BLand gets US$160m loan from Mizuho Bank

KUALA LUMPUR: Berjaya Land Bhd (BLand) has signed a loan agreement with RHB Bank Bhd and Japanese bank Mizuho Bank Ltd for a loan amount of US$160 million (RM521.16 million) to fund its Four Seasons Hotel development in Kyoto, Japan.
Under the agreement, Mizuho Bank as the end-financier, will provide the loan amount while RHB Bank, the principal financier of the project, will back the loan with a standby letter of credit.
"I am pleased that despite the challenges arising from cross-border transactions, we have completed the financing in February this year, in corporation with RHB, a prominent Malaysian bank. This is a successful cross- border transaction case where Mizuho demonstrated our expertise in real estate finance and strong relationship with major foreign banks," said Mizuho Bank general manager of Asia and Oceania division Katsuyuki Mizuma at the signing ceremony last Friday.
BLand also signed an agreement with Taisei Corp of Japan via its indirect wholly-owned subsidiary Kyoto Higashiyama Hospitality Assets Tokutei Mokuteki Kaisha (Kyoto Higashiyama), awarding the building contract for the construction of Four Seasons Hotel Kyoto to Taisei.
The contract, valued at US$110 million (RM358.3 million) is for the base building including fit outs for the standard rooms. The hotel has a built-up area of 34,725 square meters and offers 123 rooms and 56 long stay units.
BLand executive director Leong Wy Joon said the loan period for the US$160 million is five years from the first drawdown which was in February 2014. The construction period is two years while the repayment period is three years.
He said while the US$110 million is for the base building and the fit out for the standard rooms, the company needs another US$60 million to fit out the long stay units.
"There will be another contract that will cover the fit out for the long stay units as well as the front of house and back of house of the hotel. That would come out to another US$60 million so the total construction cost is about US$170 million," he said, adding that the balance of equity will be funded via internally generated funds.
The project takes up five acres and has a gross development value of RM1.35 billion. Leong said the revised GDV (from RM976 million previously), was due to the revised pricing of the long stay units which saw an increase of between 20% and 25%.
Earthwork and excavation of the project began in September 2013 and is scheduled for completion in December 2015 with the opening of the hotel slated for the end of spring in 2016. The project was originally slated to open early 2015 with construction works slated to begin in March 2013.
"There were actually some delays in the negotiation of the loan agreements and it's a cross-border transaction, and a very complicated one at that. There were numerous parties involved, it is not just between us and the bankers, it also involves the construction company Taisei and Four Seasons as the operator also was also very much involved in the negotiation," said Leong.
He said the company expects to have a starting occupancy of 70% and a starting room rate of ¥55,000 per night, and eventually stabilizing at between ¥70,000 and ¥75,000 per night in three years' time.
The Four Seasons Hotel Kyoto will be located in the historical core of Higashiyama-ku amid the temples and heritage sites of Kyoto, offering facilities such as banquet halls, restaurants, bar, swimming pool, fitness gym and spa.
sundries shop and ample parking bays.
This development is the company's third major project in North Asia after the integrated resort development in Jeju, South Korea and the Great Mall of China project in Beijing, China.
Leong said it is still bullish on North Asia due to the resilient economy and good business ethics.
In Japan, the company has some 100 acres in Okinawa where it is at the preliminary stage of planning.
"We have plans, hopefully we put it up in good stead when the gaming laws are approved in Japan. It is a large tract so there's a lot of potential," he said, adding that it has not decided on whether it will develop a casino hotel on the tract.