Selangor plans a relisting of its property assets

THE Selangor government is in the midst of identifying its high-yield property assets that it plans to consolidate into a company for eventual listing on Bursa Malaysia.

The restructuring of property assets within companies controlled by the state is to identify those that will attract investors, Selangor Menteri Besar Tan Sri Abdul Khalid Ibrahim tells The Edge.

At the moment, the state's investment arm, Kumpulan Darul Ehsan Bhd (KDEB), owns 61% of Kumpulan Perangsang Selangor Bhd (KPSB), which in turn controls 56.57% of Kumpulan Hartanah Selangor Bhd (KHSB).

KDEB is in the midst of privatising KHSB — which is essentially its property arm with valuable parcels of land in Selangor — in an exercise valued at RM193.46 million.

According to its website, KHSB has developed several integrated townships, including Taman Tun Abdul Razak (Taman TAR) in Ampang and Templer Park Resort in Selayang.

Apart from KHSB, Selangor also owns Central Spectrum Sdn Bhd, which has more than 200 acres in Pulau Indah and has been mandated with the task of developing an industrial park there.

Perbadanan Kemajuan Negeri Selangor (PKNS) is another state government entity with attractive parcels of land in Petaling Jaya and in the suburbs.

However, the problem with these companies is that they have failed to capture the imagination of investors. While there are some high-yield assets, there are also a large number of projects with slow take-up and long gestation periods.

Khalid says the reason for taking KHSB private is to facilitate the restructuring of the property assets quickly.

He explains that the process would be much smoother as there is no need to go to the shareholders after KHSB is privatised.

"Once we identify the successful income-generating corporations, we can inject them into a listed company or even Kumpulan Hartanah (KHSB) to go public again."

Khalid did not give a time frame for the listing, but says he will do so "when the time is right".

"We have all the records of the landed assets owned by the state.”

Identifying these assets is as important as managing and looking after them, he explains. "At the moment, we are in the process of building a team to monitor, rehabilitate and look after the condition of our assets."

This is vital to prepare for potential development and also prevent squatting by illegal occupants, he says.

The state government will also charge a higher conversion premium for a piece of land in Meru that was allocated to the Ministry of Defence many years ago on which to build an army camp but was instead re-channelled to a senior Umno leader.

According to reports, the ministry transferred the 223 acres to Selangor state Wanita Umno leader Senator Datuk Raja Ropiah Abdullah in return for building a National Defence Education Centre in Putrajaya. The education centre was not completed.

"The reason it can be leveraged is that the state sold it at a very cheap price. But now, since you [Ministry of Defence] are not using it for what you promised, I will have to charge you a different premium," says Khalid.

He estimates the conversion premium at RM200 million to RM300 million instead of just a few thousands if the land was used to build an army camp.

"All states in Malaysia would love to have military camps. It is more for economic than security reasons because having a militiary camp will enhance [the land's] value."

On concerns over the deal between Dijaya Corp Bhd and Permodalan Negeri Selangor Bhd (PNSB), Khalid clarifies that it was done through an open tender and initiated several months before the general election.

"Several companies proposed and PNSB finally went with Dijaya," he says.

On April 15, Dijaya signed a sales and purchase agreement to acquire the land from PNSB for about RM1.3 billion via a deferred payment method spanning 20 years.

However, there have been concerns that the agreement may not be valid because it was signed by PNSB when the state was under a caretaker government.

But Khalid says: "I decided not to sign it because I may be regarded as a caretaker. But the state financial officer was not a caretaker, so he signed it."

This story first appeared in The Edge weekly edition of May 20-26, 2013.

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