OUE to be Lippo's S'pore flagship
By EMILYN YAP
(SINGAPORE) Indonesia's Lippo Group has laid out growth plans for Overseas Union Enterprise (OUE) now that it is in sole control of the property group.
Lippo president Stephen Riady, who also became OUE's executive chairman recently, said OUE will be Lippo's Singapore flagship.
Mr Riady's interview with The Business Times is his first with the press since Lippo paid some $957 million to buy Malaysian tycoon Ananda Krishnan's stake in the Singapore-listed property group in March.
Ties between the Riadys and Mr Krishnan were said to be strained, and there were reportedly disagreements over the management of OUE.
Mr Riady shed some light on the situation then. 'People have different visions. It's hard to say who's right or who's wrong,' he said. But, 'when you have two captains and two captains have different views and different visions, I think it's bad for the company.'
He is keen to leave past 'distractions' behind and help OUE move on. 'Without all these, you'll get (to the goal) smoothly and more easily.'
OUE's focus in the last few years was to build a strong recurrent income base, and it has achieved this through asset enhancements, Mr Riady said.
For instance, it created Mandarin Gallery out of idle lobby space at the former Meritus Mandarin - now refurbished and renamed Mandarin Orchard. The mall now generates rental income.
OUE is also developing 50 Collyer Quay and One Raffles Place, and the offices will bring in rents when they are ready and leased.
Separately, the property group started cutting costs and raising operational efficiency early this year. Efforts ranged from reducing food wastage at buffets in its hotels to saving energy, and results are showing, Mr Riady said.
Once a steady recurrent income stream has been built, OUE will focus more on the residential development business - which tends to be more cyclical in nature.
The aim is to have recurrent income make up 50 per cent of the bottom line, and development profit making up the remaining half, Mr Riady said.
OUE has almost no development profit now, he added. It owns a residential site - the former Grangeford Apartments - but has yet to roll it out for sale. A showflat is in the works and the launch should happen in the 'very near future'.
The group will look to grow in the high-end residential sector, Mr Riady said, believing that it is just 'a matter of time' before prices in the sector hit the peak last set in 2007.
Developers also have more choice when it comes to prime property development, he said. They can buy land not just in the traditional districts of 9, 10 and 11, but also in Sentosa and the Keppel Bay area. OUE is also open to the idea of redeveloping offices downtown into high-end homes.
According to Mr Riady, Lippo plans to keep OUE listed to facilitate growth.
Yesterday, OUE announced a strong set of earnings and proposed a one-into-five stock split to boost trading liquidity and affordability for investors.
Copyright © 2010 Singapore Press Holdings Ltd. All rights reserved.
Mr Riady: The group will look to grow in the high-end residential sector, as it's just a matter of time before prices hit the peak last set in 2007
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