Quick take: Berjaya Land's RM1.64b Okinawa resort

Tan: We

KUALA LUMPUR: In November 2016,  tycoon Tan Sri Vincent Tan announced Berjaya Land Bhd's plan to build a Four Seasons resort on the 100-acre site in Okinawa.

He made the announcement soon ahead of the opening of the Four Seasons Hotel and Hotel Residences in Kyoto which was built for US$380mil, which includes a land cost of US$50mil.

Now, two years on, Berjaya Land announced on Thursday it was developing its Four Seasons Resort and Private Residences Okinawa. 

Projected total development cost is US$400mil (RM1.64bil) and the gross development value estimated at US$1bil (RM4.10bil).  It will comprise about 30 acres of the project development land area, with 120 hotel rooms, 120 residences and 40 villas.

These projects are being undertaken as Berjaya Land exits from its Vietnam-based international five-star hotel business in a move to monetise yet another asset in the country.

It is selling its entire 75% stake in its joint-venture TPC Nghi Tam Village Ltd (TPC Village) for 1.24 trillion Vietnam dong (RM222.18mil).

Tan had also recently revealed Berjaya Group was close to concluding a deal to sell its Four Seasons Hotel and Hotel Residences Kyoto (Four Seasons Kyoto) in Japan for a profit of between US$350mil and US$400mil.

The funds will come in handy for Tan who plans to float his hotel business on the Singapore Exchange will unlock the value of the properties owned by BLand.

Tan has said BLand, besides being significantly undervalued by the market, the company’s shares were hardly ever traded on Bursa Malaysia.

BLand had issues in complying with Bursa Malaysia’s listing requirement of having at least 25% public shareholding spread. Hence, it would make sense to delist BLand from the local stock exchange.

The steady business of the hotel industry makes it an attractive proposition for investors who look at the business more favourably, given the dynamics of the industry.

The industry has seen a large inflow of private capital coming from investors like high-net-worth individuals and family offices moving away from hedge funds to private equity in search of higher returns.

In November 2018, Malaysian Rating Corporation Bhd affirmed its ratings on BLand's outstanding RM500mil medium-term notes (MTN) programme guaranteed by Danajamin Nasional Bhd (Danajamin) at AAA(fg) and RM150min MTN Programme guaranteed by OCBC Bank (Malaysia) Berhad (OCBC Malaysia) at AAA(bg). The outlook on the ratings is stable.

MARC pointed out BLand’s standalone credit profile remains weighed down by the weak domestic property market, its sizeable debt obligations and modest earnings from non-gaming subsidiaries. 

BLand has mainly relied on proceeds from asset disposals and refinancing to address its financial obligations.

“BLand’s domestic property projects are largely limited to ongoing developments in Bukit Jalil, Kuala Lumpur, and Georgetown, Pulau Pinang, which have a combined gross development value (GDV) of RM1.1bil. 

“Unbilled sales from these projects stood at RM153mil as at June 30, 2018, providing some near-term earnings visibility,” said MARC.