Country Heights shelves real estate trust plan
Posted on | May 18, 2009
By BUSINESS TIMES
The plan to list a commercial REIT has been shot down as it is not viable to do a REIT now because of high yield expectations, says the company’s group managing director
COUNTRY Heights Holdings Bhd,(5738) a property and leisure group, has shelved plans to sell up to RM500 million in real estate investment trust (REIT) due to unfavourable market conditions.
The group, founded by Tan Sri Lee Kim Yew, had planned to list a commercial REIT, which would include the Mines Waterfront Business Park and Malaysia International Exhibition and Convention Centre (MIECC), late last year.
However, the plan has been shot down and the company will focus instead on completing its ongoing developments in the Klang Valley and Negeri Sembilan, said Mark Rozario, the company’s group managing director.
“It is not viable to do a REIT (now) because of high yield expectations. Even if we tie up with other assets, we need the size to command a better yield, so I don’t think we will be looking at it for the next three to five years,” Rozario told Business Times in an interview at Seri Kembangan, Selangor, yesterday.
However, he did not rule out an asset sale.
Country Heights’ current asset is worth some RM1.5 billion. Besides the business park and MIECC, it owns the Palace of The Golden Horses hotel and Palace Beach Resort & Spa in Seri Kembangan.
The company also has a 70 per cent stake in Borneo Heights Sdn Bhd, which owns Borneo Highlands Resort in Sarawak.
“Our gearing is low but we need to re-profile our borrowings. We have a RM150 million bond due on December 31. We are open to asset disposal or strategic investors taking a stake in the properties and making them more profitable, but we will view the price offered,” he said.
At at December 31 2008, Country Heights had RM340 million in debts.
In 2007, it sold Mines Shopping Fair to Singapore’s CapitaLand Ltd for RM432 million, from which it made an estimated gain of RM102 million.
Rozario said Country Heights will buy land in the Klang Valley to expand its existing 2,400ha of land and grow its health tourism business by setting up more health retreats in the country.
It is targeting to open a retreat in Borneo Highlands Resort, under the Country Heights Health Sanctuary brandname, within a year or two.
Country Heights will also double the facilities at its existing 11,000 sq ft health screening centre at Palace of The Golden Horses, which has 11,000 local members, and enhance its outlet in Mont’ Kiara.
“Medical tourism is the way forward. The figures are growing but what we want now is to capture the foreign market,” he said.
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