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Tuesday, July 13, 2010

Bandar Raya takes up stake in RM2.3b Johor project

Bandar Raya Development Bhd (BRDB) is buying Limitless Holdings Pte Ltd's stake in a RM2.3 billion waterfront project in Johor to strengthen its presence in the region and improve earnings.

BRDB, well known for its developments in the Bangsar enclave, Kuala Lumpur, wants to build more properties in Johor, riding on the success in Iskandar Malaysia, a spokesperson said.

"We calculated and evaluated the deal before buying the stake. It worked out well and we found it good value for our shareholders," the spokesperson added.

Based on a preliminary feasibility study, the project, dubbed "Residential North", is expected to generate gross development profit of RM700 million.
Construction work on the development featuring bungalows, detached houses, townhouses and condominiums in Puteri Harbour is expected to start in the third quarter of next year.

The project will take some six years to complete.

Limitless, a unit of the cash-strapped Dubai World, holds 60 per cent of Haute Property Sdn Bhd, which was formed in December 2007 to undertake the 44.4ha project. UEM Land Bhd, the master builder, owns the remaining 40 per cent.

It was reported that Limitless had decided to pull out of the project to raise cash and that BRDB had bought into Haute via its unit, Ardent Heights Sdn Bhd.

Ardent will pay Limitless RM75 million, which the latter had advanced to Haute as partial payment for development rights to the project.

It will also pay Limitless RM1 million to settle about RM10 million it had advanced to Haute to meet the latter's operating and development expenses.

"We are happy with the deal and also to be able to work with UEM Land, a reputable developer. We feel this is a good match. This is our first partnership together and we hope there will be more in time to come.

"We are seeking opportunities to grow in Johor and this is just one of the many plans we have," the BRDB spokesperson said.

BRDB is not new to Johor, having ventured there in the 1980s. By month-end, it will launch Straits View Residences in Permas Jaya, the first gated and guarded development in Johor with strata titles.

UEM Land, in an e-mail reply to Business Times' query, said there would be no impact on the project as BRDB was essentially stepping in to replace Limitless.

"We had decided to partner Limitless to tap their expertise in upmarket waterfront development and take advantage of their international market reach.

"Unfortunately, once the global financial crisis hit, we were unable to move this project forward as Limitless became entangled as part of the Dubai World group's debt restructuring plan, which in turn hindered the ability of Limitless and Haute to raise the required project financing.

"Because of this, both UEM Land and Limitless agreed to explore possible solutions to enable the Residential North project to move forward and we eventually agreed that BRDB replace Limitless as our joint-venture partner for this project," UEM Land said.

"In fact, with BRDB now coming in, we should be able to move the Residential North project forward," it added.

UEM Land said it was finalising the necessary agreements with BRDB and discussions were ongoing.

On project financing, UEM Land said it expects funds to be a mix of equity and debt (mainly project or bridging finance).

"Details of the funding plan will be finalised later, but, based on the financial strength of both BRDB and UEM Land, we do not foresee this to be an issue," it said.

By Business Times (by Sharen Kaur)

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