Parent firm gives IOI Properties the edge

Tuesday, June 23, 2009

Artist’s impression of Pinnacle Collection. Datuk Lee Yeow Chor (inset) says the company is closely monitoring the Singapore property market to ensure the timely launch of the projects

IOI Properties Bhd will be leveraging on the financial strength of its parent, IOI Corp Bhd, to build a greater presence in the Klang Valley and Singapore property markets.

Since being taken private in April, the 95.33% subsidiary of IOI Corp has greater liberty to plan and decide on the direction and projects it wants to undertake.

IOI Corp group executive director Datuk Lee Yeow Chor said although the level of activities would not change much from what the company had done previously, it was in a better position to leverage on the group’s financial strength to facilitate funding requirements for land acquisitions and move projects ahead.

According to Lee, property is all about holding power and having the financial strength to hold out and mitigate against the prevailing challenging market conditions, including slow sales; are important for property companies.

Despite the severe market crunch in Singapore since February last year, IOI Properties proceeded with the construction of its Seascape Collection residences on Sentosa Cove. The construction of the project has reached 40% to-date.

The 1.44-ha Seascape project is a 50:50 joint venture between IOI Properties and its Singapore partner, Ho Bee Investment Ltd.

It comprises two eight-storey condominium blocks of 151 units of various sizes, tentatively priced from S$2,500 to S$2,800 per sq ft.

IOI’s second project in Singapore, the Pinnacle Collection – which is 65%-owned by IOI Properties and 35% by Ho Bee – will be undertaken by Pinnacle (Sentosa) Pte Ltd. The 2.12-ha site was tendered for S$1.1bil.

The 99-year leasehold land is the final piece of condominium land to be launched by Sentosa Cove and has a maximum permissible gross plot ratio of 2.6.

The site will have seven 18-storey blocks and one 20-storey block of luxurious condominiums. It is one of the two condominium parcels flanking the entrance of the marina leading into Sentosa Cove.

Lee said the launch of The Pinnacle would depend on the take-up for the Seascape residences.

IOI has plans for a third project in the city state, comprising medium to medium high-end residences on a 1.44-ha site near Novena Square and Orchard Road.

He said the company was closely monitoring the Singapore property market to ensure the timely launch of the projects to optimise their value.

“The completion of the two integrated resorts in Singapore later this year will be the catalyst for further economic growth and market upturn in the city state,” Lee said.

In the last two months, the market for medium to mid-high end property in Singapore had shown encouraging signs of an upturn, he added.

Things are also looking up for the Klang Valley property market and demand is expected to recover by year-end.

For the financial year ending June 30, 2010 (FY10), project launches worth RM580mil have been lined up in the Klang Valley, including in Bandar Puteri, Bandar Puchong Jaya and IOI Resort.

A new greenfield development, Sierra Puteri, a mixed housing development on 194ha in the Seri Kembangan-Cyberjaya area, is also in the pipeline for launch in the first quarter of next year. There will also be a 22-ha commercial precinct in the RM2bil development. Lee expects the company’s property sales to bounce back from RM630mil recorded last year to RM650mil next year. This year, it expects to turn in sales of RM610mil.

“We will also be placing more focus on investment properties. For FY10, we expect more than 15% of the company’s earnings to come from property investment and the balance from property development,” he said.

Last year, income from property investment contributed 10% to the bottomline of IOI Properties and about 22% to 25% of IOI Corp’s earnings.

General manager for group operations Lee Yoke Har said besides leveraging on the good location of the company’s land bank and strong branding, it also emphasised on good community relations and programmes to promote wholesome living and safe communities in all its townships.

It set up a dedicated community website, Myioi.com, in 2000 that has become a popular communication tool for residents of its projects.

Other initiatives include the IOI Privilege card, which is a discount card offered to residents when they patronise any of the participating outlets in the townships.

“The next project to be rolled out will be free WiFi within our townships and ‘intercom connection’ for residents via the 015 IP phone,” she added.

By The Star (by Angie NG) (Posted on 22 June 2009)
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Malaysia IOI says worst is over for palm oil planters

July 2, 2009.

IOI Corp, Malaysia’s No 2 planter, said on Thursday that the worst was over for the plantation sector as palm oil prices have recovered from last year’s slump although M&A activity would be muted.

Earnings of Malaysian palm oil producers plunged in the first quarter as crude palm oil prices more than halved from a year ago.

IOI, valued at $8.37 billion, saw net profit nearly wiped out during January-March due to weak crude palm oil prices and large foreign translation losses on its U.S. dollar borrowings.

Sime Darby , Malaysia’s top planter, reported a 85 percent drop in net profit while third-ranked Kuala Lumpur Kepong saw net profit down 52 percent in the same period. “It’s quite obvious it will be better. The industry including ourselves expects to see much better fourth quarter (April-June) operating results,” IOI Executive Director Lee Yeow Chor told Reuters at the company’s headquarters in the administrative capital of Putrajaya.

Malaysia is the world’s second-largest palm oil producer after Indonesia.

Crude palm oil prices hit a record 4,486 ringgit a tonne in March 2008 before collapsing at the height of the global financial meltdown and triggering speculation that distressed plantation firms starting out would sell.

But Lee said the opportunities for merger and acquisition in the sector are hard to find now as the palm oil price recovery helped smaller firms hold out for better deals.

“Because the sharp price drop has not really been for a long time, the pressures on them (smaller planters), in terms of cashflow or repayment of bank borrowings is not so great.”

BRIGTHER OUTLOOK

IOI, which owns oil palm estates in Malaysia and Indonesia, saw net profit for the third-quarter to March plunge 94 percent to 37.36 million ringgit from a year ago on an unrealised forex translation loss of 232.4 million ringgit. [ID:nKLR496786]

The sharp drop in third-quarter earnings was due mainly to “a lot of translation adjustments” on its U.S. dollar debt, said Lee, adding that IOI expects the forex losses to reverse in the upcoming quarterly results.

“For fourth quarter with the weakening of the U.S. dollar, from end-March of around 3.63 ringgit, we expect to have some gains in currency translation for U.S. dollar borrowings,” said Lee.

“We borrow U.S. dollars, because it corresponds with our palm oil revenue, so that is a natural hedge between our borrowings and receipt of revenue,” he added.

BANKING ON ASIAN DEMAND

Palm oil prices have now recovered more than 60 percent from a low of 1,331 ringgit ($378.8) per tonne in October on surging Asian demand as well as tight Malaysian palm oil stock levels in the first few months of 2009.

“We have always thought that the low price level in the first quarter of this year was not a sustainable level to begin with. We have always expected the price to move up,” said Lee.

“The major consuming countries, China and India, their economies have not been that badly affected by the prevailing global downturn,” he said.

Lee said Malaysian palm oil production should pick up in the second half of the year due to the seasonal uptick in output as yield stress fades. He pegged June palm oil stocks at 1.5 million tonnes, an increase of 9.5 percent from a month earlier.

Source here

Backers Don't Buy 'Friendly' Palm Oil

July 15, 2009

KUALA LUMPUR, Malaysia -- European consumer groups and nongovernmental organizations have said they want environmentally friendly palm oil. Malaysian producers of palm oil that have made the switch are discovering that it is still a hard sell.

The price premium for palm oil certified as produced through sustainable plantation practices has been shrinking since the first eco-friendly palm oil was shipped to European markets last November, and producers say it may need to disappear if they are to regain business in the key European Union market.

Producers say the difficulty in selling higher-priced sustainable palm oils highlights the double standards of those who criticize the industry but buy the cheaper, uncertified oil that they say is harming the environment.

"We [plantation firms] have complied with the strictest criteria on sustainability. The multinational companies, which also are end-users of palm oil, should not preach wine and drink water," said Carl Bek-Nielsen, vice chairman of United Plantations Bhd., the first Malaysian company certified as a sustainable producer.

Palm oil is a vegetable oil used in products ranging from margarine and cosmetics to feedstock for biofuel. It competes with soybean oil. Premiums for sustainable palm oil have shrunk to between $10 and $15 a ton, from $45 to $50 a ton before the global financial crisis took a toll on European economies late last year and demand waned, said Roy Lim, group plantations director of Kuala Lumpur Kepong Bhd., Malaysia's third-largest listed palm-oil producer by stock-market value. Noncertified palm oil currently sells for about $565 a ton, he said, already down more than 50% from last year's peak.

Consumer-goods companies like Unilever PLC, Nestlé SA and Kraft Foods Inc. repeatedly have said they would seek to buy palm oil produced with minimal harm to the environment. All support the goals and efforts of the Roundtable for Sustainable Palm Oil, formed by World Wildlife Fund and Unilever, which is adopting stringent and sustainable practices for palm-oil cultivation.

Although the combined annual production capacity of RSPO-certified producers in Malaysia, Indonesia and Papua New Guinea exceeded 1.57 million tons of certified palm oil and palm-kernel oil at the end of May, only 15,000 tons of certified oil has been sold since certification started late last year.

"At the moment, demand for certified palm oil is only 1% of the [produced] volume, so this has been disappointing for the growers and we feel the food companies should keep their end of the promise," said Lee Yeow Chor, executive director of Malaysia's second-largest palm oil producer, IOI Corp. Bhd.

IOI, KLK and United Plantations say they are committed to producing sustainable palm oil, even if the price premium disappears.

Nestlé remains committed to sustainable sourcing and only buys products derived from crude palm oil from reputable manufacturers, spokeswoman Nina Backes said.

Kraft spokesman Richard D. Buino said that while the company supports the RSPO's efforts, "it is clear more work is needed to consolidate standards, enforce principles, verify traceability along the supply chain and ensure competitive pricing to bring certified palm oil to market. We're monitoring the RSPO process and actively engaging our suppliers to monitor their certification efforts to find viable options for sourcing sustainable palm oil."

Neither Nestlé nor Kraft directly addressed purchases of Malaysia's certified palm oil.

Officials from Unilever, which purchases between 1.3 million and 1.5 million tons of palm oil annually, couldn't be reached for comments. The Anglo-Dutch consumer-goods giant announced in 2008 that it was committed to completely switch to certified palm oil by 2015.

Write to Shie-Lynn Lim at shie-lynn.lim@dowjones.com

Source here

#3 Lee Shin Cheng

Net Worth $3.2 billion
Age 70
Marital Status Married, 6 children
Source palm oil

Former plantation field supervisor heads ioi Group, one of world's leading operators of palm oil plantations, refineries. Took its IOI Properties private in April. IOI's stock has doubled since November but still down a third since last year amid falling commodity prices.

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IOI's Strategic Shuffling Of Results

IOI Corp Bhd posted a 93.8% drop in net profit to RM37.36mil in the third quarter of its financial year ending June 30, compared with RM601.64mil in the corresponding period last year. The decline was mainly due to unrealised forex losses and lower contribution from its manufacturing and property business.

The company’s revenue dropped 12.2% to RM3.096bil in the third quarter compared with RM3.525bil a year earlier. Earnings per share was 0.63 sen versus 9.89 sen previously. The company declared a dividend of three sen for the quarter. IOI Corp said overall, the group’s results for the current financial year were expected to be lower than the previous year’s record but still satisfactory in the light of current conditions.

In a filing with Bursa Malaysia yesterday, the company said its plantation segment reported a 6% increase in operating profit to RM1.38bil for the nine months of the current financial year, compared with RM1.3bil in the same period a year ago. “The better performance is due mainly to higher CPO prices realised from the forward sales entered into during the second half of financial year 2008,” the company said. Its resource-based manufacturing operating profit was significantly lower at RM169.1mil for the nine months of the current financial year compared with RM457.4mil in the same period last year.

“The lower profit is attributable mainly to realised foreign exchange losses and customer defaults on high priced contracts incurred during the first half of the financial year and lower sales volume due to the unfavourable global economic conditions,” the company said. The property segment’s operating profit of RM200.5mil for the nine months of the current financial year was 35% lower than in the same period last year. It added that the decrease was mainly due to the soft property market conditions and lower margins.

Overview - The principal activities of IOICORP consist of investment holding and the cultivation of oil palm and processing of palm oil. The principal activities of the subsidiaries are cultivation of oil palm, processing of palm oil, trading in commodities, property development, property investment and investment holding.

Oil palm plantation is one of IOICORP's core businesses as it contributes over 40% to the company's profit. IOICORP manages about 100,000 ha of oil palm plantation with approximately 65% of the plantation in Sabah and the rest in the peninsular.

The company also owns ten crude palm oil mills to produce crude palm oil and palm kennel. Through its 65% owned subsidiary, IOI Properties Berhad, IOICORP is involved in property development and investment, which is another major profit contributor to the company. The company has undertaken several mixed development township projects, which include Bandar Puchong Jaya and Bandar Puteri Puchong in the Klang Valley and Bandar Putra Senai in Johor Bahru. In addition, IOICORP owns 1.7mn sq ft of lettable retail and office space. Meanwhile, the company is also involved in the manufacture and trading of fatty acids, glycerine, soap noodles and metallic stearates through its 59% owned subsidiary Palmco Holdings Berhad.

Ratings Downgrade - Moody's Investors Service has changed IOI Corporation Bhd's outlook to negative from stable for its Baa1 issuer rating. At the same time, the outlook for the Baa1 senior unsecured bonds and loans issued by IOI Ventures (L) Bhd, which are guaranteed by IOI, have been revised to negative from stable. "The rating action has been driven by IOI's recently reported weaker profitability which is mainly the result of higher than expected foreign exchange losses and customer defaults amid declining crude palm oil prices," said a Moody's Vice President.

"These losses have prompted Moody's concerns over weakness in the company's internal management system especially in effectively controlling its foreign exchange exposure. In addition, the outlook for IOI's two major business lines --- resource based manufacturing and real estate development -- are expected to remain challenging over the next 12 months which may continue to pressure its profitability," he said.

IOI's current ratings are supported by the favourable long-term outlook for palm oil demand; position as a global top-tier palm oil producer and efficient operations; good access to capital and bank markets as well as the management's good track record in managing the palm oil business throughout the business cycle. IOI's strong liquidity is also supportive of its current rating.

Downgrade pressure on IOI could emerge if pressure on its downstream operation margin continues resulting in protracted weakness in profitability, such that earnings before interest, tax, depreciation and amortisation (EBITDA) margin remains below 19 percent; and weaker palm oil production from some of its aging plantations results in a material reduction in the profitability of its plantation segment, Moody's said.

The outlook could return to stable if IOI can demonstrate effective internal measures to minimize its foreign exchange risks and bad debt losses, as well as generate positive free cash flow to reduce its debt leverage such that its Debt/EBITDA is not exceeding 2.5-2.75 times. The last rating action with regard to IOI was taken on Dec 2, 2008, when the company's issuer and debt ratings were downgraded from A3 to Baa1.

Verdict: No big deal. The stock is still some 40% off its 12 month high. Its a good sign that they are whacking all the losses onto this quarter. This will get rid of all the bad news in one shot. Expect a good showing in the coming quarters. Operations wise the company has already sold forward 80% of its FY09 CPO production at an average price of RM2,700 (till June 2009). Now they are selling FY2010 production but the company seems to think that there is a good chance that they can get RM3,000 in 2H of 2009. Operating cost is still just RM1,100 and may actually average closer to RM1,000 for the rest of the year. This represents a good pick up level.

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Raw deal for IOI Prop’s minority shareholders

Analysts believe they deserve better offer

PETALING JAYA: There is little doubt about IOI Corp Bhd’s Tan Sri Lee Shin Cheng’s ability to seize an opportunity when he sees it.

The plantation group’s executive chairman and CEO’s move to buy out its property arm may not surprise many, but some analysts feel IOI Properties Bhd’s minority shareholders deserve a better deal.

“We advise investors to sell the stock (IOI Prop) into strength,’’ CIMB Research said in a note to clients yesterday. The firm was “not keen” to swap IOI Prop’s shares for IOI Corp, but noted that the “alternative may be even less palatable.’’

IOI Corp late Wednesday offered to buy the remaining 199.7 million shares from IOI Prop minority shareholders at 0.6 share in IOI Corp at market price plus 33 sen cash per IOI Prop share.

This means that the offer price will fluctuate with IOI Corp’s share price movement. Shares in IOI Corp plunged 24 sen yesterday to RM3.68, while IOI Prop shot up 27 sen to RM2.49.

CIMB has a target price of RM3.20 for IOI Corp.

It opined that IOI Corp was “overvalued” at Wednesday’s closing price of RM3.92. It also argued that based on CIMB’s target price, the offer would equal RM1.92 worth of IOI Corp’s share plus 33 sen cash.

This works out to RM2.25 per IOI Prop share.

Maybank Investment Bank analyst Ong Chee Ting believed IOI Corp risked “low take-up rate” for its offer. Ong has a target price of RM2.90 for IOI Corp.

“Although it is unlikely to go down well with IOI Prop’s minority shareholders, the delisting would encouraged them to sell’’ as they won’t risk holding shares in an unlisted company, he said.

The deal breaker, however, are the government-linked funds Valuecap, Permodalan Nasional Bhd and the Employees Provident Fund, which collectively hold an estimated 10% stake in IOI Prop.

“If they act in concert and reject the offer, IOI Corp won’t be able to get the 90% acceptance,’’ said Tan Ting Min, an analyst at Credit Suisse Securities Malaysia wrote in a note yesterday.

He believed, however, that the market would see the privitisation as “marginally positive” for IOI Corp as it was value enhancing.

Credit Suisse upped its target price for IOI Corp from RM3.27 to RM3.31 yesterday.

IOI Corp needs to increase its stake in IOI Prop to above 90% to take the company private. Even if it failed to get the required number, IOI Corp said on Wednesday, it intended to take the requisite steps to delist IOI Prop from Bursa Malaysia.

“We believe the offer is fair, if not favourable, bearing in mind that IOI Prop may need to provide for impairment charges for its Sentosa Cove projects (in Singapore).’’ HwangDBS Vickers Research said in a report yesterday.

Based on Bloomberg’s consensus estimates, the IOI Corp offer was 36% below IOI Prop’s book value of RM3.63 and valued the company 8.9 times its forecast earnings for the year ending June 30, 2009.

Historical data showed that IOI Prop shares had been consistently traded above its book value since early 2000 until the middle of last year when equity prices worldwide collapsed.

“We lament the privatisation or delisting of IOI Prop as the company is one of the largest and most profitable developers in Malaysia and has been a benchmark and role model to many,’’ CIMB said.

The firm said IOI Prop’s revised net asset value stood at RM6.15 per share, or RM5.2bil. At yesterday’s close, its market value was RM2.07bil.

If the deal goes through, IOI Corp will fork out about RM64mil cash and issue some 116.9 million new shares at market price for the additional 24% stake in IOI Prop.

The deal, pending approvals from shareholders of both companies, is targeted for completion by end-June.

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Change In Profile But Not Values

Lee Yoke Har's resemblance to older brother Datuk Lee Yeow Chor is uncanny. Soft-spoken and affable, her quiet strength and firmness are very similar to her sibling's when it comes to dealing with the issues of the day.

The children of IOI Corp Bhd's executive chairman and CEO Tan Sri Lee Shin Cheng, Yeow Chor is group executive director of the IOI group of companies and executive director of IOI Properties Bhd, while Yoke Har is the general manager of its legal and general operations department — a position that has enabled her to stay out of the public eye.

Two months ago, however, Yoke Har, who has been with the group for 13 years, donned another hat. She took over the marketing operations of the group's property division, which is a hot seat indeed, given the current tough property market conditions.

"I am not a corporate person," Yoke Har stresses to City & Country in what is her maiden media interview. "Please focus on the exciting projects and plans we have to share with you…

" She reports to IOI Properties' executive director Datuk David Tan, a trusted chieftain of the Lees and who has been with the group for ages. Then there are her brother and father.

With Yoke Har spearheading the marketing portfolio for the property division, Tan is free to focus on other equally demanding chores, with project management being a priority.

"He has a lot on his plate and he needs to juggle his time a lot," explains Yoke Har, whose newly put-together team oversees the marketing of key Klang Valley developments, comprising those in Puchong and Klang and IOI Resort in Putrajaya.

The changes being effected are aimed at coordinating and expediting decisions so that the developer can move at a fast clip. Raising the profile of IOI Properties — a brand that is synonymous with dependability and being conservative and low profile — is also in the works.

Says Yoke Har: "We want people to know us... It is high time there was coordinated effort to do this. Our style has always been to do things quietly; do it well and people will know. (But it has been) too quiet. This has been going on for years. But our values have not changed…"

For IOI Properties, indisputably a top Malaysian property developer that has been active since 1982, the changes are perhaps overdue, seeing how the demands of property investors have surged in recent times.

No, the changes are not a knee-jerk response to the troubles ailing even the most established players across the globe, says Yoke Har. In fact, she sees the property market bottoming out in nine months. "There is liquidity; people are holding back for fire sales but this has not happened." With the property market getting more crowded and the investment climate more jittery, even the unobtrusive IOI Properties is reviewing its strategies, going forward. This is necessary because the developer plans to launch some RM500 million worth of properties in the Klang Valley this year. The offerings will come from Bandar Puchong Jaya, the newer Bandar Puteri Puchong and Bandar Puteri Klang. In Bandar Puchong Jaya, which sprawls over 1,000 acres, more upmarket homes, like the 2½-storey superlink Vistaria Residences, have emerged in the residential component. The next six months will see the launch of sixty 2½-storey semi-detached homes and light industrial units here. Meanwhile, almost 80% of the 930-acre Bandar Puteri Puchong has been developed. It will unveil thirty-six 2 and 2½-storey bungalows and seventy-eight 3 and 4-storey shopoffices over the next half year. Over in Bandar Puteri Klang, new homes and shopoffices will be rolled out from end-February. In short, IOI Properties is not about to put a stop to new launches.

PUCHONG FINANCIAL COMMERCIAL CENTRE

So, exactly what is going to be different about the developer? For starters, it will embrace fresh and compelling development concepts and designs. Add to the concoction a loyalty programme designed to reach out to and please both buyers and occupants to secure repeat buying.

The new and bolder designs are evident in the upcoming Puchong Financial Commercial Centre (PFCC) taking shape diagonally across the Damansara-Puchong Highway (LDP) from the IOI Mall. Work on two of the five PFCC towers on an eight-acre freehold tract is slated to be completed this April. "These are not very high — 11 and 20 storeys. But you will not miss them as you drive along the LDP," says Mohd Ezuddin Sami'an, IOI Properties' marketing manager.

"They are iconic… they stand out from the other buildings in Puchong.

" Puchong has too many traditional shophouses and offices, says Yoke Har. She is confident a "happening" PFCC, with its contemporary design incorporating environmentally friendly features, will lift Puchong's image to even that of Bangsar.

Looks and design aside, the developer is counting on the proximity of Cyberjaya as drawing point. However, a building can only be audited as a Cyberjaya Centre upon its completion. "We are confident of getting the status," says Yoke Har, adding that the building designs have incorporated the necessary criteria.

While the original plan was to build all the five towers in four to five years, the timeline had to been tweaked to seven to eight years in the light of the current global credit turmoil. So, the developer is improving the designs of Towers 3, 4 and 5, based on the experience and feedback from the nearing completion of Towers 1 and 2.

Combined, the five towers will offer a net lettable area of 1.15 million sq ft. The 12-storey Tower 1 (built at RM35 million) will have 125,000 sq ft, and the 20-storey Tower 2 (built at RM70 million) 253,000 sq ft. In all, there will be 1,920 parking bays in the basement, all of them interlinked.

The developer has tagged an average RM600 psf for Tower 1, while it intends to keep the LDP-fronting Tower 2 for investment. Office space in Tower 2 is being leased out at an average of RM4 psf, while the retail space is going for RM6.50 psf or so.

It is worth noting that weak market sentiment notwithstanding, two local parties have shown interest in the buildings, with talks already in the second stage. One party is looking at leasing Tower 1 en bloc while the other is exploring a buy-and-lease-back option for Tower 2.

"We are flexible; we cannot be leaving the buildings empty for six to nine months, so if the price is good, we don't mind selling..." says Yoke Har, without disclosing the numbers now on the table. One of the parties is looking at relocating its operations, while the other is expanding and relocating its business.

IOI BOULEVARD

About a kilometre down the thoroughfare from PFCC, workers are putting the finishing touches to IOI Boulevard, a hybrid office-retail/lifestyle development modelled after London's Covent Garden. "Business sophistication" and "stylish entertainment" are some of the developer's taglines for this development that comprises six blocks of office-cum-retail space. Enclosed within is the Palette, which comprises thirty-six 2-storey retail outlets that look into a 108ft by 240ft courtyard. "This will be a platform to promote arts. Budding artists, musicians and photographers, for example, can showcase their work here free of charge. We will also build a stage in the courtyard, which will be shielded by a tinted, high glass ceiling," says Yoke Har, adding that they have factored into the design the need for air to circulate.

The developer has tied up with LimKokWing University, whose students will paint two murals in the Palette. IOI Properties is also working with the Puchong Orchestra to explore ways to promote the latter.

Of the six office-retail blocks, all equipped with individual lifts, the developer plans to keep two, both fronting the LDP for recurrent income. Since its launch last June, 60% or 262,000 sq ft of the total saleable area of just under 446,000 sq ft have been sold at an average of RM450 psf, with the ground floor retail space going for RM980 psf. Space at the Palette is leased at an average of RM6 psf. In all, IOI Boulevard offers a total net lettable area of about 730,000 sq ft, with another 133,000 sq ft in retail space at the Palette.

IOI Boulevard is targeted for completion in April and is likely to be opened in May. It will be interesting to see how much IOI Properties can do to bring arts to live in Puchong.

SIERRA PUTERI

Outside the Puchong boundary closer to Sepang, earthworks for a 485-acre mixed development township with a gross development value of RM1.6 billion called Sierra Puteri, have been completed. Construction will start as soon as the authorities approve the building plans. The gated development on undulating grounds will boast designs in departure from IOI Properties' norm. However, the layout will still be functional, says Yoke Har.

The lower-density units will be designed after precincts, each of which with its own park. There will be lots of buffer parks, she continues. The maiden launch, featuring the traditional 2-storey 2ft by 75 ft terraced homes, has been slated for the second quarter this year at a pricing she declines to reveal immediately.She would however only say that it will be priced at a premium to the conventional link homes in the close by Equine Park.

IOI Properties' move to go slightly up markat at Sierra Puteri makes sense given the abundant traditional offerings coming up in Equine Park. IOI Properties' target market: Puchong and Kajang upgraders and those staying in Serdang of course.

IOI FAMILY

Fostering loyalty in customers is an integral part of marketing and it is no different for developers. Come late March or April, IOI Properties will unveil its loyalty programme, which will see some 85,000 IOI Privilege Cards distributed, in the developer's two townships of Bandar Puchong Jaya and Bandar Puteri Puchong.

The cards will be given out free to those in the catchment area to shop, dine and enjoy other services for less in participating shops in Puchong, where the developer has built some 1,700 commercial units.

The developer will also take on the role of promoting the participating outlets, which are expected to offer 10% to 15% discounts or privileges in kind for a year. So far, 60 outlets have signed up. Potential candidates are tenants in IOI Mall — 199 in the old wing and another 100 in the new extension, which at press time was awaiting its certificate of fitness. The extension expands IOI Mall's 650,000 sq ft of net lettable space to about a million sq ft.

Yoke Har is particularly excited about the loyalty programme and it is easy to see why. A thriving township can only equal an appreciation in capital values and yields. And happy investors could potentially translate to repeat buyers. So clearly, IOI Properties is the ultimate beneficiary of the programme, if it works.

The community-based programme, Yoke Har points out, is an extension of the developer's community services which it undertakes seriously and with commitment. "We have been working a lot behind the scenes. Do you know we have someone dedicated to working with the residents' associations in Puchong? Besides our website, we also publish a bi-monthly residents' newsletter called Reach Out…"

"We want to make residents feel privileged. At the same time, we are supporting the business operators in our townships as part of our after-sales service. The programme makes sense — these are self-contained townships; everything one needs one can find there. The convenience, the variety, now the pricing with the discounts offered," she adds.

Yoke Har does not discount the possibility of the IOI Privilege Card being used by third parties, which augurs well for the participating businesses. Obviously, the plan to extend the coverage of the loyalty programme is on the cards.

IN THE PIPELINE

Traditionally a township developer, IOI Properties has withstood the test of time and thrived on the legacy of its developments. Recurrent income from property investments and property management fees now help make up the property division's 30% or so contribution to IOI Group's earnings. The ratio, Yoke Har says, is going to change with more emphasis on property, but she is unable to immediately provide the numbers.

IOI Properties is also active outside the Klang Valley, for example Singapore, although plans there have been deferred given the current downturn.

Another project to look out for is a mall planned for Putrajaya, the details of which the developer declines to divulge for now. All said, IOI Properties is geared to give competitors a run for their money.

Source: The Edge Daily