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ublicly listed property developer PT Danayasa Arthatama is seeking loans to support its plan of constructing the Signature Tower, which is designed to be the tallest tower in the country and the fifth-tallest in the world.

“We will fund the tower with our equity and loans; probably a syndicated loan. We are in negotiations with several local and foreign banks,” Danayasa director Agung Prabowo said on the sidelines of the company’s annual shareholders’ meeting on Tuesday.

Agung declined to name the banks; neither did he reveal how much Danayasa aimed to raise in loans. He hinted, however, that the ratio of loans to internal cash to pay for the Signature Tower would be either 60 to 40 percent or 70 to 30 percent.

The Signature Tower, which will be 638 meters in height with 111 stories, is estimated to cost US$2 billion.

During the annual meeting, Danayasa’s shareholders approved that the company retain its earnings collected last year rather than disburse the money as dividends.

“We will use the funds to support the construction of the Signature Tower,” Agung said.

Danayasa booked Rp 72.7 billion (US$7.70 million) profit last year, a 63 percent drop from Rp 141.5 billion in 2010. The plunge was influenced by a 61 percent fall in revenue to Rp 688 billion in 2011 compared to Rp 1.11 trillion
in 2010.

This business setback continued into the first quarter of the year. Danayasa reaped only Rp 158.21 billion during January to March, a 24 percent drop from Rp 210.68 billion in the same period last year.

Danayasa saw increases in income from its hotel and telecommunications businesses; however, these could not compensate the sharp fall in its real estate business. The company saw revenue from real estate, particularly from the leasing of spaces in Pacific Place mall, drop 35 percent to Rp 81.48 billion in the first quarter of the year from Rp 125.46 billion in the same period last year.

Following declining revenue, the company’s net profits fell 64 percent to Rp 6.02 billion in the first three months of the year versus Rp 17.1 billion in the same period last year.

The company’s total assets were worth Rp 3.47 trillion by the end of the first quarter, with liabilities and equity at Rp 856.44 billion and Rp 2.62 trillion, respectively. Meanwhile, cash and cash equivalent stood at Rp 211.72 billion at the end of March. Agung said the company would lease spaces in the Signature Tower rather than sell it, to maintain recurring income.

Danayasa will start to build the Signature Tower later this year on 5.5 hectares of land. The construction is expected to be completed by 2020.

Agung said that the land for the building had been secured and was located in the company’s area in the Sudirman Central Business District (SCBD).

“From the start of the SCBD’s construction, we already had the master plan, including the construction of the Signature Tower. The tower will use lots 6 to 8 near Pacific Place mall. Existing building on the area [the lots] are only temporary,” Agung said.

Danayasa, whose controlling shareholder, PT Jakarta International Hotels & Development, with 63.22 percent ownership, is part of the Artha Graha network, which is a partnership network of private companies engaging in various industries, including property, banking and infrastructure.

Artha Graha’s chairman, Tomy Winata, said recently that the company had secured cooperation with MGM Hospitality to run the management of hotels, apartments and convention centers in the Signature Tower.