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Thursday, October 14, 2010

Overseas Reality goes for Rs. 4.2 b Rights Issue with confidence

By Uditha Jayasinghe

Sri Lanka's largest real estate investor Shing Kwan Group that holds controlling stakes in the World Trade Centre and Havelock City apartment complex is bullish of a post-war real estate boom in Sri Lanka and is launching a Rights Issue to gear up to tap potential.

Long term investors have fresh options come 18 October with the latest Rights Issue (RI) for Rs. 4.2 billion issued by Overseas Reality (Ceylon).

The RI will issue 281 shares, bringing the value of the total issued shares to Rs.562 million. Each share is valued at Rs.15. A part of the RI will be used to fund working capital needs of the second phase which will be ready for selling by the end of this year.

Aiming to ride high on a post-war real estate boom the company, which is the only listed Property Company in Sri Lanka, with 82% ownership from the Shing Kwan Group is banking on brighter prospects and increased revenue from the World Trade Centre (WTC) to spur growth. Overseas Reality Director Ong En Ping told the audience at the RI launch that the company was looking to tie up with long term investors who are dedicated to realisation of the complete Havelock City project.

Comprising eight towers the first phase of the project was completed at lacklustre pace, which the company attributes to macro economic factors of instability in the war environment that is beyond their control.

The first phase has completed construction and 60% has been sold to date. The company is confident that they can complete sales by the end of next year and are pre-selling the second phase to collect funds.

"If things go well then we expect the entire project to be complete in another three years. Nonetheless we must accept that it will be done sequentially with the second phase beginning next year and the 225 apartments will hopefully be completed in two years," Ping noted adding that in the best case scenario phase III and IV will also become reality next year.

Their money spinner is expected to be the WTC, which has seen increased demand since the end of the war and currently enjoys a 70% occupancy rate. Since the beginning of this year WTC has brought in Rs.2.7 billion with Rs.214 million in profits and estimates are to increase this to 75% by the end of this year. Ping expressed confidence in the numbers reaching 90% by the end of 2011. "Full year operation profits are expected to be in excess of Rs.500 million; so we are very bullish on the prospects for commercial real estate."

source - www.dailymirror.lk