Ivory lands Bayan Mutiara

It is learnt that Ivory Properties had submitted the higher bid to develop an initial 24.8ha at Bayan Mutiara on Penang Island.

George Town: Ivory Properties Group Bhd is believed to have won the right to develop over 40ha of land at Bayan Mutiara on Penang Island.

Business Times has learnt that the decision to award the tender to Ivory was made during Penang Development Corporation's board meeting which ended late yesterday evening.

Ivory and SP Setia Bhd were in the race to develop the landbank, which was put out by the Penang state government via a request for proposal (RFP), for which the reserve price was reportedly set at RM200 per sq ft.

It is learnt that Ivory had submitted the higher bid to develop an initial 24.8ha, which is located south of the Penang Bridge. The cost of developing the land surpasses the RM1 billion mark.

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

The Bayan Mutiara tender is part of the state government's efforts to unlock the value of the land it owns in selected areas.

Ivory's success leaves SP Setia in the lurch, as currently, it is the only developer without any development projects along Penang's southern corridor where its rivals are present.

The rivals include Mah Sing Group Bhd, which is planning a mixed-development property project in 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 , a 2.8ha public park on the rooftop, a refurbished and upgraded Penang International Sports Arena, a refurbished and upgraded aquatic centre as well as a four-star hotel with retail outlets and a spacious parking lot.

By Business Times

E&O sells assets for RM134mil

PETALING JAYA: Eastern & Oriental Bhd (E&O) is selling a building and the freehold 27,744 sq m it is located on for RM134mil cash to Soaring Profit Sdn Bhd.

The land and building in Penang is part of the E&O Group's 240-acre phase one of the Seri Tanjung Pinang mixed development project (see pic).

In a Bursa Malaysia filing yesterday, E&O said the building was completed in May this year and subsequently leased to hypermarket retail operator Tesco for a 20-year period.

The rental receivable from the building, which has about 269,418 sq ft of gross floor area and 1,042 car park bays, is RM7.6mil per annum.

The E&O Group acquired the land in May 2004 for RM13.6mil while the construction cost of the building, incurred from March 2009 to May 2011, was RM54.2mil.

Based on the audited consolidated financial statements of E&O as at March 31, 2010, the carrying amount of both the land and building was about RM19.22mil.

Proceeds from the disposal of the land and building will be utilised for working capital or repayment of bank borrowings.

As at 30 June 2011, the total bank borrowings of the E&O Group amounted to about RM752.9mil.

Assuming the entire proceeds from the disposal of the land and building were utilised to pare down borrowings, the annual savings in interest is expected to be about RM6.55mil (based on an average interest rate of 5% per annum).

In its statement, the E&O Group said “the disposal of the land and building is in line with its strategy of preserving capital value and strengthening the balance sheet via realising cash resources which can then be deployed in other projects and investments to maximise returns, or for repayment of borrowings.”

The disposal of the land and building is expected to be completed by the first quarter of 2012.

By The Star