DutaLand seeks shareholders’ nod to end Olympia joint development arrangement over RM1.917b Kenny Heights land

PETALING JAYA (Aug 12): DutaLand Bhd is seeking shareholders’ approval to terminate its long-running joint development arrangement with Olympia Industries Bhd (OIB) over undeveloped land at Kenny Heights in Kuala Lumpur, with an Independent Agreed Value of RM1.917 billion.

It said in a Bursa Malaysia filing that the proposed termination would allow DutaLand and OIB to independently develop or monetise their respective portions of the Kenny Heights land, following the prolonged delay in developing the nine undeveloped parcels.

DutaLand said its wholly owned KH Estates Sdn Bhd (KHE), OIB's wholly owned Olympia Properties Sdn Bhd (OPSB) and KH Land Sdn Bhd (KHL) had agreed on April 14 to terminate a consortium agreement dated Feb 14, 2003 and a development agreement dated Aug 10, 2007.

KHE and OPSB have also agreed to enter into a separate deed of revocation to terminate the trust deed under which the lands are currently held by a trustee.

Under the proposed termination, no land will be transferred and no consideration will be paid between KHE and OPSB. Each party will retain its respective beneficial ownership of the undeveloped lands, which are currently held on trust by the trustee.

DutaLand to retain RM1.115 bil worth of parcels

KHE will retain Parcels 4, 6A, 7A, 7B, 7C and 8B, with an agreed value of RM1.115 billion, or 58.2% of the RM1.917 billion Independent Agreed Value. OPSB will retain Parcels 3, 6B and 8A, with an agreed value of RM801.85 million, or 41.8%.

The RM1.917 billion Independent Agreed Value was derived from the average of separate valuations commissioned by the parties. DutaLand's independent valuer, Cheston International (KL) Sdn Bhd, valued the nine parcels at RM1.9226 billion, while OIB's valuer ascribed a value of RM1.9114 billion.

The deviation between the agreed value allocated to each party and its entitlement under the original 58:42 cost-and-revenue sharing ratio is within the 0.5 percentage-point tolerance stipulated in the termination agreement. As a result, no payment or reimbursement is payable by either party.

Long-running development impasse

Kenny Heights, formerly known as Bandar Sri Duta, was conceived as an integrated residential and commercial development. Under the original arrangement, KHE and OPSB were to jointly develop the land, with KHL appointed as developer.

Parcel 5 was sold in 2011 and Parcel 1 in 2017, while Parcel 2 was developed into Kenny Heights Estate, comprising 49 town villas that have been fully sold.

DutaLand attributed the prolonged delay in developing the remaining land to differences between KHE and OPSB over development strategies, risk appetite and capital allocation, as well as economic and market conditions.

The existing arrangement also requires the parties to reach agreement on matters relating to the development, limiting their ability to independently pursue plans for their respective land.

Following the termination, DutaLand intends to reassess its strategy for KHE's parcels, including the development concept, timeline, gross development cost, gross development value and funding requirements. It may consider monetising the land if development is ultimately assessed as commercially unviable. No comprehensive development plan has been finalised.

The parties will, however, remain bound by obligations intended to preserve the existing master development order, including its approved layout and plot ratio. KHE and OPSB will also grant each other contractual rights of way across their respective parcels where reasonably required for development.

RM290.3 mil uplift to net assets

DutaLand estimated that the proposed termination would increase the group's net assets by RM290.3 million, comprising a RM291.8 million net effect from the derecognition and remeasurement of the group's proportionate share of the joint-operation assets and liabilities, less RM1.5 million in estimated expenses.

On a pro forma basis using the group's audited results for the financial year ended June 30, 2025, the exercise would also increase earnings by about RM290.3 million.

KHE will bear about RM8.6 million of the estimated RM14.9 million cost for KHL to discharge its residual obligations relating to Parcel 2 and the undeveloped lands.

The exercise is deemed a related-party transaction due to the interests of certain DutaLand directors, major shareholders and persons connected with them in OIB, and therefore requires approval from DutaLand's non-interested shareholders.

Independent adviser Malacca Securities Sdn Bhd concluded that the proposed termination is fair and reasonable and not detrimental to non-interested shareholders, and recommended that they vote in favour of the resolution.

DutaLand will hold an extraordinary general meeting on Aug 28 to seek shareholders' approval. Subject to the requisite approvals being obtained, the proposed termination is expected to be completed by the third quarter of 2026.

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