JKH finally unwraps mega $ 650 m+ Waterfront move

Thursday, 11 July 2013 02:51 -     - {{hitsCtrl.values.hits}}

  • BOI deal on biggest-ever private sector venture to be signed today
  • Luxury multi-use integrated resort is at advanced stage for Strategic Development Act project status
Ending months-long silence, premier blue chip John Keells Holdings (JKH) yesterday made public about initial details on what would be Sri Lanka’s biggest-ever private sector investment – the $ 650 million plus Waterfront project. In a filing to the Colombo Stock Exchange (CSE) yesterday after the market had closed, JKH said it has proposed to the Government a project valued in excess of $ 650 million involving the developing, owning, managing, operating, selling, leasing and renting a luxury multi/mixed use integrated resort in the land owned and occupied by its subsidiaries Ceylon Cold Stores Plc, John Keells Plc, John Keells Properties Ltd. and Waterfront Ltd. in Colombo 2. The Daily FT on 25 June last year exclusively reported about the project after JKH acquired more land at Glennie Street. Yesterday’s brief announcement also said JKH, the two listed subsidiaries and JK Properties will be majority shareholders in the project company Waterfront Ltd. JKH also said that the project company would enter into an agreement with the Board of Investment (BOI) to facilitate the requisite approvals which are at an advanced stage including the approval as a project under the Strategic Development Act. The Daily FT learns the agreement with the BOI will be signed today. JKH Board of Directors has approved the project in principle subject to shareholder approval including approval as a major transaction. Last year JKH acquired 60 perches of land adjoining its head office in Glennie Street in Colombo 2 at a cost of Rs. 5 million per perch in a deal worth Rs. 300 million. JKH holds the estimated 10 acre land base mostly free-hold and a few on lease within the Glennie Street Head office complex. This block of 60 perches is behind Cold Stores premises and next to cleared area which houses a temporary visitor car park. At the time of the purchase, analysts viewed it as a precursor to plans by JKH to launch the integrated resort. Though yesterday’s filing didn’t give details, there has been speculation that the integrated resort will include a new 900-room hotel, apartment complex, office complex, convention centre, shopping mall etc. Several stock brokers last year alluded to likely facilities in the project though none have been confirmed by JKH. For example CT Smith said JKH has plans to enter into a mixed development project comprising two star-class hotels, two apartment complexes and a shopping mall within Colombo, on unutilised group land. TKS Securities said the proposed mega mixed development project of 1,000 hotel rooms, a shopping complex, a commercial complex and a serviced apartment complex in the current head office premises. Capital Alliance noted plans for an integrated city/project. According to Research, which put out a report on JKH under a new initiative with the CSE, JKH’s large land bank – which accounts for 6% of Amba’s estimate of JKH’s valuation – may allow for some additional upside, depending on its end use. JKH, according to Amba, owns one of the largest private land banks in Sri Lanka, including 121 acres of real estate within and out of Colombo. Amba estimates the current value of JKH’s land bank at Rs. 11.6 billion with the Slave Island Complex share being Rs. 7.7 billion. “Property is continuously striving towards identifying and executing projects, which yield superior returns and also taking necessary steps towards realising a ‘first mover’ advantage, a critical component in acquiring lands with strategic development potential,” JKH said in its 2011/12 Annual Report. JKH’s Property Development and Real Estate sectors concentrate primarily on the development and sale of residential apartments such as the on-going ‘OnThree20’ and ‘7th Sense’ projects. This industry group includes Asian Hotels and Properties PLC – the developers of ‘The Crescat Residencies,’ ‘The Monarch,’ the recently completed 35 storey luxury apartment complex, ‘The Emperor,’ the up-market shopping mall ‘The Crescat Boulevard’ and the ‘K-Zone’ malls in Moratuwa and Ja-Ela.