Landmarks calls off JV wellness resort project in Indonesia

The current facade of Sungei Wang Plaza (right) will be refurbished into a modern building - pls contrast with artist impression.

KUALA LUMPUR: Landmarks Bhd has lost a partner - US-based healthy living and luxury spa vacations provider Canyon Ranch - in its massive Treasure Bay resort city project on Bintan Island, Indonesia.

The company, an associate firm of Genting Bhd, said in a two-paragraph statement that after much consideration and deliberation, it and Canyon Ranch had decided not to move forward with the planned joint-venture development at Treasure Bay Bintan.

Canyon Ranch had announced the proposed Canyon Ranch Bintan health and spa facility in June 2014. (There was no announcement by Landmarks to Bursa Malaysia in 2014 on the joint venture.)

It said the wellness resort development would consist of 64 hotel suites and 64 villas, arranged in compound-like configurations of one to three units each.

Each villa was to be appointed with luxurious finishes, private fitness area and lap pool, as well as service quarters.

Villa sales were to have started in October 2014, with Canyon Ranch Bintan expecting to welcome its first guests in the third quarter of this year.

In October last year, Bloomberg reported that Landmarks would start selling villas at Canyon Ranch by end of 2015 targeted at high-net-worth individuals. The villas, ranging from 15,000 to 35,000 sq ft, were to cost between S$3.5mil and S$6.5mil.

Landmarks and Canyon Ranch said in the jointly-issued statement on Friday: “The joint decision (to abort the project) was based on the commercial interest of both parties and their respective strategic business directions. Both parties will instead be focusing their endeavours in projects slated for release in 2016,” 

No reason was given. It is not known whether Landmarks will proceed with a wellness resort project by itself or with a different partner.

Landmarks’ multi-billion-ringgit Treasure Bay Bintan resort city project, located on 338ha which is a short boat-ride from Singapore, has had two major setbacks since it was proposed back in 2007.

In May 2007, Landmarks’ unit Primary Gateway Sdn Bhd paid RM350.5mil for a 64.5% stake in Bintan Treasure Bay Pte Ltd (BTB). BTB is an investment holding company that owns 338ha of leasehold land in Indonesia’s Bintan island via indirect subsidiary, PT Pelangi Bintan Indah.

The purchase of the BTB stake was mainly funded with proceeds from its disposal of Sungei Wang Plaza Sdn Bhd, which owns most of the retail space in the well-known KL shopping complex, for RM284.8mil cash. 

Landmarks subsequently bought the rest of the stake in BTB by paying a total of RM414mil. In the second quarter of 2008, BTB became a wholly owned subsidiary.

Within months, Genting Bhd raised its stake in Landmarks, which according to reports was allowed to venture into gaming within its proposed resort, to just over 30% from 25%, (Genting remains the company’s single biggest shateholder.) Landmarks said in 2008 that it hoped to build Indonesia’s first legalised casinos to compete with Las Vegas Sands Corp in Singapore.

However, doubts on Landmarks getting a casino licence emerged in early 2008.

In another setback, the project was put on hold during the Asian financial crisis. But at the end of 2010 there was a news report quoting unnamed sources saying the Bintan development would begin in the first quarter of 2011. However, in February 2011 then Indonesian president Susilo Bambang Yudhoyono made it clear that he was against the setting up of a casino operation in Bintan.

Landmarks chief operating officer CK Fong told Bloomberg in October last year that Treasure Bay Bintan would eventually account for about 80% of Landmarks’s revenue.

Landmarks shares gained 8 sen to close at RM1.11 on Friday.