MoF says no to UDA land sale

KUALA LUMPUR: The 3.56 acres (1.42 ha) of prime land next to the Sheraton Imperial hotel along Jalan Sultan Ismail will remain with UDA Holdings Bhd after it failed to get the green light from the Ministry of Finance (MoF) to sell the land to Nadayu Properties Bhd (formerly known as Mutiara Goodyear Development Bhd).

Nadayu in its filing with Bursa Malaysia on Wednesday, July 20 said it had received a letter from UDA on Tuesday informing that it (UDA) was unable to obtain approval of its shareholder, which is the MoF, to sell the land. But the announcement didn't state why the MoF blocked the sale, which was supposed to raise proceeds for UDA to pay the government the outstanding land premium on the former Pudu Jail site.

Just two months ago, Nadayu had agreed to acquire the land from UDA for RM215.5 million cash, with the condition being getting the approval from the MoF, which UDA reports to.

However, before the MoF could even come to its decision, UDA's chairman Datuk Nur Jazlan Mohamed had came under fire amid allegation from bumiputra rights group and Umno Youth that the sale would sideline bumiputra's interest in owning a prime real estate in town, an argument which Nur Jazlan had countered.

Now with the sale failing to materialise, UDA had to refund to Nadayu a deposit of RM21.55 million that the latter had put down for the land. Nadayu had originally planned for a high-rise commercial project on the Jalan Sultan Ismail land. The project was expected to have gross floor area of 1.2 million square feet, with a gross development value (GDV) of over RM1 billion.

When contacted, Nur Jazlan said he was disappointed with the decision by the MoF because UDA does not want to borrow money to pay the outstanding premium of RM104 million on its 8ha former Pudu Jail site due this September. "Now that Finance Ministry has decided, UDA will have to borrow money to pay the outstanding premium and may have to charge the Pudu Jail land also," he said.

In an interview with The Edge Financial Daily on June 6, Nur Jazlan had said the sale of the Sultan Ismail land was necessary to raise cash to pay the outstanding premium due in September, failing which the government could revise the Pudu Jail land premium up to its current market value of about RM600 million.

"We also need the money now to restart our other projects which are hampered by our poor capital situation," said Nur Jazlan, who is Umno Pulai division head and Pulai Member of Parliament.

While the reason behind Finance Ministry's decision is unclear at this moment, an industry observer opined that UDA's board should be left to make decisions on its day-to-day operations.

"It certainly does not bode well for the transaction to be aborted suddenly given that Nadayu has already announced to the market details of the land acquisition and some preliminary plans for the land," said the observer.

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