Nadayu formalises UDA land purchase, revises development plans

KUALA LUMPUR: Nadayu Properties Bhd has formalised the acquisition of the 1.4ha tract of vacant freehold land in Jalan Sultan Ismail from UDA Holdings Bhd for RM215.5 million, a controversial deal UDA is banking on to revive its fortunes.

In a filing with Bursa Malaysia on Tuesday, July 12, Nadayu, formerly known as Mutiara Goodyear Development, said it intends to submit a revised proposal for approval, which will include two office towers to complement the serviced apartments and shopping complex that are already planned. The approval obtained from Dewan Bandaraya Kuala Lumpur (DBKL) to build a 30-storey block of serviced apartments and a three-story shopping complex on the land expired on Feb 7, 2010.

"The proposed acquisition forms part of Nadayu's expansion strategy to grow [its] landbank for development purposes in prime locations across the Klang Valley," Nadayu said, adding that the deal will boost its real estate development portfolio. The more diverse mix of property types and geographical location is expected to improve the group's risk profile, it said.

UDA's sale of the land drew flak from certain quarters who considered the deal against UDA's objective of preserving bumiputera interests, given that it is the last major plot of prime real estate in central Kuala Lumpur. In its defence, UDA said it needs the proceeds from the sale to pay the government the land premium for the former Pudu jail site, which will be converted into a major development.

Nadayu is buying the piece of prime land, located behind the buildings on Jalan Doraisamy, at a 4.6% discount to its market value of RM226 million. The price tag was determined based on a valuation certificate by independent valuers CH Williams Talhar & Wong, which is currently finalising a full valuation report. Nadayu intends to fund 76.6% or RM165 million of the purchase with bank borrowings and the rest using its own funds. The purchase is expected to increase its gearing to 1.2 times from 0.66 times as at Dec 31, 2010.

Privately held UDA is expected to see a RM183.79 million one-time gain from the deal given that the land is carried at RM31.71 million on its books for FY10 ended Dec 31.

The proposed acquisition is subject to approval by shareholders of Nadayu and UDA, as well as the Economic Planning Unit, and the Federal Territory Land Executive Committee Secretariat Kuala Lumpur.

Nadayu closed unchanged at RM1.38 on Tuesday.