New twist to land tussle

KUALA LUMPUR: The long drawn out legal battle between a private company belonging to Datuk Desmond Lim Siew Choon of Malton Bhd and Johor Corp (JCorp) for the Pusat Bandar Damansara (PBD) land appears to have moved closer to a settlement.

In an announcement yesterday, Malton disclosed that a third supplemental agreement was signed last Friday between Impian Ekspresi Sdn Bhd (IESB), a private company that is majority owned by Lim and his wife, Datin Tan Kewi Tong, and Bukit Damansara Development Sdn Bhd (BDDSB), a subsidiary of Damansara Assets Sdn Bhd which is owned by JCorp.

Under the agreement, IESB will pay RM500 million cash and allocate office space totalling 266,668 sq ft in the redeveloped PBD land to BDDSB.

Surprisingly, the announcement came barely a week after the general election, which saw Datuk

Mohamed Khalid Nordin replacing Tan Sri Abdul Ghani Othman as the new Menteri Besar of Johor.

The menteri besar is the head of JCorp. While under Ghani, JCorp had taken companies linked to Lim to court over the PBD land. The case has yet to be settled.

However, officials close to the state said the latest development suggests that the case may be coming to a closure.

According to Malton’s announcement, the allocation of office space to BDDSB will be broken into two segments of 186,667 sq ft and 80,000 sq ft.

BDDSB will assign the office space measuring 186,667 sq ft to Khuan Choo Property Management Sdn Bhd (KCPM), a subsidiary of Malton Bhd, in return for a 20-storey commercial office building known as V Square (VSQ) located in Petaling Jaya.

The remaining 80,000 sq ft of office space is to be delivered to BDDSB within five years from the date IESB acquires the PBD land.

The VSQ building, valued at RM140 million, has a net lettable area of about 163,504 sq ft and parking bays for 964 cars.

The transaction will see Malton gain a development profit of RM54.6 million from the disposal of the VSQ property.

Malton said the rationale for the proposed asset exchange was to enable KCPM to realise its investments in its VSQ property.  

The group said it also provides KCPM with an opportunity to invest in the proposed PBD complex.

“[PBD complex] has promising prospects for rental returns and capital appreciation as the property is located in a very prime and strategic location in Damansara Heights, Kuala Lumpur,” it said.

The PBD land, which measures 416,993 sq ft, comes together with nine blocks of commercial office buildings.

Currently, all the commercial office buildings, except for 25 parcels of properties within the PBD commercial complex, belong to BDDSB.

The office complex is old but strategically located in the affluent neighbourhood of Damansara Heights.
It enjoys good connectivity, and two new stations in the ongoing mass rapid transit (MRT) project will be built in the vicinity.

According to Malton’s announcement, IESB’s preliminary plan is to redevelop the PBD by building five new towers, comprising two office towers and three residential towers, and a suburban retail mall within the office space.

It is a multi-billion ringgit development which is expected to be completed over seven to eight years.

In a second part of the corporate exercise, IESB and KCPM have entered into an option whereby the former has the right to acquire the office block in PDB. The option starts 12 months after KCPM becomes the unencumbered owner of the property.

If the option is exercised, the amount IESB has to pay for the office space will increase from RM825 psf to RM1,050 psf in the fourth year.

The legal tussle between JCorp and IESB and KCPM goes back to an agreement dated Jan 7, 2009, in which JCorp supposedly agreed to sell the PBD land to IESB for an amount that is believed to be in the region of RM700 million.

However the deal was not concluded and after the former menteri besar, Ghani, took on a more active role in JCorp, the agreement was rescinded.

According to the announcement, the PBD land proposals are expected to affect the net assets and gearing of the Malton group.

As at June 30, 2012, it recorded net assets of RM587.3 million and gearing of 0.27 times. After the proposed asset exchange, the group is expected to have net assets of about RM625.1 million and gearing of 0.25 times.

This article first appeared in The Edge Financial Daily, on May 14, 2013.

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