Shahril: ‘We have a fair number of assets in Australia.’
As previously reported:
OSK buys Melbourne property for AUD 145 Million, promises gardens in the sky,and gets EPF to pay AUD 154 Million for 49% in a market that is expected to collapse
EPF will finance OSK's Melbourne development with AUD 175 Million (RM 525 Million) in borrowed money.after providing Ong Leong Huat & family AUD 154 million and a AUD 38.2 Million upfront profit
Further research has shown that the EPF probably sought Australian dollar funding from Malaysian banks CIMB Bank Berhad, OCBC Bank (Malaysia) Berhad and RHB Bank Berhad ,very likely because Australian banks would not fund the project.The AFR reported as far back as 2009:
Reed Construction Data found that $12.5 billion worth of residential apartment projects was deferred in the first three months of 2009. The two most active lenders in the market are National Australia Bank and Commonwealth Bank of Australia.
High on the banks' hit list are precommitments. Whereas in the past preselling 60 per cent of apartments was enough to get a development out of the ground, some banks are now demanding the whole project be sold. Banks are also calling for increased equity contributions - or "hurt money", as one source describes it - while imposing extended sunset clauses for off-the-plan sales.
Property consultancy Charter Keck Cramer director Robert Papaleo says banks are hesitant to finance individual projects to more than 70 per cent owing to fears they will overexpose themselves to a single developer in one location.
"The banks are now wanting developers to tip in a lot more equity. They want a lot more skin in the game - and as a private developer, you haven't got a corporate balance sheet you can rely upon. From what I'm hearing, banks are basically discounting the value associated with any sales overseas, because they fear that a foreign purchaser may walk away from a contract easier than an Australian might."
Elsewhere in Melbourne, Baracon's Wrap development in Southbank is believed to have faced funding difficulties owing to precommitments.
Also in Southbank, Central Equity's 37-level residential building tower at 110-120 Kavanagh Street worth $88 million has been deferred.(Banks make it hard to build high-rise apartment complexesScott Elliott;4 June 2009
The Australian Financial Review)
Given the current market in Australia precommitment are hard to generate,and that is quite likely why Ong Leong Huat and family needed the EPF to fund the project.
Despite this, OSK's PJ Holdings paid a record setting price for the Melbourne Square site at 93 Kavanagh St, Southbank:
Local developers are competing with offshore operators for sites in the city and the suburbs. Malaysian-based company PJ Development paid a record $145 million for a two-hectare development site at 93-119 Kavanagh Street in South Melbourne in June.
(Offshore rivals hit profits of developers;Simon Johanson, Nicole Lindsay;19 November 2014
As reported, when the EPF bought in to the project, it did so at a premium, paying AUD 154 million for 49% of a property bought for AUD 145 million (albeit after development approvals had been obtained,but without EPF funding, the DAs may well be worth nothing).
It does look as if the EPF's involvment in this proejct had been planned from the beginning, when OSK bought the property.