UDA: Sale of prime KL land will beef up cash flow

KUALA LUMPUR: UDA Holdings Bhd's recent proposed divestment of prime land along Jalan Sultan Ismail will help strengthen the company's cash position and replenish its depleting landbank in the Klang Valley, said UDA chairman Datuk Nur Jazlan Mohamed.

UDA had recently proposed to divest its 1.42ha plot of land in the Kuala Lumpur city centre (behind Sheraton Imperial and Asian Heritage Row) to Mutiara Goodyear Development Bhd for RM215.5 million cash.

In a statement on Wednesday, Nur Jazlan said UDA's board had decided to sell the plot after considering various factors, mainly to strengthen UDA's cash position, which currently stands at RM90 million.

"The divestment enables UDA to hunt for new landbank to develop new townships, especially in the Klang Valley. UDA no longer has a large landbank to develop new townships," Nur Jazlan said.

He said UDA's board had considered the possibility of developing the plot on a joint venture basis but found that this would expose it to high risks, especially from a cash flow point of view.

"Any proposed joint venture will see that UDA has sufficient financial strength. From time to time, it has to sell land to strengthen its cash flow position given that UDA does not receive funds from the government," said Nur Jazlan.

The proceeds from the RM215.5 million sale will also enable UDA to settle the balance RM104 million premium on the site of the former Pudu jail, with the September deadline this year, Nur Jazlan said.

UDA proposes to build a mixed development on the former Pudu Jail site, tentatively naming the project Bukit Bintang Commercial Centre.

Nur Jazlan said Mutiara Goodyear won the bid as the company had emerged with the best price, offering over RM1,400 psf compared with the market price of RM800 psf.

UDA also found that Mutiara Goodyear has bumiputera company status, Nur Jazlan said.

According to Mutiara Goodyear, the freehold land has been approved for commercial development consisting of a shopping complex and serviced apartments.

"The proposed acquisition forms part of Mutiara Goodyear group's expansion strategy to increase its holding of choice landbank in prime locations in the Klang Valley," the company said.

The proposed land sale, however, is subject to UDA receiving approval from the Ministry of Finance and Mutiara Goodyear getting shareholders' consent.

Nur Jazlan refuted remarks to the media by two Umno Youth office bearers who alleged that the divestment of the land would be a disservice to the bumiputera community.

He stressed that the divestment would benefit bumiputeras as a whole with UDA ensuring that the company continues to remain competitive and have a solid financial position.

Nur Jazlan, who is the Pulai member of parliament and Pulai Umno division chief, also mentioned the federal government's recent moves to sell state-owned land to private companies offering the best prices to ensure better returns and spur township development.