www.shaproperty.com

Sep 16, 2007

Why church inked Buona Vista mega-property deal

·  60-year rental: $343m

·  A place of its own: $280m

By Nur Dianah Suhaimi

TO HEAR Deacon Matthew Kang talk, it makes sense for a church to go into property development.

The church in question is the 23-year-old charismatic New Creation Church. Its Sunday services at Suntec City Mall draw long lines of worshippers that snake round the block.

The property in question, announced last week, is a $660-million lifestyle hub in Buona Vista. The church's business arm, Rock Productions, is partnering property giant CapitaLand to develop the site.

In an interview with The Sunday Times, Mr Kang, one of the directors of Rock Productions, explained why the church decided to turn property developer in such a big way - the company's investment in the project comes up to $280 million.

Every month, the church pays Suntec City $477,000 to rent the 1,400-seat auditorium, where it holds its services, and a convention hall to accommodate the spillover of worshippers. Its congregation is 16,000-strong.

Mr Kang, a full-time director of financial services at insurance company Manulife Financial, said the rental would add up to $343 million in 60 years' time.

It thus makes economic sense to invest $280 million in developing its share of the 60-year lease Buona Vista site, which consists of an auditorium, an amphitheatre, an outdoor theatre, two ballrooms and a rooftop function area.

The restaurants, shops, wine bars and dance clubs will be developed by CapitaLand.

When the complex is ready in 2011, services would be held at the 5,000-seat auditorium.

The amount involved is no small sum but Mr Kang, 47, said the church would have no problems ponying up the money.

Even before the foundation has been laid, it already has $100 million in cash to cover 35 per cent of the project cost.

Since the company is projected to make about $60million in profit over the next three years, it is left with $120 million to raise.

Mr Kang, who is married with three children, said: 'Of course it is possible to raise $120 million. We have faith that people will give.'

According to the church's financial statements, it received $39.3 million in tithe and offerings in its 2007 financial year.

Rock Productions, set up in 1998 with a paid-up capital of $8 million, is fully funded by the church.

The company is run by a six-member board chaired by church pastor Joseph Prince, 44, who started preaching from a four-room flat in Holland Road.

The board members, who do not receive any salary or dividends from the company, make all the business decisions.

One of its shrewdest was the 2001 purchase of Marine Cove at East Coast Park for $10 million, $4 million below its valuation price, after the previous owner had to sell off assets to pay creditors.

Mr Kang, who readily quotes from the Bible to illustrate the virtues of investing, said: 'Marine Cove was a great investment. It came with ready, popular tenants such as McDonald's and the place is always crowded. Even the carpark is making money.'

Profit from Marine Cove came up to $425,388 in the last financial year.

Other religious organisations are also actively involved in business. Sultan Mosque, in Bussorah Street, collects rent from 11 shophouses that were donated to the mosque by members of the public. The Kong Meng San Phor Kark See Monastery earns income from its crematorium.

In 2002, the Methodist Church leased out a 173,800 sqft piece of land in Mount Sophia to Centrepoint Properties for a reported sum of $50 million.

In 2003, the Seventh-Day Adventist Church sold a 13-storey condominium in Irrawady Road for an estimated $21 million.

Mr Kang, referring to the parable about the servant who buried Jesus' money instead of investing it, said: 'In today's context, that is like keeping money under your mattress. Putting money in the bank and earning interest is the last resort.'

ndianah@sph.com.sg