20 May 2013

Crest Builder adopts sell some, keep some strategy.

PETALING JAYA: Employing the “sell some and keep some” strategy in the properties Crest Builder Holdings Bhd construct, it sees itself venturing into retail space management with its latest investment property Tierra Crest and possibly the upcoming Dang Wangi light rail transit (LRT) redevelopment project, or aptly known as The Bank. 

In an interview with StarBiz, executive director Eric Yong said: “We look at property investment as a whole package. We sell some and keep some.” The second and latest addition to its investment property portfolio is Tierra Crest at Kelana Jaya. The RM140mil project, which is going to house Unitar's new main campus, the three-storey retail podium would be leased to food and beverage tenants and other peripheral businesses that would serve its immediate community, he said. 

The 16-storey Tierra Crest has a floor plan of 280,000 sq ft which is inclusive of 9,900 sq ft retail space. Education group Unitar has signed a nine-year tenancy with the company to occupy about 85% of Tierra Crest's total lettable area from June onwards. As for the podium, Yong said the company was in talks with potential tenants to take up the space and hoped to allocate 40% to 50% of the retail space for food and beverage businesses. 

In the pipeline, it might retain and manage the retail space at The Bank, a joint-venture project with Detik Utuh Sdn Bhd. Yong said: “It is likely that we will keep a big chunk of the retail space while the land owner (Syarikat Prasarana Negara Bhd) will have the offices and the residences will be sold.” The single-block mixed development atop the Dang Wangi LRT station has a gross development value of RM1.04bil. 

He said the project was situated in a prime location but the size was not substantial enough to create a full-fledge shopping mall so it would position itself as a lifestyle podium in the neighbourhood and a stopover for commuters. Slated for completion in 2018, The Bank would host a retail mall podium, commercial office spaces, small office home office (Sohos) suites and a 207-room boutique hotel. He said the Soho suites would be fully-furnished to “ease the headache” of buyers who are busy or always on the move. 

When asked if it was confident of retail management as it had not been its main business, Yong said, “We are not managing it as a full-fledge shopping mall but we focus on creating a niche lifestyle mall to serve the people in the neighbourhood.” He added that the direction was effective because there was a demand from people who prefer to eat and drink in a no frills neighbourhood mall rather then getting stuck in the traffic jam and spend a great amount of time to look for parking in bigger malls. 

From its financial year ended 2012, property investment contributed only 2% to its topline. Its bread and butter is still construction, contributing over 80% to its turnover, followed by property development in 2012. Property investment served as a recurring income generator which allowed it to repay bank borrowings from the rental collected while it could also gain from the properties' value appreciation over time, he said. For instance, its fourth quarter net profit rose 17% compared with the third quarter partly due to the fair value gain of its investment properties. 

Currently, it receives RM9mil per annum in revenue from leasing office space at The Crest office tower while it expects to gain another RM10mil from Tierra Crest. “The investment segment will grow but it will not be as fast as the construction arm,” he said. The firm's maiden property investment was the 3 Two Square project in which it sold the commercial shops and kept the office tower, The Crest, and the car park lots. The land in Section 19, Petaling Jaya was bought for RM34mil back in 2003 and the building it holds fetched a valuation of RM108mil, Yong said.


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