Bolton doing what it does best

Datuk Azman Yahya set himself a three-year deadline when he set foot in Bolton Bhd in 2005. His task was to turn around the property development company which was incorporated in 1964, the year Azman was born - a coincidence he likes to point out. The deadline was up on March 31, 2008, and the results have been better than expected, says Azman, who is now the executive chairman of the company and single largest shareholder, with a 16.4% stake.

Over the last three financial years, the company has divested and realised more than RM200 million worth of non-core assets. The proceeds have been used to pare down borrowings, which, as of March 31, 2008, stood at RM185 million compared to RM350 million in 2006. Its operating cash flow is RM123 million, a far cry from the RM4 million seen in 2006.

"Having completed our turnaround plan, we are now in the transformation stage, which will take another three years," Azman, who also heads business process outsourcing company Symphony House Bhd, tells City & Country.

The transformation stage involves branding activities, looking at the "soft" side of business, such as customer service and, of course, like any far-sighted developer, looking at aggressive land acquisitions for sustainable growth.

Bolton had made a name for itself in its early days with the 262-acre Taman Midah housing estate in Kuala Lumpur. In recent times, it was the high-end 42-acre residential development in Kenny Hills or Bukit Tunku which brought it to another level as a luxury home developer.

Through the years, Bolton accumulated assets in various industries, from food franchising and retail to quarrying and liquid bulk terminal. It was also involved in financial services, system integration, equipment trading and renting, and the manufacture of cement, among others. It also owns a number of properties.

Azman was not happy with the diversified portfolio. "I believe we should be a single business company simply because we were not able to build our expertise in so many different areas. So, we decided to return our focus to property development, something which we know how to do," says the former head of national asset management company Danaharta Nasional Bhd.

Hence under Bolton's turnaround plan, non-core assets, including some of its older properties such as Hotel Midah in Jalan Kampung Attap, were disposed of. Its portfolio of businesses was reduced to maximise returns on assets and equity.

Bolton's Campbell Complex in Jalan Dang Wangi, where its headquarters is located, and Langkawi Fair Complex are up for sale.

The turnaround plan also included bringing in new directors, such as former Sime Darby Bhd CEO Tan Sri Nik Mohamed Nik Yaacob. Chan Wing Kwong was appointed executive director. Previous directors such as Tan Sri Amin Shah Omar and Tan Sri Lim Yan Hai retired.

Shopping for land
"We are now in a position to look at acquisitions. The property cycle is now at a plateau, so we foresee the need to prepare ourselves for acquisitions as we want to be ready for the next cycle. The softer property market could be a blessing in disguise, for Bolton at least. It could offer us opportunities as some people may be wanting to sell while buyers are cautious," says Azman.

Meanwhile, Bolton's image-building exercise is beginning to show results. "We have been receiving a number of referrals for land wsales recently, maybe because our profile has gone up. So, we can be a bit more choosy," he quips.

One can expect a number of announcements from Bolton in the next few months regarding acquisitions in Penang and in the Klang Valley. "We have set up a business development unit whose main task is to scout around for land. We are now evaluating some land in Puchong and in the Ampang area and we will most probably finalise at least one acquisition three months down the road." The land in the Ampang area, on the fringes of the KL city centre, is "a sizeable" piece and a mixed landed residential development is planned for it.

At present, Bolton has an undeveloped landbank of 900 acres valued at RM650 million, which will keep the company busy for about two to three years. "Having land is one thing but it really depends on where it is," Azman acknowledges. In this respect, Bolton owns strategic land in the Klang Valley that make up 60% to 70% of the total value of its landbank. This includes 4.3 acres in the KLCC area, one acre in Bukit Ceylon, 200 acres in Puchong and 18 undeveloped acres in its Tijani site in Bukit Tunku.

Bolton in Penang
The company recently unveiled its debut project in Tanjung Bungah, Penang - a condominium development called Surin. The 3.5-acre tract was Bolton's first acquisition as it neared the end of its turnaround plan.

At the launch of the two-block, 28-storey, freehold 390-unit condominium, Azman announced that an additional RM200 million will be poured into property development in Penang. "We are looking at a few acquisitions here and they are under various stages of negotiations. We have confidence in the local market where we will bank on the good infrastructure and affordability of our projects."

Bolton is looking at developing projects in Penang with a gross development value (GDV) of between RM600 million and RM800 million.

"There are a number of high-end developments coming up, such as super condos with large built-ups and space, and then there are those on the lower end. We want to fill the gap between the two, which is to offer high-end properties which are smaller in size, to make them more affordable and value for money.

"There are a lot less players in Penang in terms of competition compared with the Klang Valley as there is generally a monopoly by local players here," says Azman.
He also notes that the housing market in Penang seems more resillient during general market slowdowns in the country.

The units in Surin range from 1,307 to 2,827 sq ft in size and are priced at RM364,988 to RM1.2 million. Bolton held a soft launch for Surin about six months ago, where 65% of the 198 units in the first block were snapped up at RM300 to RM320 psf. At the official launch on July 3, when the rest of the units were opened up for sale, prices were already hovering at RM400 psf.

Boasting an unobstructed view of the sea in front and a forest reserve behind, the project features an infinity pool, a rooftop garden, a sky deck, a three-tier security system and 850 parking bays, giving each unit at least two bays.

Surin also features 8ft-high doors and floor-to-ceiling heights of 11ft.

Construction began this month and the project is expected to be completed within three years.

Exciting year ahead
Bolton has projects worth about RM1.5 billion in GDV which have been or are ready to be launched over 12 months. This includes Surin. "It is not the GDV that is important but the realisation of GDV over a period. We have a number of projects in the pipeline to ensure sustainability at least until 2013," Azman says.

There is no doubt the coming financial year will be an exciting one for Bolton. One can expect the developer to make a splash on the KLCC area when it launches a super high-end condominium project with a GDV of RM1 billion in a 50:50 joint venture with United Malayan Land Bhd (UM Land).

"The JV was part of our strategy to realise cash to pare down borrowings as it allowed Bolton to realise some RM118 million cash and retain a 50% interest in the project. We also took into account [Singapore-based] CapitaLand's indirect involvement in the project through UM Land," says Azman.

The condos will be housed in two, 45-storey towers on 4.3 acres of freehold land in Jalan Mayang, in the corner of Jalan Yap Kwan Seng near the Petronas Twin Towers.

"We are very excited about it. I would rather not say much at this moment but suffice it to say that it is going to be iconic in design and concept. We are going to position ourselves well in terms of quality and design," enthuses Azman.

Bolton has property development projects in seven states but the Tijani high-end development in Bukit Tunku or Kenny Hills in Kuala Lumpur is by far its most successful. It offers bungalow lots, bungalows, semi-detached units, duplexes and condos.

The Tijani 2 North apartments were launched two years ago at RM650 psf and while they were under construction, prices shot up to RM1,200 psf. Tijani will be fully built in September or October, with the completion of the final block of the Tijani 2 North low-rise condos. Comprising 28 units in an 8-storey tower with a GDV of RM100 million, the block will be opened for sale at an indicative pricing of RM1,200 to RM1,400 psf. A unit in one of the earlier blocks is said to have been sold for RM1,160 psf last month.

Bolton plans to turn two acres of the remaining land at the Tijani site into a 110-unit condominium development aimed at young homeowners. "It is a completely different development from Tijani. Access will be from Jalan Mahameru. We are finalising the design and hope to launch next year. The current indicative pricing could be around RM800 to RM900 psf," Azman offers.

In Bukit Ceylon in the heart of KL, the developer is finalising the design for the redevelopment of Bolton Court into 240 units of serviced apartments with a GDV of RM180 million. "We are considering selling them fully furnished," says Azman.

Over at its 345-acre leasehold Bandar Baru Tasik Prima township development, which surrounds a 200-acre lake in Puchong, Selangor, the developer recently offered 118 units of high-end shopoffices in the commercial precinct, called The Wharf. Priced between RM800,000 and RM1 million (or about RM320 psf), all units were sold except for four.

An upcoming launch here would be 141 units of 2 and 2½-storey link homes with an estimated GDV of RM38 million.

"Rising construction costs affect developers with projects where margins are small. It will affect our developments in Melaka and Negri Sembilan, where we will complete what we have and delay our launches for maybe a year," says Azman.

On the outskirts of Melaka town, Bolton is developing the 262-acre Taman Seri Telok Emas, which offers mainly 1-storey houses, shopoffices and industrial lots. In Negri Sembilan, it is developing the 353-acre Lavender Heights in Senawang.

In the north, Bolton, through wholly-owned subsidiary Kejora Harta, is the developer of the 1,500-acre Amanjaya township in Sungai Petani, Kedah.

"Our company is not too small or too large, so we are of a nice size, have a reasonably good reputation and projects in good locations that are relatively affordable. We also have fair financing. I brought in Dubai Group to provide financing," says Azman.

The Dubai Investment Group, the global real estate investment arm of Dubai Holdings, has a 9.3% stake in Bolton.

Come the end of its transformation in 2011, Bolton wants to be known as a premier league developer. "We want to spend time now on branding and positioning. We want to be known as a dependable developer. We have grandfathers who own our properties and we hope their children and grandchildren will also want to own our properties," says Azman.

There is no doubt that the market will be hearing more of Bolton... and of Azman. - By The Edge Daily

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