The Edge, 7 April 2011 - Dijaya expands into hospitality

The Edge, 7 April 2011

Developer ties up with Us' Starwood to build W Hotel in Kuala Lumpur

KUALA LUMPUR: Property developer Dijaya Corp Bhd is making its mark in the hospitality business by venturing with US-based Starwood Hotels & Resorts

Dijaya said yesterday that the 150-room hotel is scheduled to open in 2016 and will mark the entry of the W brand into Malaysia.

Independent non-executive chairman Datuk Rohana Mahmood said Dijaya was proud to collaborate with Starwood Hotels and Resorts Worldwide, a company with a long history of designing, building and managing world-class hotels and resorts.

"We have chosen a proven partner that is in line with our focus to grow with a dynamic prresence," she said.

Rohana said Dijaya's venture into the hospitalitty industry underlined the company's commitment to continued growth.

"Dijaya is seeking differentiation with regard to sustainability practices. With W, Kuala Lumpur, Dijaya will work towards a Green Building Index (GBI) rating," she said.

The hotel will be located in Jalan Ampang, across from the Petronas Twin Towers and 500 metres from the Kuala Lumpur Convention Centre.

W Kuala Lumpur is designed by Skidmore, Owings & Merrill LLP from New York. Scheduled to open in 2016, W Kuala Lumpur will feature 150 rooms and suites with urban views.

An industry observer welcomes the tie-up, saying the W label is one of the top brands within the Starwood family along with the Luxury Collection and Westin labels, and is very popular in North America.

"It will provide a strong branding for Dijaya's entire development on the prime land," he said.

The land on which the W Kuala Lumpur will sit measures 55,929 sq ft and was formerly the site of the historic Bok House. It sits between Sunrise Bhd's Wisma Angkasa Raya and Wisma BSN.

Dijaya had acquired the land for RM123 million in late 2009, or about Rm2,200 psf from a Korea-linked vendor Mercury Property Management Sdn Bhd. The price was at a slight discount to the price of RM2,588 psf Sunrise paid in 2008 for Wisma Angkasa Raya next door,

although Sunrise's land has direct frontage to KLCC's Petronas Twin Towers.

Mercury Property Management had in turn acquired the land for about RM103 million in July 2008 from Chua Yong Man and Others acting as trustees for the Estate of Chua Cheng Bok.

Once the other components of the project are launched, analysts expect it to boost Dijaya's earnings and profile further. The company which is synonymous with the Tropicana Golf and Country Resort development and Tropicana City Mall, is venturing beyond its home base to other parts of the Klang Valley.

An analyst added that Dijaya has a pipeline of new projects that will support growth in the coming years. Apart from the ongoing Tropicana Grande and other planned launches in the Tropicana area, he said the land the company bought over in the last few years in Kajang and Cheras should yiled good margins as it was acquired at low prices.

"the land, which totals about 66 acres in Kajang and 28 acres in Cheras, is strategically located within or near established areas. It was acquired at around RM16 to RM17 psf in the late 2007 and early 2008 as it was then agricultural land, which was to be converted into residential status," he said, adding it was a good strategy to expand Dijaya's landbank and market reach at low cost.

Dijaya's shares added five sen to close at RM1.16 on thin volume of 93,700 shares yesterday. The stock is trading well below its net assets per share of RM1.98 as at end-2010, which an analyst said makes it deeply undervalued as the company's prime land in Tropicana

Golf an Country Resort and Damansara Indah Resort homes is carried in its books at very low prices.

According to Dijaya's 2009 annual report, it has 103.8ha (259.56 acres) in Tropicana Golf and Country Resort, including a golf course at RM118.27 million or RM10.46 psf.

In the adjoining Tropicana Indah Resort Homes, it has 50.78 acres with a book value of RM11.24 million or just RM5.08 psf. The company also has a strong, cash-rich balance sheet, with net cash equivalents of RM 76.8 million as at Dec 31, 2010.

An artist's impression of the W Hotel in Kuala Lumpur which is scheduled to open in 2016.