DutaLand, Olympia terminate Kenny Heights consortium agreements

PETALING JAYA (Sept 1): DutaLand Bhd and Olympia Industries Bhd have terminated agreements governing their long-running consortium arrangement for the proposed joint development of Kenny Heights in Kuala Lumpur, after securing approvals from their respective non-interested shareholders.

In a Bursa Malaysia filing on Tuesday (Sept 1), DutaLand said the consortium agreement between its wholly owned subsidiary KH Estates Sdn Bhd (KHE) and Olympia’s wholly owned subsidiary Olympia Properties Sdn Bhd (OPSB), as well as the development agreement involving KHE, OPSB and KH Land Sdn Bhd (KHL), were terminated on Sept 1.

The terminations followed shareholder approvals obtained on Aug 28. DutaLand had announced on the same day that the condition precedent under the termination agreement had been fulfilled, rendering the agreement unconditional.

Nine parcels undeveloped for over 18 years

The consortium agreement was entered into on Feb 14, 2003, while the development agreement was signed on Aug 10, 2007. The parties had intended to develop Kenny Heights, formerly known as Bandar Sri Duta, into a mixed residential and commercial township.

Nine parcels of the Kenny Heights project have remained undeveloped for more than 18 years, apart from a temporary car park on Parcel 7C that is not operational.

DutaLand cited differences in development strategies, risk appetites and capital-allocation priorities between the parties, as well as economic and market conditions, as reasons for the prolonged delay.

The transaction does not involve a transfer of land or payment of consideration between KHE and OPSB. The legal titles are currently held by a trustee, while KHE and OPSB retain beneficial ownership of their respective portions.

Following the termination, the parties may determine whether legal title will revert to them, remain under a new trust arrangement or be transferred to a new trustee.

Undeveloped land valued at RM1.917b

The parties agreed on an independent value of RM1.917 billion for the undeveloped land, based on the average of separate valuations of RM1.9226 billion commissioned by DutaLand and RM1.9114 billion commissioned by Olympia.

Of the agreed value, RM1.115 billion was allocated to KHE and RM801.85 million to OPSB, representing 58.2% and 41.8% respectively.

The allocations differ marginally from the consortium’s original 58:42 cost-and-revenue sharing ratio in favour of KHE.

On a pro forma basis, assuming the termination had taken effect at the start of DutaLand’s financial year ended June 30, 2025, the transaction would have resulted in an estimated increase of about RM290.3 million in the group’s net assets and earnings.

The non-recurring effect mainly reflects the derecognition and remeasurement of DutaLand’s proportionate share of the joint operation’s assets and liabilities, after RM1.5 million in estimated termination expenses.

DutaLand will no longer share future joint-development costs. Its share of losses from the joint operation amounted to RM2.73 million in FY2025.

However, KHE will remain responsible for its share of residual obligations relating to Parcel 2 and the undeveloped land, estimated at about RM8.6 million.

Related-party transaction

The transaction was classified as a related-party transaction. Among the interested parties disclosed is DutaLand group managing director and major shareholder Tan Sri Datuk Yap Yong Seong, who is also Olympia’s group managing director and a major shareholder.

Following the termination, KHE may independently formulate a development or monetisation strategy for its portion of the land, subject to obligations under the master development order and other regulatory requirements.

DutaLand said it has yet to finalise a comprehensive development plan, timeline, estimated gross development cost, gross development value or funding structure for KHE’s portion of the land.

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