Business Times Malaysia, 13 December 2005
FOREIGN investors were captivated by YTL Corp Bhd’s Starhill Real Estate Investment Trust (REIT) because of the retail growth potential in the country as well as the tremendous support from iconic brands in Starhill Gallery, managing director Tan Sri Francis Yeoh Sock Ping said.
The REIT comprises three of Kuala Lumpur’s top retail and property icons, namely Starhill Gallery and Lot 10 shopping complexes and JW Marriott Hotel, valued at RM1.15 billion collectively.
YTL ventured to Singapore, Hong Kong, the Netherlands and the UK to promote Starhill REIT and the results have been worth the effort.
The units for institutions were oversubscribed by 8.8 times and about 65 per cent of them were snapped up by foreign investors.
“I was like Daniel in the lion’s den,” Yeoh said when asked about his experience in presenting Starhill REIT across the borders.
“Singapore and Hong Kong are world-renowned retail centres. Their retail industries are decades old, while in Malaysia it is only about six years old.
“But the investors understood that the retail growth potential here is tremendous. Just look at the number of Hong Kong and Singapore retailers here in Starhill. The rental that we are charging is so low. It is a third of Singapore’s and a tenth of Hong Kong’s,” he said in an interview in Kuala Lumpur yesterday.
Yeoh said some of the tenants in Starhill Gallery agreed that when their turnover increases, their rental increases as well. Organically, the higher rental income translates into a better price for the REIT and subsequently, a much better dividend yield.
To fill the entire 280,000 sq ft Starhill Gallery is not an easy task, Yeoh admitted. But the duty-free implementation in 1999 and his vision to have a global, grade “A” store were key factors in attracting the heads of the iconic brands to Malaysia.
“Timing is everything. In the retail area, we have proven that we can catch the time well by introducing Bintang Walk and taking over and closing down CK Tang to create Starhill Gallery. Most importantly, the duty-free element that was introduced in 1999 — that is how we have gained the support of the global retailers.
“We also have the REIT kings advising us,” he said.
The REIT kings, Yeoh noted, are DBS Bank Ltd, which has handled almost all of the REITS in Singapore and Hong Kong, and Shanghai Banking Ltd, which handled Link Management Ltd in Hong Kong. Joining them are ECM Libra Securities Sdn Bhd and AmMerchant Bhd Group as the senior co-lead manager.
Starhill Gallery, which does not have an anchor department store, has the biggest watch centre in the world offering world-renowned labels and 11 exquisite restaurants on dedicated floors.
Out of the first 20,000 sq ft on the watch floor, Singaporean investments take up 10,000 sq ft. Starhill Gallery is truly one of a kind in the world, Yeoh said.
The JW Marriott Hotel has just undergone a two-floor renovation, while Lot 10 will soon see the addition of exclusive global brands catering for young adults.
The Starhill REIT pays good dividends and is backed by visible tangible assets located in Kuala Lumpur’s Golden Triangle, Yeoh stressed.
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