LBS issues RM135mil sukuk to finance housing projects

  • Business
  • Wednesday, 14 Jul 2010

PETALING JAYA: Property developer LBS BINA GROUP BHD is issuing RM135mil sukuk to part-finance three projects in Malaysia, group managing director Datuk Lim Hock San said.

The proceeds would be utilised mainly for proposed development projects in Bandar Putera Indah in Batu Pahat, Johor, Puchong in Selangor, and Taman Royal Lily in Cameron Highlands, he said.

“The total gross development value (GDV) of the three projects is RM600mil,” Lim said after a signing ceremony for the issuance witnessed by Housing and Local Government Minister Datuk Wira Chor Chee Heung yesterday.

The sukuk will be the first private-debt Islamic securities issuance in Malaysia to be guaranteed by Danajamin Nasional Bhd, the nation’s first financial guarantee insurer.

EON Bank Bhd unit MIMB Investment Bank is the principal adviser and lead arranger for the issuance. The first tranche will be released this month.

On the projects, Lim said the 26 medium-cost properties in Cameron Highlands were sold, while the Batu Pahat project and high-end super-link three-storey properties in the D’Puchong project would be launched this year. “We are confident that the units will be taken up very fast,” he said.

The group has a landbank of about 930.7ha in Malaysia and China, which would ensure its continuous operation for the next 10 to 15 years.

Executive director Alan Chia said with the launch of the new projects and some launches in 2009, the group aimed to return to profitability this year or next after registering its first loss last year.

Chia said sales last year touched RM317mil and sales so far this year had reached RM180mil.

“We expect to break even or post a small profit this year and better profit in 2011,” he said.

Lim said more projects would be launched this year amid the favourable outlook for the property market for the next two years.

“With the Danajamin guarantee, the issue will be rated AAA (fg), thus allowing LBS to raise funds from the sukuk market at a competitive rate, even in this risk-adverse environment,” said EON Bank Group chief executive officer, Michael Lor.

On another note, LBS planned next year to launch its mixed residential project with a GDV of RM5bil in Zhuhai, a city neighbouring Macau in China.

Lim said LBS had a 60% stake in the joint venture project with a local government linked company.

“Currently we are waiting for the masterplan for the project to be ready,” he said.

The project, which spans 77ha, was delayed due to work on a light rail transit system. — Bernama

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