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Thursday, August 13, 2009

Mah Sing sells building en bloc to Felda co-op for RM226m

Property developer Mah Sing Group Bhd has made its second en bloc sale, this time of an eight-storey building with retail and office space, to Koperasi Permodalan Felda Bhd for RM226 million, helping the developer exceed its full-year sales target.

Mah Sing is selling the Corporate block under its Southgate development in Kuala Lumpur under a sale and purchase agreement signed yesterday.

While the Corporate block had garnered interest from several institutional investors, Mah Sing sweetened the deal for shareholder Koperasi Permodalan Felda to purchase the building by offering its 5/95 programme to the latter.

Five per cent of the sale consideration is paid upon the execution of the sale and purchase agreement while the balance is paid after each stage is completed.
"We have offered the programme as we are confident of the buyer's financial health," Mah Sing executive director of corporate and investment Ng Poh Seng said when contacted yesterday.

In an announcement to Bursa Malaysia, Koperasi Permodalan Felda said it will lease back the building to Mah Sing for two years based on an annual guaranteed rental of 8 per cent of the building sale price.

According to the group's 2008 annual report, Koperasi Permodalan Felda had a 8.47 per cent stake in Mah Sing as at April 29.

Mah Sing's first en bloc sale to Koperasi Permodalan Felda was in July 2007 when it sold The Icon Jalan Tun Razak (West Wing) for RM174.4 million.

Meanwhile, Ng said Mah Sing is still talking to several parties for the sale of its remaining Southgate office and retail block, APEX.

The Southgate development comprises of five buildings in total, of which three blocks (Vox, Vivo and Vertex) opened for investment on a strata basis yielded sales of RM163 million.

Yesterday's deal saw the developer record total sales of RM543 million for the first seven-and-a- half months of the year, more than its initial full-year target of RM453 million.

Its unbilled sales were RM800 million for the same duration, and Ng expects the sales to be realised within the next two to three years.

At a media briefing held in Kuala Lumpur yesterday, Mah Sing said it is acquiring 46.7ha of freehold land in Cyberjaya for RM130.5 million.

"The land will be a medium to high-end residential development, named Garden Residences, with an estimated gross development value (GDV) of RM690 million," said Mah Sing group managing director-cum-group chief executive Tan Sri Leong Hoy Kum.

The Garden Residences will be developed in two phases. Phase One, due to be launched early 2010 with a GDV of RM250 million, will have 267 superlink and 124 semi-detached units. Phase Two, with a GDV of RM440, will have 284 semi detached units and 70 villas.

"We are targeting to complete the development within three years and we should be able to book in about 30 per cent (of Phase One GDV) by the end of 2010," said Leong.

He added that Mah Sing was bullish about the property market and expects a recovery by the middle of next year.

The group has a total of 17 projects with remaining GDV and unbilled sales of RM4.4 billion located in the Klang Valley, Penang and Johor Baru.

On its ongoing talks with stakeholder Permodalan Nasional Bhd, Leong said that both parties are still discussing on future commercial ventures.

By Business Times (by Jeeva Arulampalam)

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