ASIAN PAC HOLDINGS BHD is building up its property investment portfolio in new growth areas to widen its income streams.
According to managing director Datuk Mustapha Buang, the company will consider land that is ready for development in the Klang Valley, Penang and Johor.
“By raising our property investment portfolio, we expect to raise our annual income from investment property of about RM1.5mil now to more than RM40mil in the next three to four years. The existing income is mainly derived from car parking fees,” Mustapha says.
Currently, Asian Pac operates 1,300 car park bays in Kota Kinabalu and another 2,300 bays will be ready in the next three to four years. It also has a 6.3 acre site in Kepong Entrepreneurs’ Park that is being leased to Carrefour.
Mustapha points out that most of Asian Pac’s projects are in Kuala Lumpur now and the company has experienced some delay in the approval application process pending the Kuala Lumpur City Draft Plan 2020.
“It is also getting more challenging as land cost in the city has appreciated by 20% to 30%. Building up another source of regular income flow will ensure we are able to diversify our income streams,” he adds.
Currently 40% of Asian Pac’s sales come from commercial projects and the balance from residential projects.
For the financial year ended March 31, 2010 (FY10), the company recorded sales of RM101.6mil against RM83mil in FY09.
The company has in the pipeline four mixed developments with a total gross development value (GDV) of more than RM1.8bil for launch in one to two years.
The first will be KK Times Square phase two in Kota Kinabalu; Dataran Wangsa in Wangsa Melawati, Kuala Lumpur; Kepong Entrepreneurs’ Park parcel B4 in Kepong and Dataran Larkin in Johor Baru.
A residential project for launch early next year will be Bijan at Country Heights comprising 12 terraced bungalows and semi-detached houses with GDV of RM20mil.
KK Times Square 2 will be launched next month, Dataran Larkin by November, Dataran Wangsa by December and the Kepong Entrepreneurs’ Park project will be early next year.
Mustapha sees opportunity to further expand the company’s presence in Kota Kinabalu,
Its wholly owned unit, Syarikat Kapasi Sdn Bhd has built up a good track record in Kota Kinabalu through its KK Times Square 1 comprising 5-, 6- and 8-storey shop offices and Karamunsing Capital’s 55 units of two- and three-storey shops.
“We want to leverage on this presence and are on the look out for strategic land for development in Kota Kinabalu. We are also exploring possible joint ventures with Government-linked companies.
“With climbing palm oil prices, the Sabah Development Corridor and increasing tourist arrivals, we see good potential for Kota Kinabalu’s property market,” he adds.
Syarikat Kapasi, which owns the 23.45 acres that KK Times Square is located on, was acquired in 1997.
The land is strategically located at the coastal area of Kota Kinabalu, close to Sutera Harbour.
Located about 10 minutes from the airport, KK Times Square comprises shop offices, a shopping mall of about 670,000 sq ft in net lettable area, 41 exterior shops and 498 serviced apartments.
Asian Pac chief operating officer Calvin Low says the project with a total GDV of close to RM1.4bil, is slated for completion in 2013.
“The 670,000 sq ft of net lettable area to be completed in the later part of 2013 will be able to churn out rental income of RM40mil a year. The five blocks of serviced apartments and shoplots with a GDV of RM460mil are for sale,” Low adds. To raise funds for the KK Times Square 2 project, Sykt Kapasi would issue RM200mil nominal value of up to 5-year guaranteed commercial papers or medium-term notes to be guaranteed by Danajamin Nasional Bhd.
Danajamin is guaranteeing the bonds based on the viability of the project as the fund will be raised specifically to finance the project.
Mustapha says Danajamin’s guarantee has provided the company the opportunity to raise longer term borrowings at a reasonable cost within a shorter time.
He says this form of fund raising would be popular, especially in projects where there are no sales during the construction period.
“Despite being a mid-sized developer, we are now able to raise bonds for project financing.
“Bonds wrapped by Danajamin will automatically be upgraded to AAA rating, which gives investors an assurance of the quality of the paper,” Mustapha adds.
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