Hatten Land Ltd is postponing the launch of several projects in Malaysia worth over RM4 billion, against the backdrop of Covid-19 that has weakened economic prospects here, says its chief.
Executive chairman and managing director Datuk Colin Tan June Teng despite postponing some projects, the Hatten group remains deeply rooted and vested in Malaysia with over 20 land banks and development rights in high-growth locations.
“We remain optimistic of the long-term prospects in Malaysia despite the short term challenges from the Covid-19 pandemic,” he told NST Property.
Tan said the group will re-evaluate the plans for some of the developments in Malaysia, including the RM3 billion mixed-use project in Cyberjaya.
Hatten Land has deferred two projects in Melaka, including the development of an RM942 million international convention centre in Melaka Tengah for almost three years now.
“Covid-19 has caused a much wider impact on all of our lives and communities as well as the global economy, which has forced many businesses to suspend their operations and re-evaluate their business models. As such, we may have to revaluate our plan for Melaka Tengah to cater to new market trends ahead,” he said.
For the project in Cyberjaya, Hatten Land will make the relevant announcements if there are any material changes or updates to the plans, he said.
The 10.2-hectare project was to be Hatten Land’s maiden venture into medical tourism. It was set to feature residential, retail, office, and hospitality components, including a hospital.
The project had been targeted to launch late last year.
Hatten Land’s current development portfolio comprises Hatten City Phases 1 and 2, Harbour City, Satori, Unicity, Vedro by the River retail mall, and the project in Cyberjaya. These developments combined are valued at about RM10 billion.
Tan said that Harbour City, which is being developed on the reclaimed island of Pulau Melaka, fronting the Malacca Straits, is moving ahead despite an on-going legal dispute with the contractor.
“It was disclosed in May 2020 that there is a legal dispute with the contractor. The contractor’s claim is without merit and they are in substantive breach of the agreement. We are in the process of evaluating new contractors for this development, and focusing on the construction schedule as planned,” he said.
The RM849 million Harbour City comprises the Harbour City Mall, with 1,831 shops; an indoor and outdoor theme park; and four service suite blocks.
It had been reported that the Harbour City development would be completed in phases from the second half of 2019 to sometime this year.
Focus on selling inventories this year
Tan said Hatten Land is focusing on selling the remaining units in Hatten City Phase 1 and Phase 2.
Phase 1, with a gross development value (GDV) of RM628 million, was completed in 2016. Within the complex are Elements Mall, with 1,530 strata shops; SilverScape Residences (745 units); Hatten Suites/Serviced Apartments (589 units); and the 277-room DoubleTree by Hilton managed by Hilton Worldwide.
Hatten Land’s subsidiary MDSA Resources Sdn Bhd has sold about 83 per cent of the total 2,580 units developed in Phase 1 as at March 31, 2020.
Phase 2 was scheduled for full completion in the second half of 2017 but it only finished in 2018. Phase 2, worth RM363 million comprises Imperio Mall, with 786 shops; and Imperio Residences (950 units).
Another subsidiary of Hatten Land, MDSA Ventures Sdn Bhd has sold some 79.5 per cent of the 1,734 units in Phase 2.
“As a developer, it is always a plan on selling down the inventories. We will work with agencies to continue to sell down the inventories,” said Tan.
Hatten Land’s cash and bank balances stood at RM105.6 million as at December 31, 2018, while total borrowings were RM500.6 million.
As at March 31, 2020, Hatten Land had net assets and net current assets of RM370 million and RM307 million respectively.
Also, the group has about RM1.3 billion of unsold completed properties.
Tan said these assets can be monetised through collection and sales to generate cash flow for the group.
According to Tan, most of Hatten Land’s repayment obligations for borrowings have been extended and this has allowed the group to channel its cashflow for operation purposes.
He said Hatten Land has also implemented various initiatives to manage and/or reduce its operating costs such as salary adjustments and reduction of non-essential expenses.
This will allow Hatten Land to manage its expenditure in line with its cash flow, he said.
When asked if Hatten Land plans to dispose of its hotels in Melaka to generate additional cash flow for the group, Tan said: “For the Hatten group, we are always exploring opportunities to unlock value within our property portfolio.”
Hatten has four hotels in Melaka, with 3,000 rooms.