Lian Beng Group Ltd - How much will it contribute to the A$150 mln mixed used development in Brisbane?

8/9/2014 – Lian Beng Group Ltd has announced two joint ventures to develop mixed use properties in Fortitude Valley in Brisbane (map).

Singapore’s Heeton Holdings Ltd, KSH Holdings Ltd and Lian Beng Group will collaborate through their subsidiaries on the residential and hotel developments.

But the main shareholder is Australian company Marvel Investments Pty Ltd, which will lead the residential development with an effective interest of 67%.

According to a report in The Australian, Perth-based Twin Ocean Property and Sunfire Asset are behind Marvel Investments Pty Ltd.

In other words, SGX-listed Heeton Holdings Ltd, KSH Holdings Ltd and Lian Beng Group Ltd are teaming up with Twin Ocean Property and Sunfire Asset to develop two residential towers — one 30-storey tower with 187 units and another tower with 23 storeys with 137 units — and a 25-storey hotel.

It is noteworthy that the Lian Beng Group's press release said the hotel building will consist of 23 storeys. That's a couple of storeys fewer than what The Australian's report claimed.

The Singapore companies will own the remaining 33% in the residential development through a private company called Wickham 186 Pty Ltd, which bought a 33% stake in 186 Wickham Street (Residential) Pty Ltd, by subscribing to 330 ordinary shares for S$3.83 mln.

It is 186 Wickham Street (Residential) Pty Ltd, which actually owns the plot of freehold land.

Now, Wickham 186 Pty Ltd is a joint venture of Heeton Holdings Ltd (55%), Lian Beng Group (30%) and KSH Holdings Ltd (15%).

Marvel Investments Pty Ltd owns the remaining 67% stake in 186 Wickham Street (Residential) Pty Ltd.

Those are the details of the residential blocks – the 23-storey hotel will be owned by an entirely different entity.

It will be built on Lot 7 on RP9541 which is a freehold property at 29 Ranwell Lane – just next door.

Fortitude Valley (Hotels) Pty Ltd, a wholly-owned subsidiary of Prospere Holdings Pte Ltd, bought Lot 7 on RP9541 at 29 Ranwell Lane for S$6.38 mln from an undisclosed vendor.

Prospere Holdings Pte Ltd is a joint venture in which Lian Beng Group owns a 30% stake while Heeton Holdings Ltd owns the remaining 70% stake.

In short, the land on which a 23-storey hotel will be built is now owned by Lian Beng Group's 30% associate.

Investor Central. Asian insights for global investors. We ask the tough questions of Asian companies which global investors need answers to.

Question

1. Who is the vendor of the freehold land at 29 Ranwell Lane?

Curiously, Lian Beng Group's announcement didn't mention anything about the vendor who sold the freehold land at Lot 7 on RP9541 at 29 Ranwell Lane to Lian Beng Group's 30%-owned associate Fortitude Valley (Hotels) Pty Ltd for S$6.38 mln.

According to the Brisbane City Council's records, it was Marvel Investments Pty Ltd which proposed the development of a 23-storey hotel at the freehold land on 29 Ranwell Lane, along with the development of two residential towers at the freehold land on 186 Wickham Street.

Therefore that makes us wonder if Marvel Investments Pty Ltd sold the freehold land at 29 Ranwell Lane to Fortitude Valley (Hotels) Pty Ltd.

And if that's the case, what was the need to sell the land to the joint venture of Lian Beng Group and Heeton Holdings Ltd?

Question

2. Has the Brisbane City Council already approved the joint venture arrangements?

It was Marvel Invesments Pty Ltd which applied to the Brisbane City Council for its approval to develop the properties.

But now that it has forged a joint venture with the Singaporean partners, we wonder if the Brisbane City Council has already approved the arrangements between them.

Total number of questions in the full story: 7)

We have invited the company (aikkee@capitalaccess.com.sg, edwinlee@capitalaccess.com.sg, lbg@lianbeng.sg) to an on-camera interview, and/or to reply to our questions in writing.

At the time of publication we have not received a reply (which is why you are seeing this message).

We will update this report if we do.

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