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IOI Properties acquires Xiamen land for RM1.4 bil

KUALA LUMPUR (Aug 29): IOI Properties Group Bhd has successfully tendered for a 6.2-acre parcel of leasehold land in Xiang An central business district in Xiamen, China, for RMB2.324 billion (approximately RM1.4 billion), of which 91% will be allocated for residential development and the rest (9%) for commercial development and a community service centre.

In a filing with Bursa Malaysia today, IOI Properties said the land was acquired via its indirect 99.8%-owned subsidiary IOI (Xiamen) Properties Co Ltd through a competitive bidding conducted by the Xiamen Bureau of Land Resources and Real Estate Management.

It said the consideration for the land was arrived at after taking into consideration the location of the land, in addition to the permissible development plans intended for the land. Key future developments in the vicinity of the proposed land include schools, a new Xiang An hospital and a new Xiamen international airport, which will be completed in 2020.

"The gross development value and gross development costs of the proposed development to be undertaken on the proposed land has yet to be determined as the project development plans are still at a preliminary stage," said IOI Properties.

It added that it will fund the acquisition through sources of funding available to the group, including internal funds.

IOI Properties believes the land tender provides an opportunity for it to replenish its existing landbank in China.

"The group has been sourcing for landbank with development potential following the completion of the group's maiden property development, that is, the IOI Park Bay in Jimei and the successful launch of its second Jimei project, IOI Palm City," it added.

"Barring any unforeseen circumstances and subject to all required approvals being obtained (if any), the land tender is expected to be completed by the third quarter of 2016," said IOI Properties, adding that it is expected to contribute positively to the group's future earnings and earnings per share.

The land tender will see the group's gross gearing rising from 0.29 times to 0.33 times, while its net gearing will increase from 0.16 times to 0.25 times.

At 2.12pm, IOI Properties was unchanged at RM2.50, with 462,100 shares traded. Its market capitalisation stood at RM11.03 billion. — theedgemarkets.com

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