Complete Property Market Updates of Singapore

April 23, 2008

Japan Land unveils new focus

Filed under: General — Propertymarketupdates @ 4:43 am

It says its new IDC here will be ‘very meaningful’ to its shareholders

JAPAN Land yesterday unveiled its new business focus at an extraordinary general meeting (EGM) and shed light on the new Internet Data Centre (IDC) to be built in Singapore with its joint-venture partner CS Technology.

The whole project, slated to be one of the largest IDCs in South-east Asia, is estimated to cost $250 million to $300 million and Japan Land will take up at least a 20 per cent stake. Its construction is scheduled to start in September this year and to be completed by the fourth quarter of 2009.

It will be an eight-storey IDC with a server room area of 30,000 sq m, bigger than Japan Land’s first IDC in Tokyo, which is a 10-storey facility with a server room area of 20,000 sq m and a project cost of $170 million.

‘As a company listed on the Singapore Exchange, Japan Land’s doing an IDC project in Singapore will be very meaningful to our shareholders,’ independent director Jen Shek Voon told BT. This will propel Japan Land from a Japanese play into a regional player and signals its shift from customised housing to having a stronger footing in specialised real estate services.

The shift in focus was also prompted by shrinking margins at the group’s 68 per cent-owned customised housing subsidiary KHC Ltd amid higher competition and higher building costs, Mr Jen said. ‘It will be a leg-up to getting more higher-value contribution.’

So far, the Singapore IDC has received good responses from potential tenants, including telecommunication carriers and local blue chips, said Japan Land’s managing director Mitsutoshi Ono.

Yesterday’s EGM saw the ordinary resolution for the proposed stake sale in KHC to Kokusai Kogyo Holdings Co Ltd passed.

In February, Japan Land’s wholly owned subsidiary Japan Asia Land Ltd proposed to sell 48 per cent of its 68 per cent stake in KHC to Kokusai Kogyo Holdings for $45.6 million. The proceeds will be used to repay the outstanding bonds obtained to finance the acquisition of KHC. This allows Japan Land to improve its balance sheet while consolidating part of KHC’s earnings.

Japan Land is now looking to pare down its stake in its first Japan IDC from the current 70 per cent, said Japan Land chairman Tetsuo Yamashita. Upon completion of the construction in June, Japan Land will receive recurring earnings stream in the form of leasing fees. It will continue to evaluate opportunities for more IDC projects in Asia and in mixed commercial development, environment and infrastructure, Mr Ono said.

It is eyeing a third IDC, which could be in Singapore, Malaysia or Vietnam, he added. In Vietnam, the group is in the process of setting up an office to spearhead mixed commercial projects there with local partners, particularly in Ho Chi Minh City and Hanoi.

Source : Business Times – 4 Apr 2008


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