MRCB working towards lowering debt level

Chief operating officer Kwan Joon Hoe said the firm was working on reducing its gearing level to 0.5 times from 1.2 times currently.

LONDON: Malaysian Resources Corp Bhd (MRCB) continues to focus on lowering its debt level, which include spinning off its assets through direct sales and potentially listing its property and construction arms.

Chief operating officer Kwan Joon Hoe said the firm was working on reducing its gearing level to 0.5 times from 1.2 times currently.

“Reducing debt level is a continuous effort by the company. It is noteworthy that the bulk of our debt is backed by our infrastructure projects,” he said.

Kwan was speaking to reporters after the 7th Middle East Business Leadership Award here, where MRCB won the “Best Urban Property Developer Award” and “Best Transit-Oriented Development Award”.

“Listing our property and construction arms as separate entities is something we are looking at, but it is still at a discussion stage because we need to ensure that both business segments can be standalone entities. Right now, they are linked,” he said.

MRCB’s construction arm currently manages an RM7bil order book that includes the development of PJ Sentral, Cyberjaya City Centre, the northern transport hub of Penang Sentral and Kwasa Sentral in Sungai Buloh.

Meanwhile, Kwan said its property arm is targeting between RM1bil and RM1.5bil in sales this year from residential development projects next to KL Sentral, known as Sentral Suites.

He said properties at the KL Sentral area have been enjoying high occupancy rates and the firm will focus on residential properties in the surrounding area.

“Previously our focus has been on the commercial development. For last plot of land in KL Sentral, which is about six acres, is earmarked for residential or hotel,” he said.

The construction and property outfit have 450 acres of landbank mainly in the Klang Valley area.

Hotels occupancy rate at the KL Sentral area recorded about 80% on average, while MRCB’s residential development, The Sentral Residences, which is next to the newly opened St Regis Kuala Lumpur, recorded 95% occupancy rate.

“We expect the property sector would be similar with what we saw in 2016, and commercial properties are expected to be softer this year. Nonetheless, there is demand for smaller-sized residential units in the Klang Valley,” Kwan said.

For its development projects, MRCB had last year completed a private placement of raising more than RM400mil proceeds. Part of the money was also used to pared down its debt.

MRCB is currently in the midst of selling its highway asset, Eastern Dispersal Link Expressway.

Last October, MRCB announced that it has received two interest parties to acquire stakes in MRCB Lingkaran Selatan Sdn Bhd, the concession holder of the EDL expressway. The parties were PLUS Malaysia Bhd and ZJ Advisory Sdn Bhd.

Kwan said MRCB was working on the sale of EDL and that the detail of the deal would be announced in due course.

The sale of EDL would reduce MRCB’s gearing level to 0.7 times, he said.

Last year, the firm sold its Menara Shell, located at KL Sentral, to its REIT (real estate investment) arm for RM640mil, which analyst said would translate to RM89mil gain for 2017.