KUALA LUMPUR (Aug 9): Berjaya Assets Bhd aims to increase occupancy of its Berjaya Waterfront development in Johor from 50% currently to 70% by year end, as the group expects to secure new tenants going forward.

Berjaya Assets executive director Koh Huey Min said it has been successful in refurbishing the asset, since acquiring it from Atlan Holdings Bhd for RM325 million in 2012.

She said the group has refurbished the development for less than RM20 million, and has been in talks with a few prospects from China since last year.

“Negotiations are still ongoing. We have also talked to the big brands at Berjaya Times Square which are keen to go in. We will definitely see some increment in occupancy — we are targeting to achieve approximately 70% by year end. With the new tenants, I am confident we can take it to the next level,” said Koh at an investor briefing yesterday.

She said the group has the right to reclaim another 55 acres (22.26ha) of seabed adjacent to the existing site, which will further enhance the development’s value. Koh said the environmental impact assessment has been secured, with the group currently in the midst of submitting the environment management plan and getting planning approval.

She added that the reclamation works can only start next year, as approval will only be secured within three to six months.

The group estimates a reclamation cost of less than RM200 per sq ft, significantly lower than the highest recorded transaction price of RM800 per sq ft for the area.

“Even if I were to give about 50% discount at RM400 per sq ft, we still have a value of about RM1 billion.

“And this is only looking at the value of the land. We have earmarked it for a mixed development project, comprising hotels, residential units and probably hospital facilities, which will definitely push the gross development value beyond RM1 billion.”

She said the reclamation works will take less than two years, but added that Berjaya Assets is not in a hurry to finish the development, considering current market conditions. The development will likely be completed phase by phase.

Asked if Berjaya Assets would consider injecting its assets into a real estate investment trust (REIT), Koh said the group will have to consider restructuring its borrowings to meet requirements for REITs, as well as whether the yields are attractive. She said maybe Berjaya Waterfront Sdn Bhd — which owns the Berjaya Waterfront development — could be turned into a REIT.

“The Berjaya Waterfront project is still light and has potential for growth because the occupancy rate is still at about 50%.”

This article first appeared in The Edge Financial Daily, on Aug 9, 2017.

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