Jesselton Quay project to kick off

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KUALA LUMPUR: Sabah-based port operator Suria Capital Holdings Bhd — in a joint venture (JV) with SBC Corp Bhd — expects to launch the RM1.8 billion Jesselton Quay project in Kota Kinabalu, Sabah in the first quarter of next year (1Q2015), as it looks to obtain the development order (DO) by year-end.

Its chief financial officer Ng Kiat Min said the launch of the first phase of Jesselton Quay, comprising retail and serviced suites worth RM500 to RM700 million, was initially targeted for the third quarter of this year (3Q2014), but the DO “took longer than expected”.

“I think we are going to get it [DO] soon. I haven’t seen it in black and white, but I heard the approving authority has already given conditional approval because it involves traffic, among others,” she told The Edge Financial Daily at the Investor Day 2014 yesterday.

The project, which has a minimum net saleable value (NSV) of RM1.8 billion, is to be developed by SBC over eight years. Suria Capital will provide the 16.25-acre (6.58ha) plot of land in Kota Kinabalu.

“For now it [NSV] looks like it is going to hit RM2 billion ... it all depends on how we plan it. [The] RM1.8 billion [value] is the minimum, anything more than that, we still have an 18% upside,” Ng said.

Under the JV, Suria Capital will receive a minimum guaranteed amount of RM324 million or a minimum return of 18% of the NSV.

“We have a cash entitlement of RM212 million but we will not register that as revenue. Revenue from the project will be pegged very much to the physical profits on the ground when sales [and purchase agreements] are made, thus we will be registering them progressively,” Ng noted.

She added that Suria Capital may retain some retail units for recurring income but this will be decided once the building plan is approved.

Suria Capital also has plans to develop the remaining seven acres of land it owns that are located next to the 16.25-acre Jesselton Quay project. It plans to build the group’s new corporate office and other commercial and retail buildings there.

“We are talking to a different partner [developer] to develop this piece of land... We have spoken to a few, and have more or less shortlisted [them]. We will probably make an announcement in the first half of next year,” Ng said.

She indicated that the NSV for the seven acres could be taken “proportionately” from the Jesselton Quay project, as a cue. “We have the first one as a benchmark already. We will model the second project after the first one, which to me is easier in that sense as we already have quite a good model,” she said.

On Suria Capital, Ng is positive on the group’s revenue and earnings outlook for the financial year ending Dec 31, 2014 (FY14).


This article first appeared in The Edge Financial Daily, on October 13, 2014.