FinancialBuzz.com News Commentary
NEW YORK, June 2, 2023 /PRNewswire/ — In recent years, mixed-use real estate development has gained significant momentum worldwide, transforming the way we think about urban spaces. By integrating residential, commercial, and recreational elements into a single project, these developments offer a multitude of benefits for both developers and investors. In recent years, developers started to leverage cutting-edge solutions to streamline construction processes, enhance efficiency, and improve overall project management. The use of Building Information Modeling (BIM) allows for detailed planning and collaboration among various stakeholders, resulting in optimized designs and cost-effective construction methods. As for financing, mixed-use developments require significant investment due to their complex nature. However, the benefits they offer, including diversification and reduced risk, make them an attractive option for both developers and investors. VCI Global Limited (NASDAQ: VCIG), Kilroy Realty Corporation (NYSE: KRC), VICI Properties Inc. (NYSE: VICI), Armada Hoffler Properties, Inc. (NYSE: AHH), Essential Properties Realty Trust, Inc. (NYSE: EPRT)
A rapidly emerging region for mixed-use real estate development is Southeast Asia. Fast urbanization, increasing population density, and a growing middle class are driving the demand for integrated communities that offer convenience, sustainability, and a high quality of life. Moreover, Southeast Asian governments are recognizing the potential of mixed-use developments in addressing urban challenges. They are actively implementing policies and regulations that support the growth of these projects, attracting both domestic and international developers. By fostering an environment conducive to mixed-use development, Southeast Asian countries are positioning themselves as attractive investment destinations.
VCI Global Limited (NASDAQ: VCIG) announced yesterday breaking news that, “its wholly owned subsidiary, V Capital Real Estate Sdn Bhd (“V Capital Real Estate”) has been engaged as a consultant by Tinta Anggun Engineering Sdn Bhd (“Tinta Anggun”). This is with respect to the latter’s mixed development project known as Porto De Melaka, comprising residential and commercial units on a 9.91-acre commercial land in Melaka. The land, located next to the Melaka river mouth, fronting the sea, is about 600 metres from the famous Jonker Walk within the UNESCO Heritage Site of Melaka. Melaka, located approximately 2 hours driving distance from the capital of Malaysia, Kuala Lumpur, attracts an average of 18 million tourist arrivals to the UNESCO Heritage Site of Melaka. The site also boasts a waterfront resort living style and located next to the upcoming Melaka International Yacht Club.
V Capital Real Estate’s scope of consultancy works includes, amongst others, the successful development and execution of the development strategies for Tinta Anggun, advise on the development of capital structures of equity and debt and advise in financial analysis and project evaluation.
The entire Porto De Melaka project, with a RM600 million (approximately USD130 million) gross development value (“GDV”), comprises one 241-room hotel, 1 block of serviced suite of 140 studio units and another 4 blocks of serviced apartments comprising 342 units. V Capital Real Estate’s consultancy works will focus on 3 of the 4 serviced apartments and the 241-room hotel, with a cumulative GDV of RM400 million (approximately USD87 million). The consultancy fee in turn shall be 20% of any revenue generated from this portion of the development during the 5-year term of the consultancy.
Tinta Anggun believes there is currently significant demand for residential development in Melaka and expects occupancy rates to be high given the location of this development which is in the main population centre of the Melaka state. Demand would be well supported by the state of Melaka’s mean monthly household gross income of RM7,186 (approximately USD1,560) in 2020, based on data by Department of Statistics Malaysia, which is higher than Malaysia’s overall mean monthly household gross income of RM7,089 (approximately USD1,540).
‘I am humbled that our consultancy reputation is taking traction amongst the developers. Here, we would like to thank Tinta Anggun for giving us the opportunity to be part of this development which will undoubtedly play its part in sustaining the state’s economic growth, as economies continue to sail further away from the pandemic storm into a new post Covid era,’ said Dato’ Victor Hoo, Group Executive Chairman and Chief Executive Officer of VCI Global.”
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Kilroy Realty Corporation (NYSE: KRC) reported back in April financial results for its first quarter ended March 31, 2023. Some of the highlights indicate revenue growth of approximately 10.3% to $292.8 million for the quarter ended March 31, 2023, as compared to $265.5 million for the quarter ended March 31, 2022, as well as net income available to common stockholders of $0.48 per diluted share, an increase of approximately 6.7% as compared to $0.45 per diluted share for the quarter ended March 31, 2022. Kilroy Realty Corporation is a real estate investment trust. The Company engages in the ownership, acquisition, development, and operation of Class A office properties located in the States of California and Washington.
VICI Properties Inc. (NYSE: VICI) announced last month that it has entered into definitive agreements to acquire the real estate assets of Century Casino & Hotel Edmonton, Century Casino St. Albert and Century Mile Racetrack and Casino, each in Edmonton, Alberta and Century Downs Racetrack and Casino in Calgary, Alberta, (collectively the “Century Canadian Portfolio”) from Century Casinos, Inc. for an aggregate purchase price of C$221.7 million (US$164.7 million) in cash. Simultaneous with the closing of the transaction, the Century Canadian Portfolio will be added to the existing triple-net master lease agreement between VICI Properties and Century (the “Century Master Lease”) and annual rent will increase by C$17.3 million (US$12.8 million) representing an implied acquisition capitalization rate of 7.8%. The property-level rent coverage ratio under the Century Master Lease, adjusted for the pending acquisition of Rocky Gap Casino Resort and the Century Canadian Portfolio, is expected to be approximately 2.0x. The transaction is expected to be accretive to VICI immediately upon closing.
Armada Hoffler Properties, Inc. (NYSE: AHH) reported last month that it has completed the previously announced $215 million addition to its greater Atlanta portfolio by closing the purchase of a Class A commercial mixed use development at The Interlock in West Midtown. In addition to serving as the general contractor of The Interlock, the Company was actively involved in the development in collaboration with SJC Ventures as a public-private partnership with Georgia Tech. “We are thrilled to complete this transaction, which is immediately accretive, reinforcing our core focus on prime mixed-use real estate,” said Louis Haddad, President and CEO of Armada Hoffler. “From the inception of the project, Georgia Tech has spearheaded the economic development of the West Midtown neighborhood and we look forward to a long-term partnership with this great institution.”
Essential Properties Realty Trust, Inc. (NYSE: EPRT) announced last month operating results for the three months ended March 31, 2023. Commenting on the first quarter 2023 results, the Company’s President and Chief Executive Officer, Pete Mavoides, said, “We had a great quarter, highlighted by $207 million of investments at a weighted average cash cap rate of 7.6%, a weighted average lease term of 19 years and average annual rent escalations of 2.0%.” Mr. Mavoides continued, “The first quarter was also a great quarter of performance from a portfolio perspective, with occupancy remaining strong at 99.8%, same-store rent growth remaining at 1.6% and average unit level rent coverage at 3.9x. These results are strong indicators of the stability of our middle market tenancy and the overall health of our portfolio.” Mr. Mavoides concluded by saying, “Supported by our strong liquidity position, conservative balance sheet and a robust second quarter investment pipeline, we are refining our 2023 AFFO per share guidance range to $1.60 to $1.64.”
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