Standing from left are Colin Enticknap, Her Excellency Vicki Treadell; Datuk Seri Johari Abdul Ghani; Tan Sri Liew Kee Sin and Tan Sri Azlan Mohd Zainol. Seated from left are: Cheong Heng Leong; Datuk Teow Leong Seng and Rick Willmott.
KUALA LUMPUR: EcoWorld International Bhd (EWI) has teamed up with UK's Be Living Holdings Ltd to jointly develop 12 sites in Greater London and the southeast of England with an estimated gross development value (GDV) of least £2.6bil (RM14bil).
EWI said on Friday it had agreed terms with Be Living, which is the development arm of UK contractor and developer Willmott Dixon Holdings Ltd, to buy a 70% stake.
Under the corporate exercise, EWI said the JV is looking to acquire a development management company (DMco) with a full multi-disciplinary team of highly experienced personnel.
“Going forward, the DMco will be the development manager of all projects under the joint-venture with Be Living.
“This will provide EcoWorld International, as the 70% shareholder of the DMco, with a strong pool of in-house talent and manpower resources to grow its UK business and bring it to greater heights,” it said.
EWI said its acquisition of its 70% stake in the Stage 1 sites and DMCo is £64.9mil (RM356mil) which will be fully funded using part of the proceeds raised from its recent initial public offering.
The purchase consideration for the Stage 2 sites have yet to be finalised however the group was planning to fully fund this using a combination of bank borrowings and / or other debt instruments.
“This is in view of its low gearing level of only 0.05 times following the conclusion of its IPO in April 2017 which successfully raised more than RM2.5bil,” it said.
EWI said the 12 sites which are the subject of the JV are within the London commuter belt.
It said the definitive agreement for the Stage 1 sites (Stage 1 SPA) has been signed with Be Living and negotiations are at an advanced stage for the Stage 2 sites.
EWI targets to complete its acquisition of the Stage 1 sites by Q1 of 2018. Negotiations and documentations for Stage 2 sites are expected to conclude shortly after.
EWI executive vice chairman Tan Sri Liew Kee Sin described the announcement as the culmination of several months of hard work to seal the deal with Be Living that will transform not just the size but also the scale and scope of our operations in the United Kingdom.
“We are truly appreciative of our new partners at both Willmott Dixon and Be Living for the faith they have placed in us to grow the joint-venture’s development business in the UK,” he said.
EcoWorld International president & CEO Datuk Teow Leong Seng described the proposed JV with Be Living as “truly a game-changer for EcoWorld International on many fronts”.
“Firstly, our development presence in the UK will potentially increase by fourfold with approximately 8,200 units to be added on to our existing portfolio once we complete the acquisition of all 12 sites.
“From a geographic and market penetration standpoint our reach will also extend from Central London where our products are priced from £800 psf to £1,500 psf to Greater London and the South East of England where we will be able to offer homes priced from £500 psf to £800 psf that an average income earner is able to afford. This will enable us to serve the needs of both the local market and our traditional international audience to grow the joint-venture into a strong and sustainable long-term player in the UK residential development market,” he added.
Teow pointed out the JV will enable EcoWorld International to establish an immediate footprint in the Build-to-Rent (BTR) subsector by co-developing the BTR platform with Be Living and enter the private rented sector (PRS) given the increasing demand in the private rental market.
EWI would also be able to leverage on Willmott Dixon’s long-established reputation in the construction industry, as well as extensive network of business relations and contacts developed with key stakeholders and local authorities, to potentially participate as a co-developer in off-market residential schemes.
Several of the sites have received planning consent which will enable the Group to move on to plan for the launch of the same within a year of completion of site acquisition. The others are targeted to be launched within a year of full planning consent being received.
The remaining six sites proposed to be acquired as part of the Stage 2 Acquisitions have largely not received planning consents yet.
EWI has agreed with Be Living for these sites to be injected into the JV progressively, subject to planning consents meeting pre-agreed minimum criteria being obtained from the local councils for each of the Stage 2 projects.
It pointed out that due to the location of the projects outside Central London, the price point envisaged for the products to be developed by the JV will range from £500 psf to £800 psf.
Importantly, this broadens the spectrum of price points currently offered by EWI’s existing portfolio of development projects and will allow it to tap into the large pool of domestic and foreign investors in the affordable segment.
Domestic buyers of projects within the price range contemplated above are entitled to benefit from government homeownership initiatives such as the Help-to-Buy scheme, where the UK Government will provide an equity loan (interest-free for five years) for new build residential properties of up to 40% of the price within Greater London and 20% outside of London.
EWI said recently, in the Chancellor’s Autumn Statement in November 2017 a stamp duty relief has also been proposed for properties priced up to £500,000 in London.
Along with the Help-to-Buy scheme this will boost the already strong local demand for homes within these price points and further insulate the affordable segment from global sentiment. All this also bodes well for the JV as most of the homes to be developed are proposed to be priced below £500,000.
Among those present were group chairman of Willmott Dixon Colin Enticknap; British High Commissioner to Malaysia Vicki Treadell; Second Finance Minister Datuk Seri Johari Abdul Ghani; EWI executive vice chairman Tan Sri Liew Kee Sin and EWI chairman Tan Sri Azlan Mohd Zainol.
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