KUALA LUMPUR (Dec 22): DRB-Hicom Bhd announced on Wednesday it had entered into an agreement to swap the Malay Reserve (MR) status of a plot of land in Langkawi with the non-MR status of a piece of land in Kedah for RM76 million.
DRB-Hicom's wholly owned subsidiary Rebak Island Marina Bhd (RIMB) entered into the land status-swap (LSS) agreement with Northern Gateway Free Zone Sdn Bhd (NGFZ).
This could be the first time listed companies have swapped the status between two pieces of land and the only approval required is the nod from the state authority. The swap may set a precedent for LSS deals to take place in the future.
In its announcement to Bursa Malaysia on Wednesday, DRB-Hicom said RIMB's plot which has been proposed for the LSS is located on Pulau Rebak Besar in Mukim Kedawang, Langkawi and spans 333 acres.
DRB-Hicom hopes to swap the 333 acres of its Pulau Rebak Besar land's MR status with the non-MR status of NGFZ's 350-acre piece of agricultural land located in Bandar Kota Perdana in Mukim Sungai Laka, Kubang Pasu, Kedah.
One of the conditions imposed by the Kedah government is that the land in the state to receive MR status must be held by a Malay individual or a company which is deemed as "Malay'.
"The swapping of the land status is an allowed exercise to convert the status of MR land to non-MR land subject to the relevant conditions imposed by the Kedah government. MR land in Langkawi can only be converted into non-MR status by swapping with land located in Kubang Pasu, Kuala Muda and/or Kulim," DRB-Hicom noted.
The consideration of RM76 million to be paid to NGFZ works out to RM5.23 psf to convert the MR land to non-MR land.
The total land area of Pulau Rebak Besar is 391.73 acres of which 44.57 acres have already been developed and another 114.84 acres is a forest park. RIMB holds a 379.78 acre plot of 60-year leasehold land which will expire on May 8, 2054 and currently has a MR status. The undeveloped portion of RIMB's land is approximately 225.07 acres.
DRB-Hicom said the settlement amount of RM76 million had taken into consideration the incremental market value of Rebak Land by RM85.3 million arising from the redesignation of the Rebak Land as a non-MR land as well as the prospects of the high-end niche development by Rebak. The size of land to be swapped is based on the swapping ratio of 1 MR: 1.05 non-MR.
"Messrs Hakimi & Associates, the independent valuer has estimated that the market value of the redesignated Rebak Land will increase by RM85.3 million ie from RM47.8 million to RM133.1 million based on the valuation report dated Dec 8," it said.
DRB-Hicom plans to develop villas and waterfront bungalow lots, commercial retail outlets and other required amenities on the undeveloped portion of Rebak Land.
"To attract the high net worth individuals to invest in the said developments, the MR status of Rebak Land needs to be converted into non-MR."
The conversion of the land status via the proposed land status swap will facilitate DRB-Hicom's/Rebak's plan to develop high-end "boutique" mixed developments targeted mainly to attract the high net worth individuals, both foreigners and Malaysians, the company noted.
The proposed LSS deal is expected to be completed by 2Q12.
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