExxonMobil Exploration and Production Malaysia Inc, the anchor tenant at Menara ExxonMobil, renewed the lease in February 2020 for the next three-year term of the 18-year lease tenure.

KLCCP also improved the conditions at Menara Dayabumi, such as giving the facade a makeover. The group expects this will further boost visibility to retail offerings together with the 10-metre new pedestrian bridge connecting Menara Dayabumi to Central Market.

"Our office portfolio remains stable backed by its long-term leases which form the foundation to the group cash flow," it said.

Retail

The retail segment, represented by Suria KLCC and the retail podium of Menara 3 Petronas saw a 3.2 increase in revenue YoY to record RM130.9 million. Pre-tax profit also increased by 4.9 per cent to RM100.7 million.

KLCCP said this was mainly due to the increase in rental contributed by the new specialty tenants following the partial completion of the reconfiguration exercise at the mall.

Phase 1 of the reconfigured space was launched on January 24, 2020, and it had about 50 new tenants.

The opening of Phase 2 of the refurbishment which entails the second half of the food court is expected to be delayed in light of the MCO.

The group said the mall has been supportive of its tenants and retailers and has extended rental assistance on a case-to-case basis to ensure the retailers can weather the crisis, recover quickly and rebuild their loyal customer base.

Hotel

In the hotel segment, the group said that the quarterly performance of Mandarin Oriental Kuala Lumpur (MOKL) was severely impacted by the Covid-19 outbreak and the implementation of MCO with revenue declining by 33.8 per cent YoY to RM28.1 million.

Pre-tax profit fell 100 per cent YoY to minus RM8.8 million.

The hotel is practically closed except for the existing and long stay guests at apartments.

KLCCP said January performance saw a subsequent decline following the escalation of public health issues and halting of travels in mid-February 2020, impacting occupancy and the contribution from meetings, incentives, conferences, and exhibitions (MICE).

It said a series of cost containment measures have been implemented including suspending non-essential operating and capital expenditures, temporary closure of rooms and amenities by floors, including utility cost-saving, review of hotel's labour scheduling with minimal staffing, and review of operational contracts with third-party suppliers and external contractors.

With the CMCO enforcement, MOKL is partially open with its restaurants offering a smaller menu while all the spa and wellness facilities remain closed. The hotel rooms are also open but are restricted to only sectors outlined by the government.