Ivory Properties unit to buy/rehabilitate Plaza Rakyat for RM400m

From The Edge Malaysia
6th September 2013

"Ivory Properties said it intends to revise the development plans of the project, which encompasses a comprehensive and integrated residential, commercial and transportation hub."

KUALA LUMPUR (Sept 6): Ivory PROPERTIES Group Bhd announced that its 65% unit Ivory Place Sdn Bhd is buying the property assets of the abandoned Plaza Rakyat project in Kuala Lumpur for RM400 million.

In a filing with Bursa Malaysia, Ivory Properties said Ivory Place has entered into a conditional acquisition and rehabilitation agreement with Plaza Rakyat Sdn Bhd for the acquisition of:-

(i) the lease expiring April 2081 over 5 parcels of adjoining leasehold land with a total land area measuring 663,595 square feet (61,650 square metres);

(ii) all the incomplete or abandoned structures built on the project land;

(iii) the development rights on the project land; and

(iv) the rights, interests and benefits on the lease in relation to the project land.

All these assets are purchased with the consent of Datuk Bandar Kuala Lumpur on an "as is where is basis", for RM400 million cash or about RM603 per square foot, the company said.

The CONSTRUCTION of Plaza Rakya was originally scheduled to be completed in 1998 but due to the Asian financial crisis, construction was halted.

Ivory Properties said it intends to revise the development plans of the project, which encompasses a comprehensive and integrated residential, commercial and transportation hub.

The project was originally intended for a development value of about RM1.4 billion and approved for the development of a 7-storey shopping mall, 21-storey 4-star hotel, a budget hotel, 290 units 45-storey service apartments and a 79-storey office tower.

Ivory Properties said as part of its on-going efforts to diversify its business outside of Penang as well as to seek investments to provide recurring income in the future, it submitted its bid for the project.

As the expected completion date of the proposed acquisition will be in the first half of 2014, it is expected that there will not be any material effect on the earnings of the group for the financial year ending 31 December 2013.

However, the interest expense in relation to the borrowings to fund the acquisitions may lead to a decrease in the earnings and the earnings per share (EPS) of the group for the financial year ending 31 December 2014.

“Moving forward, Ivory's management is of the view that the proposed acquisition will contribute positively to the future earnings and EPS of the group,” said Ivory Properties.

[Source]