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Parkson pays RM98m for Melaka land

KUALA LUMPUR (Sept 4): Moving closer to its goal to own and operate shopping malls, Parkson Holdings Bhd’s wholly-owned unit on Monday agreed to pay RM98 million for 64.6% of a 23.22-acre (9.38ha) site in Melaka from a company effectively controlled by its major shareholder, Tan Sri William Cheng.

In a statement on Monday, Parkson said Megan Mastika Sdn Bhd has agreed to buy 6ha of the 9.38ha land in Melaka earmarked for a mixed development from Dimensi Andaman Sdn Bhd. Cheng controls Dimensi Andaman’s holding company, Ayer Keroh Resort Sdn Bhd (AKR), which is currently carrying out reclamation works on the tract.

The proposed acquisition will allow Parkson Holdings group “to develop a shopping mall at a strategic location in Melaka among the famous tourist attractions and in an area planned for mixed development” with sea frontage, Parkson’s statement read.

Parkson Holdings — which is without a core business after spinning off its department store operations in China and Asean to separately listed entities in Hong Kong and Singapore — intends to morph into an entity that owns and manages shopping malls, Datuk Alfred Cheng, who manages the Parkson group, told The Edge weekly in a recent interview.

Alfred is group managing director of Hong Kong-listed unit Parkson Retail Group Ltd and Parkson Retail Asia Ltd, which is listed in Singapore. Both are units of Parkson Holdings.

Alfred is the nephew of Cheng senior, chairman and managing director of Parkson Holdings. In the interview, Alfred had then said Parkson Holdings’ second mall would be in Melaka and would cost some RM400 million to build.

As it is, the KL Festival City — which opened last October in Setapak, Kuala Lumpur and cost RM215 million to build — is the only mall in the portfolio of Parkson Holdings. The retail group intends to have at least three or four malls by 2015.

A retail-centric real estate investment trust (REIT) will be considered once its asset pool is big enough, Alfred said in the interview in July.

“When Parkson Holdings has five or six malls and the income stream is bigger, we could possibly do a REIT. As you know, I still prefer an asset-light business model,” Alfred is reported to have said. Its listed subsidiaries currently operate shopping malls in premises leased from other property owners and do not invest in building malls.

For yesterday’s Melaka land purchase, Parkson Holdings said the purchase price represents one time the RM151.72 million that independent valuer Messrs Henry Butcher Malaysia (Malacca) Sdn Bhd had valued the entire 9.38ha tract on Aug 24.

The valuation assumes that the land title (99-year leasehold commercial) had been issued for the land by the Melaka government. Dimensi Andaman paid the same amount for the said land from its parent AKR yesterday.

The statement yesterday did not mention AKR’s cost of investment for the land. Dimensi Andaman intends to “organise and undertake an integrated commercial and property development project on the entire 23.22 [9.38ha] acres, which includes a shopping mall, serviced apartments and boutique hotel”.

Parkson intends to fund the purchase using internally generated funds and expects the deal to be completed by December.

This article appeared in The Edge Financial Daily on Sept 4, 2012.

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