SHAH ALAM: I-Bhd, the master developer of the 72-acre (28.8ha) i-City, is embarking on its maiden foray outside Shah Alam in Selangor with the acquisition of a 1.05-acre tract for RM132 million in the Kuala Lumpur city centre (KLCC).
The tract was acquired by I-Marcom Sdn Bhd, a subsidiary of of I-Bhd, from Sumuracres Sdn Bhd. Sumuracres is a wholly owned subsidiary of Sumurwang Properties Sdn Bhd, which in turn is wholly owned by Sumurwang Sdn Bhd. I-Bhd executive chairman Tan Sri Lim Kim Hong is a substantial shareholder of Sumurwang Sdn Bhd.
The tract, which is located in Jalan Changkat Kia Peng, is believed to be the last of the privately owned parcels in the landed residential enclave and is a stone’s throw away from the Petronas Twin Towers, I-Bhd said in a statement.
I-Bhd plans to develop a luxury high-rise development, the Grand i-Residence, on the plot. The project has a gross development value (GDV) of RM820 million and comprises 442 fully-furnished residential units at an average selling price of RM2,300 per sq ft (psf). The development is expected to commence in mid-2014 and is slated for completion by mid-2019.
I-Bhd deputy chairman Datuk Eu Hong Chew said its development parameters have been designed to address the gap in the KLCC area where most of the current projects are for larger units.
“This development will tower [over] the neighbouring projects and provide a commanding view of the Twin Towers. Grand i-Residence has been designed to be an iconic project standing majestically at 50 storeys that meets world standards and will be marketed internationally.
“Moreover, it is located on a quieter stretch, thus exuding a sense of privacy and less traffic hassle for residents as they reach out to the cosmopolitan lifestyle haven of KLCC and Bukit Bintang, both of which are within five minutes’ walking distance,” said Eu.
He drew a comparison of the Grand i-Residence with i-City’s successful roll-out of projects with smaller units.
“We have seen amazing take-up rates for our projects in i-City, namely i-Residence (95% sold), i-SoVo (sold out), i-SoHo (50% sold) and are expecting a similar response to our recently launched Best Western Hotel i-City Shah Alam and Serviced [email protected],” said Eu.
With a GDV of RM50 million, the 216-room boutique Best Western i-City Shah Alam is scheduled to open in the third quarter of 2014, while the 826-unit Service [email protected] is poised to be the first hotel-branded residential development in Shah Alam.
Eu is optimistic the Grand i-Residence will contribute to I-Bhd’s bottom line from 2014.
“The Grand i-Residence project is a testimony that we are not resting on our laurels. Although our i-City project will be able to contribute to I-Bhd’s property development pipeline till 2020, we have already started to plan the next phase of our property development growth,” he said.
The RM132 million purchase price is to be settled via an issuance of redeemable convertible unsecured loan stocks (RCULS). The RCULS will have a tenure of five years with an average coupon rate (equivalent to interest) of 3.4% per annum. They can be converted into I-Bhd ordinary shares at RM3.20 a piece, or a 15% premium to the past five days volume weighted average market price.
The RCULS enable I-Bhd to settle the purchase price without incurring a significant cash outflow. At the same time, the coupon rate is a very attractive borrowing rate, said I-Bhd.
In a filing with Bursa Malaysia, I-Bhd said the land transaction will enable the group to expand its geographical footprint to include the heart of Kuala Lumpur and specifically in a strategic and prime locality within the vicinity of KLCC.
“With the i-City forming the foundation of I-Bhd’s property development activities, the proposed acquisition will see I-Bhd grow and expand its property portfolio beyond the capital city of Selangor,” noted the stock exchange.
CIMB Investment Bank Bhd is the adviser and RHB Investment Bank Bhd the independent adviser.
This article first appeared in The Edge Financial Daily, on October 25, 2013.
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