When you’re in the business of revitalising and sub-letting unused and underutilised properties, an economic downturn can be your best friend. Kelvin Lim, Executive Chairman and Group Managing Director at LHN Limited, says the current world economic situation is working in the company’s favour. “Generally, when the economy is down, we’re able to acquire longer leases at a lower cost,” he notes. Naturally, downturns can deliver some challenges too. “We have to work very, very hard to secure more tenants.”
Fortunately, the 39-year-old has shown great ability in handling the market’s challenges. Kelvin had just finished school in 1997 when he joined the company his father started. The company, too, was in its fledgling stages at that point. Back then, the business model was straightforward: leasing and sub-leasing property with minimal capital outlay.
“After a few years, we saw that an increasing number of people were following in our footsteps, so we refreshed the business model. I have now been in the company for close to 20 years; I have never worked anywhere else. Most of my training has been on the job. From day one when I joined the company, it was very small and I quickly assumed a strong leadership position. Due to our size, there was no division between departments; everyone did everything. I wanted to improve the company in as many ways as I could, and I have been extremely happy with the success we have achieved thus far.”
A reinvention
Kelvin was appointed as Group Managing Director of LHN Group in 2005 before moving into his current position. Today, he is responsible for the development of the business and overall management of the group, as well as overseeing investment activities and marketing efforts. In addition to his role with LHN Limited, Kelvin is now currently Patron of Bukit Batok East Citizen’s Consultative Committee, Past President of Lions Club of Singapore Neesoon Mandarin, and Vice-President, National Arthritis Foundation of Singapore General Council. In recognition of all of his work within the wider community, he was presented with a public service medal (Pingkat Bakti Masyarakat) in 2012.
Kelvin explains that LHN Limited’s reinvention began when the company started to identify old or underutilised commercial and industrial properties. It would then refurbish and optimise the spaces before sub-leasing them. That concept has helped it to stay ahead of its competitors. In fact, LHN has reported that fourth-quarter net profit soared 1069.8% to S$9.2 million. LHN also recorded an 8.6% increase in revenue to S$104.7 million for the financial year which ended 30 September 2016.
LHN Limited now manages 36 industrial, commercial and residential properties in Singapore, Indonesia and Myanmar, with a total net lettable area of more than 4.2 million square feet. “Optimising the property before we sub-lease it improves or increases the net lettable area and increases the revenue,” says Kelvin. For example, LHN Limited might know that in a particular location there’s demand for units of a certain size. It then optimises the space to cater to that demand. “When we optimise a space, we look at the efficiency of the overall development,” Kelvin explains.
“For example, we might minimise the corridor sizes if we discover they’re too big when we visit a building. Optimising the property before we sub-lease it is extremely important. Through our interaction with the market, we know what locations, what types of properties, and what unit sizes will generate the best rental return. When we optimise a space, we also consider the efficiency of the overall development. We will never leave any space in a building that is underutilsed or not utilised at all.”
The GreenHub initiative
One of LHN Limited’s refurbishments was Phoenix Park, a cluster of 11 buildings, which was formerly the Ministry of Home Affairs. The company was able to increase the net lettable area from 110,000 square feet to 125,000 square feet. Over time, it has added several services to the company’s offering; in addition to facilities management and logistics management services, it launched its GreenHub suited office concept in 2012.
“We run it in a way that’s very energy efficient, so we pass on those savings to the tenant in the form of reasonable rental rates.” – Kelvin Lim
As Kelvin explains, these are similar to serviced offices and are usually located on the fringe of the CBD. “We run it in a way that’s very energy efficient, so we pass on those savings to the tenant in the form of reasonable rental rates.” There are now three GreenHub offices in Singapore and two in Jakarta, Indonesia.
The GreenHub initiative is driven by LHN Limited’s service philosophy, innovative environment, and results-driven purpose. This has allowed it to provide the ecosystem that is needed to leapfrog the global companies that it services, so that clients can focus solely on growing and expanding their business both locally and internationally. The spaces are far from your average serviced office environment; they offer a tranquil, green setting which enhances the creativity and productivity of workers. As LHN Limited describes it: it’s a space where business meets innovation and convenience.
Making the business work
Over the past year, the company has started analysing the data generated by its day-to-day business in order to improve its processes and marketing. “One such example is when we analysed the rental patterns of our tenants, including their industry and how long they stay with us before they upgrade or downgrade. We also analysed what kind of industry they are in, so we went in the direction of data analysis to derive statistics that may help us improve our business process and marketing direction.”
LHN Limited has started using digital marketing platforms to generate more inquiries and integrate technology within its properties. “To bring businesses to our tenants or our suppliers, we use a digital platform to advertise our services and drive traffic to the property when they look at the ad.”
“The world is changing at a much faster pace than before, so we have to be ready to take on new challenges, accept new concepts, and deal with disruptions.” – Kelvin Lim
Working with the right suppliers is key to making the business work, Kelvin shares. “We don’t own all of the properties that we work on, so choosing the right supplier is very important.” Their worst nightmare? Placing millions of capital expenditure into a property only to learn that when the first term of the lease is up, the landlord asks them to leave and takes over their tenants. “So we always work with landlords who are honourable and require our services,” he says. “The ones who are not going to take us for a ride.”
An open-minded approach
As a leader, Kelvin believes it is important to cultivate an open mind. “The world is changing at a much faster pace than before, so we have to be ready to take on new challenges, accept new concepts, and deal with disruptions. When we have a very open-minded approach, we’re able to overcome challenges.”
Maintaining a loyal team and productive staff is essential too, particularly in the face of change. “When you have to take a new direction, you can’t do it alone,” says Kelvin. “You need your staff to drive it.” On the remuneration front, the HR department reviews the company’s compensation and benefit policies annually to ensure they are competitive.
“We also have a KPI system where we measure and reward our staff well,” he says. Apart from financial rewards, Kelvin says maintaining a caring and nurturing culture helps keep staff motivated. As a young team, they do a lot of after-work activities together and Kelvin joins in regularly. “I see that as part of maintaining a close relationship with them.”
Looking ahead, as a Catalist-listed company (it listed in April 2015), Kelvin is conscious of the need to grow the business’s revenue. Long term, the company is aiming to replicate its business model in multiple countries; currently 95 per cent of its revenue comes from activities in Singapore.
LHN Limited already has a presence in Myanmar, Indonesia and Thailand, and has its eye on China. “In years to come, we want to have more revenue from overseas and we want to groom more talents in these countries,” he says.