#Update* YTL to inject Niseko Village into Starhill REIT

KUALA LUMPUR: YTL Corp Bhd is planning to inject its new acquisition of Japan-based ski resort Niseko Village into its Starhill REIT (real estate investment trust) along with its other hospitality properties, said its managing director Tan Sri Francis Yeoh.

The ski resort located in Hokkaido, which was acquired from PC One YK for ¥6 billion (RM224 million), will be injected into the REIT which was now being restructured to become a hospitality REIT, said Yeoh at the signing ceremony here yesterday, marking the completion of the acquisition.

“Niseko Village will go into the hotel REIT along with the different hotel brands from our group,” he said, adding that the REIT’s portfolio would include brands such as JW Marriot, Ritz-Carlton Residences and Pangkor Laut Resort.

“We are in the process of changing it (Starhill REIT) to become a hospitality REIT. Niseko Village and our other hotel brands around the world would be injected here, while the Singapore-listed Starhill Global REIT will absorb our retail entities,” Yeoh said, adding that the exercise would be completed this year.

Last November, YTL’s 63.37% Malaysian-listed subsidiary Starhill REIT announced it would sell its retail assets — Starhill Gallery and Lot 10 Shopping Centre — for a total of RM1.03 billion to Singapore-listed Starhill Global Real Estate Investment Trust (SG REIT), in which YTL owns 28.9%.

The exercise would see Starhill REIT become the first hospitality REIT in Malaysia, said Yeoh.

“With the exercise, you can see that we are serious in terms of discipline and approach. We can grow without inhibition through a transparent REIT that gives you good returns,” he said.

Yeoh said Niseko Village would allow the group to further expand its footprint in the Asia-Pacific region, as well as Japan, where it owns seven commercial buildings through Starhill Global REITs.

With the acquisition of Niseko Village, YTL would have invested ¥14 billion (RM478.4 million) in Japan. Yeoh added that now was a good time to enter Japan given the weakening yen.

“Japan is having problems in the economy and they are looking for investors. It (weakening yen) will help tourists to go to Japan. If the yen reaches about 100 yen to the US dollar, it is very compelling to invest in Japan and to look at it long-term. We have a very keen eye on Japan,” he said.

Yeoh said the group had a strong cash flow and was in a position to invest.

“We are already in Indonesia, with our power plants and hotel in Bali. From Phuket, we are looking at expanding to Koh Samui. We look at the economies of scale for our management to be able to manage these territories. Where we are, we can continue to reinvest more,” he said.

On Niseko Village, Yeoh said another ¥1 billion would be invested for working capital.

“It is a big development with 1,000 acres of land. We anticipate to complete the first phase of 100 acres within the first five years,” he said.

Yeoh said he hoped to position the Niseko as the “Aspen of the East” in the long term. He said it was strategically located within a three-hour flight from Shanghai and Beijing where the future “super-rich” would be.

Niseko Village sits on 617 hectares of land comprising 462ha freehold land which sites the 506-room Hilton Niseko Village, 200-room Green Leaf Hotel and two 18-hole golf courses, and 155ha of leased ski mountain land on which are situated seven ski lifts and 15 ski trails, at the base of Mt Niseko An’nupuri.

“Our vision for Niseko Village is to realise the resort’s untapped potential by creating a unique, sophisticated village atmosphere offering private houses and ski-in ski-out estates, and featuring all the hallmarks of the YTL brand,” he said.

This article appeared in The Edge Financial Daily, April 16, 2010.