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Crest Builder with Latitud8 and selling to reduce gearing

Posted in Property, KL / Selangor

I do not think too highly of developers who are taking their own sweet time when it comes to developments. Common, show some vibrancy and aggressiveness. However, I also think having a very high gearing is quite dangerous and may cause the company to face cashflow issues. In fact investors may not want to buy a company which is over-geared especially during a slowdown in general. A developer with a high gearing is Crest Builder. It’s current gearing is 1.7 times. It is looking to reduce this by selling off its Tierra Crest office block in Kelana Jaya. It has a book value of RM158 million and is 90 precent tenanted, it’s managing director Eric Yong revealed.

He said this about its debts. “Yes, we are looking to sell one of our assets but we’re not in a dire situation either. We are staggering our development projects. We have the funding requirements for 2016. We are good for the next 18 months. Our unbilled construction orderbook of RM1.2 billion will keep us in good stead.” According to Yong, the group’s RM510 million sukuk is self sustaining. It is being serviced with the group’s yearly concession income of RM43 million from Universiti Teknologi Mara (UiTM) campus in Tapah, Perak.

Latitud8Crest Builder is also undertaking the first transit-oriented development with Prasarana Malaysia Bhd. It’s called Latitud8 and is located just above the Dang Wangi underground LRT station. It is a 45-storey mixed-use tower. It will have a lifestyle retail podium with business and convention facilities, open office spaces, SOFO (small office flexible office) suites, SOHO (small office home office) residences, duplexes as well as a rooftop lounge and bar. Under this public private partnership, landowner Prasarana is entitled to 21.2 per cent of the RM1.16 billion gross development value (GDV) of Latitud8, including land cost.

In terms of launching, the selling of the office space and residential space will start from September 2016 while the work on the foundation of the new structure has begun. According to some other media reports, the estimated price per sq ft for the residential component is RM1,300 per sq ft. Everyone should mark these words, ‘Transit-Oriented Development.’ It will be a word used many more times as I think there would be more of these public-private joint ventures moving forward, especially for stations where further developments are possible. Yes, I would definitely drop by for a look since my office is not too far away. As for pricing, I leave it to investors to decide. Happy visiting.

written on 12 June 2016

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