PJD to acquire Melbourne land for A$145m

KUALA LUMPUR: PJ Development Holdings Bhd (PJD), through its 75%-owned subsidiary Yarra Park City Pte Ltd, has entered into a put and call option deed with an Australian developer for the purchase of a piece of freehold land measuring 2.026ha in Southbank, Melbourne for A$145 million (RM439.8 million) cash.

The proposed transaction works out to RM2,013 per sq ft.

In a filing with Bursa Malaysia, PJD said the land, to be purchased from developer Dynasty Falls Pte Ltd, is located in the inner urban central business district (CBD), which houses many offices of major corporations, high-rise developments and landmark buildings such as the Melbourne Convention and Exhibition Centre, and Melbourne’s tallest building — Eureka Tower.

PJD said in a statement that it deems the acquisition to be ideal for long-term development with strong growth potential, given that it is one of the last pieces of sizeable prime land available for development in the Melbourne CBD.

The basis of deriving the purchase price, said PJD, is on a willing buyer, willing seller basis, premised on the strategic location of the property, best estimate of the indicative market value and comparison of recently transacted prices of properties located within the vicinity.

“A formal valuation is currently being carried out, details of which will be disclosed upon signing of the contract of sale of real estate,” it said, adding that the estimated time frame for completion is expected to take effect in July 2014.

However, PJD didn’t say how it would fund the acquisition that seems to be a major exercise for the group. PJD had net total borrowings of RM328 million as at March 31, 2014, against shareholders’ fund of almost RM1 billion. The group reported a net profit of RM75.9 million for the nine-month period ended March 31, on revenue of RM705.5 million.

Nevertheless, there has been speculation that PJD may embark on a corporate exercise to raise funds or to be merged with OSK Property Holdings Bhd to form a bigger entity. Both property development outfits are controlled by veteran investment banker Tan Sri Ong Leong Huat who holds 26.8% and 70% stakes in the companies respectively.

This article first appeared in The Edge Financial Daily, on June 20, 2014.


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