KUALA LUMPUR (Sept 6): Property developer LBS Bina Group Bhd announced it will be buying Gerbang Mekar Sdn Bhd, the mall owner and operator of the M3 Mall in Gombak, for which it will be paying RM105 million in cash and kind, to enter the retail business.

LBS Bina said in a filing yesterday that its wholly-owned unit Saujana Tunggal Sdn Bhd has inked an agreement with Jadi Wawasan Sdn Bhd and Chua Choon Yang to acquire Gerbang Mekar.

Under the agreement, LBS Bina will pay Jadi Wawasan and Chua RM12 million cash for the 100% stake in Gerbang Mekar.

In addition, LBS Bina will, on behalf of Gerbang Mekar, repay RM5.2 million of directors’ advances in cash in five instalments within a nine-month period, as well as another RM40.8 million worth of shareholders’ advances “by contra of units of real properties developed or to be developed” by LBS Bina.

The developer said the cash payments will be satisfied with internal funds.

Under the deal, LBS Bina will also assume Gerbang Mekar’s outstanding loan of RM47 million to Kuwait Finance House Bhd, to which the M3 Mall is charged for a credit facility.

Incorporated in 2012, Gerbang Mekar has a paid-up capital of RM2 million.

The M3 Mall in Gombak, which was fully developed in the third quarter of last year, has a market value of RM107 million, said LBS Bina.

Constructed on a 3.2-acre (1.29ha) leasehold land, M3 Mall is part of a larger mixed development project known as Medan Mega Melati, which also includes the M3 Residency, comprising two blocks of 16-storey serviced apartments built atop the mall.

“The shares’ acquisition offers a low entry to the retail business where the income is recurrent in nature with capital appreciation potential on the assets,” said LBS Bina.

“It offers an opportunity to reformat and reposition a well-built mall in a strategic location into a community-centric shopping arcade for an estimated catchment of approximately 455,000 people within a 10 minutes’ drive,” it added.

LBS Bina expects to complete the buy in the last quarter of this year.

Shares in LBS Bina closed 1.04% or two sen lower at RM1.91, giving it a market capitalisation of RM1.3 billion.

This article first appeared in The Edge Financial Daily, on Sept 6, 2017.

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