This article first appeared in The Edge Financial Daily, on April 1, 2016.

PETALING JAYA: Sunway Hotels & Resorts, the hospitality division of Sunway Group, announced yesterday an investment of RM875 million to facilitate a three-year redevelopment and expansion of its hotels in Malaysia, Cambodia and Vietnam.

It is allocating RM530 million for new investment assets for the Sunway Pyramid Hotel West and Sunway Velocity Hotel, and RM345 million for refurbishment and expansion of existing assets.

The plan commences this year, with completion targeted for the second quarter of 2018.

Speaking to reporters at a media briefing, Sunway Bhd’s property development division managing director Sarena Cheah said the plan would be funded internally and also from borrowings.

“In fact, [the allocation of new investments in] Sunway Pyramid Hotel West and Velocity Hotel has already been incurred under Sunway Bhd,” she said.

Cheah said the new expansion and the refurbishment of Sunway Pyramid Hotel East and Sunway Resort Hotel & Spa, which is under Sunway Real Estate Investment Trust (SunREIT), will be funded by the REIT’s borrowings.

Upon the completion of all expansion plans in 2018, Sunway Group will own and operate 11 hotels in all, with 3,500 guest rooms.

Meanwhile, Sunway Resort Hotel Sdn Bhd group general manager Albert Cheong said the company is looking to open its first hotel in the Iskandar region, Johor, in 2018 to 2019.

“We are still going through the conceptual planning at this time. We are not talking about only one hotel because that is a longer term of plan we have,” he pointed out.

He added that the hotel’s size will be about 290 to 350 rooms, for a start, and that there will be a few hotels given the size of the land Sunway has in Iskandar.

Cheah said the development in Sunway Iskandar will be similar to Sunway City, which was developed as a community, with hotels, entertainment outlets and a theme park.

While the group’s Iskandar project will need funds for investment, she said there will not be any hotel injected into SunREIT in the short term.

“We are 60:40 there. Gearing is also quite comfortable. So, even if we do it there, we might get other investors to come and joint ventures also,” she said.

“When we want to inject [assets into SunREIT], [it will be because] we wish to raise some cash for further investment,” she added.

As at Dec 31, 2015, the net gearing ratio for Sunway stood at 49.8%.

Sunway Iskandar is a 1,800-acre  (728.43ha) development with a gross development value of RM30 billion that will be developed over a period of 15 to 20 years from 2014.

To recap, Sunway had entered into a 60:40 joint-venture agreement with Khazanah Nasional Bhd to develop the 691-acre Medini portion, and a similar deal with Iskandar Investment Bhd to develop the Pendas portion.

Sunway closed one sen or 0.32% lower at RM3.14 yesterday, with a market capitalisation of RM6.23 billion.