IWCity inks deal to swap lands with Johor government

KUALA LUMPUR (Aug 10): Iskandar Waterfront City Bhd (IWCity) announced yesterday that it has inked a conditional alienation-cum-development agreement for a land swap deal with the Johor state government.

Under the deal, the state government will compulsorily acquire six plots of agricultural land measuring 121.58 acres in Plentong, Johor Bahru, from IWCity for RM222.8 million, according to IWCity in a Bursa Malaysia filing yesterday.

In return, the Johor government will alienate plots of underwater land measuring 228.78 acres, which adjoins IWCity's existing coastal land in Plentong, to IWC for RM531.92 million. These lands are presently completely submerged and located in the Straits of Johor, off Kampung Senibong, about 12km northeast of Johor Bahru city centre.

The alienated lands' price was arrived upon taking into consideration the land premium imposed by the Johor State Government on the alienated lands of RM50 psf, said IWCity.

That means IWCity will have to fork out RM309.12 million to the Johor government, i.e. the difference between the compensation IWCity will get for the land, and the cost it will have to pay for the new plots from the government.

As it will be appointed contractor of 570 residential units and nine shop lots that the Johor government wants to be built on three plots of the land it is compulsorily buying from IWCity, IWCity will foot the construction cost for the units as part of the payment. The agreed construction cost is RM189.18 million. IWCity will also absorb some RM9.94 million of expected ancillary costs for the project.

In addition, IWCity will pay RM100 million in cash as premium for the alienation of the lands to the relevant state authority. It will also pay RM10 million to Kumpulan Prasarana Rakyat Johor Sdn Bhd (KPRJ), which is a wholly-owned unit of the Johor government.

IWCity intends to fund the cash payments as well as the construction and ancillary costs for the units to be built via a combination of bank borrowings and internal funds.

KPRJ has a 27% stake in Iskandar Waterfront Holdings Sdn Bhd (IWH), the controlling shareholder of IWCity. IWH and IWCity are in the midst of a merger exercise, under which swathes of land measuring some 3,593 acres owned by tycoon Tan Sri Lim Kang Hoo — who controls IWH — and KPPRJ will be injected into the merged IWCity.

IWCity first announced Tuesday's proposed land swap deal in 2014. Then in November 2015, it accepted the government's offer for the compulsory land acquisition of two plots of the land. Four more plots were added to form part of the agreement on Wednesday. "The proposed alienation and development is not conditional upon any other corporate exercises of IWCity," its filing today read.

IWCity has 824 acres of landbank now, which will grow to 1,052 on completion of the land swap.

"IWCity, and its holding company IWH have been one of the key drivers behind the Iskandar Malaysia vision, heavily investing in the development of waterfront land around Danga Bay and the Tebrau Coast. 

"The expansion of the masterplan via the Lands Alienation by the Johor State Government will allow IWCity to increase the overall value of the masterplan and Iskandar Malaysia as a whole," IWCity added. — theedgemarkets.com

For more stories, download TheEdgeProperty.com pullout here for free.