MKH takes part in redevelopment of Pekeliling flats

KUALA LUMPUR (Feb 5): MKH Bhd’s indirect subsidiary Amona Metro Development Sdn Bhd plans to acquire a 84% stake in Temara Pekeliling Sdn Bhd, the owner of a 1.5-acre (0.61ha) leasehold plot in Jalan Tun Razak, part of where the Pekeliling flats used to stand, for RM5 million.

Amona Metro Development a subsidiary of Gabung Wajib Sdn Bhd, which in turn is a subsidiary of MKH. In a bourse filing, MKH said Amona Metro Development had entered into a master share sale agreement with Amona Land Sdn Bhd, Che Hasnadi Bin Che Hassan and Temara Pekeliling Sdn Bhd to pave the way for the acquisition.

Amona Land holds a 90% stake in Temara Pekeliling, while Che Hasnadi holds the remaining 10%. Temara Pekeliling’s 1.5-acre tract has a 99-year lease that will expire on Dec 27, 2084.

According to the bourse filing, the land is located to the west of the Jalan Pahang roundabout, and is near the Putra World Trade Centre, the Malaysian Medical Association, the Institute of Medical Research and the National University of Malaysia Kuala Lumpur Campus.

It is also served by the Titiwangsa monorail station and Titiwangsa RapidKL LRT station.

MKH said Amona Metro Development had paid the RM5 million to the vendors through internally generated funds, and that the purchase consideration was arrived at based on the gross development value (GDV) and valuation of the land, MKH said.

The GDV of the land is approximately RM380 million; a valuation by Rahim & Co Chartered Surveyors Sdn Bhd on Feb 27, 2015 pegs the value of the land at RM78.4 million.

MKH also said Amona Metro Development and MKH will assume liabilities arising from the commodity murabahah (trust sale) term financing-i facility of RM50 million granted by RHB Islamic Bank Bhd to Temara Pekeliling by offering a corporate guarantee of RM50 million in favour of the bank to secure the repayment of the murabahah facility from Temara Pekeliling, together with profit and other monies payable thereon, to part finance the land purchase.

MKH said the acquisition is in line with the group’s strategy to acquire land or companies which own strategically located land banks for the group’s future property development projects.

The deal is expected to contribute positively to future earnings of the group.

It should be noted that property developer Mah Sing Group Bhd in August 2011 secured the development rights for a 4.08-acre plot in the same area, which formerly housed the Pekeliling flats.

Mah Sing said its wholly-owned subsidiary Grand Pavilion Development Sdn Bhd had entered into a joint-venture agreement with privately-held Asie Sdn Bhd and its unit Usaha Nusantara Sdn Bhd to undertake a niche development named M Sentral on the land. The development carried a potential GDV of RM900 million.

Built in 1969 under the First Malaysia Plan for the low-income group, the Pekeliling blocks have since been demolished to make way for new developments.

MKH closed five sen or 2.36% higher at RM2.17 yesterday, valuing it at RM910.15 million.

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This article first appeared in The Edge Financial Daily, on Feb 5, 2016. Subscribe to The Edge Financial Daily here.