Penang land duel

SP Setia and Ivory Properties Group have responded to Penang state government's tender to develop the Bayan Mutiara land.

George Town: Two property players are in the race for the multi-billion ringgit development of some 40.47ha at Bayan Mutiara on Penang island.

Business Times has learnt that SP Setia Bhd and Ivory Properties Group Bhd are the companies that have responded to Penang state government's tender to develop the Bayan Mutiara land. The tender is part of the state government's efforts to raise funds.

Sources said of the two companies, Ivory Properties had submitted the higher bid, for which the reserve price was reportedly set at RM200 per sq foot.

The state government had asked for a request for proposal (RFP) via the Penang Development Corp to develop an initial 24.8ha, which is located south of the Penang Bridge and overlooking Pulau Jerejak.

The RFP comes with the potential to develop an additional 14ha via a future reclamation after the development of the initial 24.8 ha.

Although the deadline for the RFP of the project was set for December 31 2010, it is learnt that the RFP had been recalled and interested parties were asked to re-submit their bids.

SP Setia is currently the only developer without any development projects along Penang's southern corridor where its rivals are present.

This includes Mah Sing Group Bhd, which is planning a mixed-development property project at Batu Maung. Ivory Properties is present via "The View Twin Towers" development in Batu Uban, while IJM Land Bhd had already embarked on its landmark waterfront development of "The Light" close to the Penang Bridge.

In January this year, the Penang state government announced that SP Setia - via subsidiary Eco Meridean Sdn Bhd - had won a RM300 million project to build and operate the Penang International Convention and Exhibition Centre in Relau on the island.

The project was reportedly meant to create a "Penang People's Park" that includes the country's first subterranean Penang International Convention and Exhibition Centre (sPICE), a 2.8ha public park on the rooftop, a refurbished and upgraded Penang International Sports Arena (Pisa), a refurbished and upgraded aquatic centre and a four-star hotel with retail outlets and a spacious parking lot.

It is not known if SP Setia and the state authorities have inked any agreement to firm up this deal.

By Business Times

'Overweight' on property sector stays: OSK

KUALA LUMPUR: OSK Research Sdn Bhd has maintained its 'overweight' call on the property sector.

In a note today, OSK said the biggest gainers from the current upcycle were the mid- to high-end developers, particularly those with focus on developing landed properties and also had significant exposure in high-growth areas.

"As such, our top buys for the sector are UEM Land Bhd and SP Setia Bhd for mid- to large-capitalised property companies while Plenitude Bhd (is our top pick for small-cap firms," it said.

OSK said developers with exposure in high growth areas such as Kuala Lumpur, Penang and Iskandar Malaysia would benefit the most not only from the current but also future property upcycle.

"Out of the three high-growth areas, Iskandar presents the most upside for developers, both in terms of supply as well as price appreciation.

"With the development of Iskandar progressing as planned and reaching its tipping point by 2012, we believe there is significant untapped potential for the property market there," it said.

By Bernama

N2N buys office tower in Bangsar South

N2N Connect Bhd says it has entered into a sale and purchase agreement on June 3 to buy an 11-storey office building known as Block 6, The Horizon (Phase 1), Bangsar South from Bangga Istimewa Sdn Bhd for RM36 million cash.

N2N plans to borrow RM27 million, or 75 per cent, of the purchase price to pay for the building.

The remaining RM9 million, or 25 per cent, will be derived from internal funds.

N2N intends to occupy four storeys of the property for its own use and rent out the remaining floor space to third-party tenants.

It estimated the rental income to be generated at about RM1.76 million per annum based on current office rental rates of RM5 per sq ft per month.

By Business Times

Privatisation of AP Land, OSK Property

With an upward movement of interest rates in tandem with the creeping price inflation amidst the softening global economy, majority owners of listed companies such as AP Land and OSK Property have announced plans to take them private.

Minority shareholders should consider their positions with regard to each of these individual offers.

As regards AP Land, on Jan 11 this year Low Chuan Holdings, the family-owned company that started AP Land half a century ago, offered 45 sen a share for all of AP Land's assets and liabilities, with the market surmising that this move is a likely precursor to the company being taken private.

That means the Low family has offered RM305mil to take over the business of a company famous for building some of Kuala Lumpur's main landmarks like the Empire Tower and City Square shopping centre, in Kuala Lumpur. The group's major shareholder, Low Chuan Holdings Sdn Bhd, which has a 37% stake, is owned by Low Gee Tat@Gene Low, Low Gee Teong, Low Gee Soon, SemSiong Industries SB, Selangor Holdings SB and Low Chuan Securities SB.

The issue is that the offer is 45 sen, an 8% premium compared to its closing price of 41.5 sen before the announcement whereas the net tangible asset (NTA) per share is RM1.

Generally, it is not uncommon to see a privatisation offer that is priced below net asset value in Malaysian listed companies, and is particularly prevalent among property developers.

Many reasons could be attributed to this such as the fact that the value of the assets, mostly backed by landbank, has not been unlocked; undemanding valuation and location of the land bank; and the (perceived) management quality.

Additionally, AP Land has not enjoyed a stable history of profits, since it has lost money in seven of the last ten years. Nor has it paid any dividends in this period.

However, it does have some non-property related businesses in the shape of its oil palm plantation venture in East Kalimantan, Indonesia, which has seen a total of 4,982 hectares of land planted with 3,000 hectares coming into maturity in the first quarter of 2012.

An additional point to note is that only a simple majority (or 50%+one share) of non-interested shareholders' approval is required for the proposed privatisation, since the offer came before the amendments to the listing requirements (which raises the threshold for shareholder approval to 75%, where a listed company is disposing all, or substantially all, of its assets, resulting in it being no longer suitable for continued listing on Bursa Malaysia).

Despite AP Land's lack of visibility and poor valuation, it has a 50-year track record in building.

Plus, it also operates a golf course and college and has current and ongoing projects such as the myHabitat residences in Kuala Lumpur, Bandar Tasik Puteri township in Rawang, Penang Island Bay Resort, commercial development in Changshu City in China as well as a residential project in Hokkaido, Japan.

These projects do have value, and minorities need to bear these factors in mind in their assessment of Low Chuan Holdings' offer.

As regards OSK Property Holdings Bhd, on May 27, its executive director and substantial shareholder Ong Leong Huat, together with Land Management Sdn Bhd, which comprises other members of the (founding) Ong family, offered to buy all the remaining shares and warrants that they do not already own in OSK Property Bhd, for 87 sen per share and 6 sen per warrant.

The joint offerors have been acquiring the shares at the offer price in the past one week. The additional shares acquired has triggered the mandatory general offer instead of conditional general offer at 87 sen.

In our view, the proposal can be seen as a move by the joint offerors to acquire a meaningful stake (i.e. 51%) at a reasonable price, to control the company, since the joint offerors had stated that it was their intention to maintain OSK Property's listed status.

However, the price offers no premium over the counter's last closing price of 87 sen, and is about half the value of OSK Property's NTA of RM1.71 per share. Which means that OSK Property shareholders who do not feel the price is sufficiently compelling may choose to retain the shares until the elapsement of the offer.

Ultimately, there is nothing to prevent the founding families from taking their companies off the public markets.

Our main consideration, as always, remains the minority shareholders who had helped the family finance the growth of the company.

To offer them a reasonable exit as this will certainly bode well for the founding families should any of them decide to again tap the public markets in future.

Rita Benoy Bushon is the CEO of Minority Shareholder Watchdog Group (MSWG).

By The Star (Comment by Rita Benoy Bushon)

UOA arm acquires land for RM50m

UOA Development Bhd, through its wholly-owned unit, Magna Tiara Development Sdn Bhd, has acquired two parcels of freehold land in Sri Petaling for RM50 million from Sim Nam Housing Development
Co Sdn Bhd.

In a filing to Bursa Malaysia today, UOA said it proposed to develop the 1.94-hectare land into high-rise residential and the development was expected to commence in the fourth quarter of 2011.

"The land is strategically located approximately 15 km from Kuala Lumpur City Centre, within the mature suburbs of Sri Petaling, which is a densely-populated and highly-accessible residential area," it said.

In a separate statement, the group said its wholly-owned unit, Paramount Properties Sdn Bhd, has won the 2011 Green Building Index Provisional Gold Rating award.

The award was awarded for its four office towers located at The Horizon, Phase 2, it said.

Its chief operating officer, David Khor, said the award marked the beginning of the group's venture into Malaysia's green economy, particularly through its flagship development, Bangsar South City.

By Bernama

Gromutual unit buys land in JB for RM44m

KUALA LUMPUR: GROMUTUAL BHD has acquired two pieces of freehold land in Johor Bahru for RM44 million as part of its plans to replenish its land bank in strategic locations for future development.

In a filing on Tuesday, June 7, Gromutual said its wholly owned subsidiary Rainbow Entity Sdn Bhd had acquired the two lands measuring 9,079.88 sq meters and 5.37ha respectively from Ladang SPK Sdn Bhd.

It said the purchase would be financed via internally generated funds and bank borrowings.

“The development on the said land is expected to contribute to the medium to long term future earnings of the Gromutual group,” it said.

By The EDGE Malaysia