KUALA LUMPUR (Sept 6): Magna Prima Bhd’s wholly-owned subsidiary Magna Ecocity Sdn Bhd (MESB) is to acquire 20 acres in Seksyen 15, Shah Alam, Selangor for RM100 million.
The vendor of the land is PCM Bina Sdn Bhd, which will receive RM70 million cash plus a 30% stake in MESB valued at RM30 million for the transaction.
The 20-acre plot in question is still an industrial property, but the Petaling Land Office has approved the variation of land use from “industrial” to “commercial”.
According to a filing with Bursa Malaysia on Wednesday, Magna Prima said it will finance the purchase via a combination of internally generated funds and bank borrowings.
MESB has proposed to develop the leasehold land into a mixed residential and commercial project which will comprise 244 terraced three-storey shop offices and 1,620 serviced apartments.
The proposed project has a gross development value of slightly over RM1 billion with a development cost estimated at RM676.62 million, not including the cost of acquiring the land.
The proposal is still subject to relevant approvals. MESB expects the development to rake in RM229.12 million in gross profit, after factoring in the cost of the land.
According to a note by Magna Prima, the value of property was assessed at RM105 million by independent valuers CVC. At RM100 million, MESB will effectively pay RM114.78 per sq ft.
With most of Magna Prima’s landbank situated in the Klang Valley, the group views the acquisition as an opportunity to strengthen its position and market presence in the area with a particular focus on Shah Alam.
This article appeared in The Edge Financial Daily on Sept 6, 2012.
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