- The land is for development of industrial properties with an estimated gross development value of up to RM626 million.
KUALA LUMPUR (Nov 9): Paragon Globe Bhd has proposed to acquire a 42.29ha parcel of land in Johor Bahru for RM71.5 million, which is more than half of its market capitalisation of RM130.66 million.
The land is for development of industrial properties with an estimated gross development value of up to RM626 million, according to its filing with Bursa Malaysia.
The property developer said its wholly owned subsidiary Paragon Business Hub Sdn Bhd entered into a sales and purchase agreement with the respective vendors for the proposed land purchase.
The land vendors are Tan Teng Chiu and Tan Chaan Hong, both of whom are the executors for the estate of the late Tan Beng Hoea. The company added that the vendors are “not connected in any manner to Paragon Globe and its subsidiaries”.
Paragon Globe noted that the RM71.5 million purchase consideration was arrived on a “willing-buyer willing-seller” basis, in consideration of the land’s market value of RM75 million as at Nov 1, 2022 — as valued by independent valuer CBRE WTW Valuation & Advisory Sdn Bhd.
“The purchase consideration of RM71.5 million represents a discount of approximately 4.7% to the market value of the land of RM75 million,” said the company, adding that the acquisition will be funded via internally generated funds, bank borrowings and equity fundraising.
The property developer said it will develop 171 units of industrial properties on the land, the development of which is expected to commence in 2024, with completion to take a subsequent eight to 10 years.
“The estimated total gross development value of the development project ranges from RM544 million to RM626 million, whilst its gross development cost is expected to be approximately RM473 million,” said the company, noting that it is expected to derive a gross development profit of up to RM153 million.
Paragon Globe said the proposed acquisition is in line with the company’s strategic plan to grasp opportunities to create greater economic value and increase its earnings potential over the medium to long term.
Paragon Globe said the acquisition is expected to be completed within six months after the vendors deliver to Paragon Business the letter of consent from the Estate Land Board and the order for sale from the High Court.
Shares in Paragon Globe ended half a sen or 2.94% higher at 17.5 sen, giving the company a market capitalisation of RM130.66 million.
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