KUALA LUMPUR (March 23): The joint-venture (JV) company between Malaysian Resources Corp Bhd (MRCB) and the Employees Provident Fund (EPF), which is undertaking the town centre development of the massive Kwasa Damansara township in Sungai Buloh, has appointed MRCB’s wholly-owned MRCB Land Sdn Bhd as the project’s management contractor for a provisional sum of RM7.46 billion cash.
The JV company, Kwasa Sentral Sdn Bhd (KSSB), is 70%-owned by MRCB and 30% owned by Kwasa Land Sdn Bhd — the EPF unit tasked with developing Kwasa Damansara as the master developer. EPF is also the major shareholder of MRCB, with a 34.73% stake.
Under the agreement inked yesterday, among the services MRCB Land will provide as a management contractor are constructing the financial models as the basis to plan the development, including an initial feasibility study and concept plan; sales and marketing consultancy for the buildings to be developed; project management services for the development as a whole and for each plot; and plan, design, construct, test and commission the works for each plot.
The estimated gross development cost of the 64.3-acre (26ha) land known as MX-1 — on which the town centre will be built over an estimated 12 years from this year — is RM8.55 billion, MRCB said in its Bursa Malaysia filing. Aside from the RM7.46 billion management contract sum payable to MRCB Land, the balance RM1.09 billion is for land cost, authority and statutory charges and financing cost.
The estimated gross development value (GDV) of the project is RM10.55 billion. MRCB won the bid to develop the plot in 2014.
Some 60% of the MX-1 development is expected to consist of a commercial hub, while the remaining 40% will be residential. There will be 10 separate development plots, made up of six office towers, two blocks of a hotel, a wellness centre, three retail blocks, and 15 residential blocks and recreational facilities.
MRCB said KSSB will fund the RM7.46 billion via internal funds and/or bank borrowings.
The town centre is part of Kwasa Land’s township that spans some 2,330 acres. Kwasa Land has estimated that the township would generate a GDV of RM50 billion over the next 20 years. In 2016, Kwasa Land appointed MRCB as the project delivery partner to develop the main infrastructure for the township.
“By undertaking the proposed [town centre] construction, MRCB gains a stronger foothold in the township project and a potential pipeline of construction projects, auguring well for MRCB’s financial performance in the mid- to longer-term period,” MRCB said.
While MRCB said the project is expected to contribute to its future earnings, it is still too early to ascertain the expected profits as development plans for the project have yet to be submitted for regulatory approvals, while the provisional contract costs and provisional management contract fees are still subject to change.
MRCB shares closed unchanged at 99 sen yesterday, with a market capitalisation of RM4.35 billion.
This article first appeared in The Edge Financial Daily, on March 23, 2018.
TOP PICKS BY EDGEPROP
Serendah Golf Resort (Chazara, Fabriciana, Issoria, Vanessa)