By NST Property - Published on June 15, 2022
EcoWorld International Bhd intends to monetise its completed stocks in Australia and the United Kingdom (UK), which will generate significant cash reserves.
Datuk Teow Leong Seng, the group's president and chief executive officer, said that a portion of the proceeds will be earmarked for future growth.
The remaining funds will be repatriated to Malaysia for distribution to shareholders in the next 1-2 years, he said.
Teow said that EcoWorld International's strategy has been to focus on monetisation of completed stocks at the group's EW-Ballymore joint venture (JV) and Australian projects since the fourth quarter of 2021.
It has also been selectively evaluating new growth opportunities, to eventually reinvest the substantial cash reserves generated by the group's current project sales, he said.
"Our monetisation strategy has progressed well, enabling us to repay all the project development loans for our Australian projects as well as all the bank borrowings of our EW-Ballymore JV," he said.
EcoWorld International's major shareholders include Eco World Development Group Bhd and Singapore-listed GuocoLand Ltd.
The group currently has 18 active and upcoming projects in the UK and Australia, with a total gross development value of £4.7 billion and AU$700 million, respectively.
EcoWorld International's presence in the UK began with the EcoWorld-Ballymore JV, which is currently developing three prime waterside residential projects in London.
EcoWorld London opened in 2018, providing EcoWorld with an immediate presence in the highly resilient UK mid-mainstream market and the rapidly growing Build to Rent sub-sector.
In Australia, EcoWorld International currently has two active projects, namely West Village in Parramatta, Sydney's second central business district, and Yarra One in Melbourne's charming South Yarra neighbourhood.
Teow said that EW-Ballymore has about £400 million in completed properties that are easily monetisable given the ongoing interest in all three projects in the portfolio.
"Once the remaining completed properties in the EW-Ballymore portfolio, as well as the group's Australian projects, are sold, EcoWorld International will have substantial cash reserves to be deployed," he said in a statement today.
EcoWorld International's total sales plus reserves for the seven months ending May 31, 2022, were RM1.533 billion, a 52 per cent increase over the RM1.012 billion recorded during the same period in FY2021.
Teow said that EcoWorld International's strong start in the first quarter of 2022 has continued into the second quarter of 2022.
"The group's London City Island and Embassy Gardens projects continue to lead sales performance. We have also seen a good uptick in demand for our Australian projects in 2Q 2022," he said.
According to Teow, the group is on track to meet its FY2022 sales target of RM2 billion.
Meanwhile, Teow said that EcoWorld International has begun to receive some repayment from EW Ballymore for shareholder advances.
"However, despite the resurgence in demand we have seen over the last seven months, selling prices for properties have not increased at quite the same pace as yet. This is because market sentiment continues to be weighed down by inflationary concerns and rising interest rates, compounded by geopolitical tensions caused by the ongoing conflict between Russia and Ukraine.
"Interestingly though, rents in London have been going up particularly at our EW-Ballymore projects due to their prime location, transport accessibility, and excellent liveability. Such rental growth augurs well for an eventual price recovery which should help us to achieve better overall returns from the sale of our completed properties for the benefit of our shareholders," he said.
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