CHHB mulls REIT of at least RM500m

BY THE EDGE

SERI KEMBANGAN: Country Heights Holdings Bhd (CHHB) is mulling over the setting up of a real estate investment trust (REIT) with a minimum portfolio value of RM500 million as early as the end of next year.

Its managing director Tan Sri Lee Kim Yew said CHHB had been approached by several parties to set up a REIT and “as for the properties to be injected into the REIT, we prefer it to be specialised… only commercial properties.”

The developer is looking at its Mines Waterfront Business Park project in Mines Resort City and will also consider buying existing commercial properties in the Klang Valley’s southern corridor like Cyberjaya.

Speaking to reporters after CHHB’s EGM yesterday, Lee said CHHB would also consider injecting up to 150,000 sq ft of nett lettable area of the Heritage Southlake development in Seri Kembangan comprising serviced residences, a retail village and an office tower into such a REIT. The project is a joint-venture development undertaken by Lee in his personal capacity.

However, he said CHHB was not in a hurry to set up a REIT. “Our aim is to reduce the company’s gearing levels by selling some of our properties owned by East Vision Leisure Group Sdn Bhd which include the Mines Waterfront Business Park and the Mines International Exhibition & Convention Centre (MIECC).” East Vision Leisure is CHHB’s wholly-owned subsidiary.

Lee said there were interested parties for the Mines Waterfront Business Park, and the company would not hesitate to sell it if the price is right. He added that the market value for the first phase of Mines Waterfront Business Park was about RM130 million.

CHHB has already started work on the second phase that will add another 350,000 sq ft of space that will be completed by the end of next year.

On the MIECC, Lee said it faced stiff competition from other similar properties developed by government-linked companies and the government.

“We still want to dispose of the MIECC. In the past, we even tried to sell it at cost for RM250 million but such property is a tough one to run in the business sense. However, if it can’t be sold at cost, we will find ways to make it work,” Lee said.

The developer is planning to add value to the MIECC by converting the ground floor space for retail use. There are plans to lease it out while the exhibition space will be on the upper floors.

Earlier at the EGM, CHHB shareholders approved the disposal of the leasehold Mines Shopping Fair in Mines Resort City for RM432 million cash to Mutual Streams Sdn Bhd, whose principal activity is investment holding. It is owned by Singapore’s CapitaLand Ltd.

Sited on a 10.19-acre tract, the 4½-storey shopping complex was built at a cost of RM300 million and began operations in 1997.

With a nett lettable area of about 638,000 sq ft, its main anchors include Giant Hypermarket, TGV Cinemas and Best Denki. It recorded occupancy levels of 88% and for the year ended Dec 31, 2006, the audited gross rental income totalled RM34.9 million.

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