Perennial Real Estate Holdings in joint venture to develop Penang waterfront site

SINGAPORE - Perennial Real Estate Holdings (PREH) has partnered Malaysian developer IJM Land to jointly develop an integrated mixed-use development in Penang.

The site in question is about 1.4 million sq ft of waterfront freehold land in Gelugor town on the eastern coastline of Penang Island, about 1km from Penang Bridge and 5km from George Town, the capital of Penang.

The project will comprise a shopping mall and thematic shops, residential towers, an office tower, two hotels and a convention centre with a total gross floor area of about 4.1 million sq ft, excluding carpark areas.

This will all take place along a waterfront spanning over 750 metres.

It will be complemented by IJM Land's first phase of THE LIGHT Waterfront Penang, an adjacent residential project of 1,177 condo units and luxury villas, which have been largely completed and almost fully sold, PREH said on Tuesday in a Singapore Exchange filing after markets closed.

The acquisition cost of the site from an IJM subsidiary is about RM402.8 million (S$149.2 million). Based on PREH's 50 per cent effective interest in the joint venture, it expects to fork out RM201.4 million of the sum.

The total development of the site is expected to be over RM3 billion. The joint venture company intends to fund the development through a mix of internal funds, bank loans and sales proceeds from the sale of residential and office components, it said.

PREH will fund the transaction by internal funds and external borrowing, it added.

The development will be managed by the joint venture partners and will be completed in phases from 2018.

The joint venture marks PREH's first foray into a new market, Mr Pua Seck Guan, chief executive officer of PREH said on Tuesday. "(It) will augment our existing business in core markets of China and Singapore and diversify our investment portfolio to generate sustainable returns over the longer term."

The development of the integrated commercial hub will "add another feather to the cap for IJM Land, as THE LIGHT Waterfront Penang will join the league of international waterfront icons," added Mr Soam Heng Choon, chief executive officer and managing director of IJM Corporation, the parent company of IJM Land.

PREH shares closed up six cents to $1.135 today.