Varia signs agreement to jointly develop RM250 mil residential project in Bandar Seri Alam

PETALING JAYA (June 10): Varia Bhd said its indirect wholly owned subsidiary Varia Southrise Sdn Bhd has entered into a collaboration agreement with Seri Alam Properties Sdn Bhd to jointly undertake the development of a freehold residential parcel in Bandar Seri Alam, Johor Bahru, comprising a proposed 645-unit stratified housing project with an estimated gross development value (GDV) of about RM250 million.

In a Bursa Malaysia filing yesterday, Varia said the project will be developed on Lot 89848, Geran 264634, Mukim Plentong, measuring about 43,810 sq m, and will comprise two blocks of 20 and 21 storeys, together with ancillary facilities including a TNB sub-station.

Varia said the land is located within Bandar Seri Alam in Johor Bahru and is owned by Seri Alam Properties, a wholly owned subsidiary of United Malaya Land Bhd. The landowner will remain the legal and beneficial owner of the land throughout the tenure of the collaboration agreement, meaning the exercise is not a land acquisition by Varia.

Varia Southrise will have the sole and exclusive right to undertake the development, subject to approved plans and regulatory requirements. The project is targeted to be launched within the current year, subject to the issuance of the advertising permit and developer's licence (APDL) and other relevant approvals.

Under the agreement, profit before tax will be shared equally, with 50% to Varia Southrise and 50% to Seri Alam Properties. The filing stated that the land cost under the collaboration arrangement is fixed at RM17 million, representing the landowner's JV contribution, while initial working capital of up to RM3 million may be advanced by the developer, subject to the terms of the agreement.

Varia said the project is expected to be funded primarily through project financing procured by the developer, together with initial funding advanced under the collaboration agreement. If further funding is required and cannot be fully met through financing, internally generated funds or sales proceeds, the parties will provide additional funding in equal proportions, according to the filing.

The group said the collaboration agreement is not expected to have any material effect on net assets, net assets per share, earnings or earnings per share for the financial year ending June 30, 2026. Varia said the project is expected to contribute positively to future earnings, while the eventual impact on gearing will depend on the final funding mix.

The board said none of the company's directors, major shareholders or persons connected to them has any direct or indirect interest in the proposed development. Varia added that the collaboration agreement is not subject to shareholder approval and remains subject to the relevant approvals from the authorities.

The project will be undertaken through a profit-sharing structure with the landowner rather than through a land acquisition. The filing also states that development order and building plan approvals have been obtained, although the launch remains subject to the issuance of the APDL and other relevant approvals.

..........

EdgeProp brings you another month of data-driven insights, exclusive interviews, and market commentaries. Subscribe now for your free copy!