KUALA LUMPUR: MK Land Holdings Bhd is selling its tract of land near Sungai Buloh, Selangor for RM83.5 million.
In a filing with Bursa Malaysia yesterday, MK Land said its unit Medan Prestasi Sdn Bhd has entered into a sale and purchase agreement (SPA) with Jaya Megah Building & Engineering Sdn Bhd (JMBESB) to sell a 9.59 acre tract at RM200 per sq ft compared with the market value of RM125 psf.
Henry Butcher Malaysia Sdn Bhd, an independent valuer, has indicated the market value of the land at RM52.2 million, according to the announcement.
The property developer said the rationale for the land disposal was to realise its land value. The gross gain on the sale before the provision of any commission, legal fees and related expenses stood at RM31.3 million.
“The proceeds shall be utilised to redeem the property from the existing chargee, develop ongoing projects and future projects and for general working capital over the next 18 months,” said MK Land.
It added that the disposal did not require the approval of its shareholders and is to be completed within 12 months from the date of the agreement.
“The board, having considered all aspects of the disposal, believes that it is in the best interest of MK Land,” it said.
JMBESB is a property and housing developer, general trader and investment holding company. Its shareholders are Low Han Peir and Peter Lin.
In a separate filing with Bursa yesterday, MK Land announced it had terminated an equity joint venture agreement to develop affordable housing and high-end integrated projects in Bangalore, India.
MK Land’s unit Ritma Mantap Sdn Bhd had entered into the agreement with MKN Embassy Development Sdn Bhd, Star Dreams, and Milan Gateway Sdn Bhd in 2009.
MK Land said the termination was due to the rising cost of land and construction costs coupled with a highly competitive real estate market in India making the objective of the joint venture agreement no longer viable.
The parties have agreed to a mutual termination of the agreement with no liability or obligation to pay any compensation to any party, it said.
MK Land noted that both the termination of the agreement and the disposal of the Sungei Buloh land are not expected to have any material effect on its earnings per share and net assets for the 2013 financial year ending June 30.
This article first appeared in The Edge Financial Daily, on April 26, 2013.
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